Working paper

Government interventions in pursuit of regional development: learning from experience

15 Jun 2003
Description

The questions of why regions grow or fail to grow, and what, if anything, governments can do about it have attracted considerable interest and debate for many years. This report provides a select review of previous government intervention approaches and experiences in pursuit of regional development. The review attempts to provide useful insights into the purpose and outcomes of various government–sponsored interventions in Australia, and in a number of other comparable countries. This information will assist policy makers by identifying relevant principles and lessons that can be applied to the development of Australian regional development policy. The experiences of the European Union, United States, Canada and New Zealand are examined.

The term “regional” is used in the review to refer to sub–national areas that may be defined in different ways depending on the spatial scope (eg. jurisdictional, biophysical, cultural, economic) and objectives of the intervention policy. The review does not (as sometimes happens in Australia) confine the term solely to non–metropolitan areas but includes both urban/metropolitan and non– metropolitan areas where relevant. This is consistent with the international treatment of all types of sub–national areas under the domain of “regional” development policy.

One of the key findings of the report is that evaluation of regional interventions is generally difficult in terms of isolating the cause and effect of particular interventions from other macro–economic and local factors, particularly in light of the complexity of the economic growth process itself. In many instances the efficacy of government interventions is uncertain due to such factors as the cumulative effects of a wide range of policies and macro–economic influences on regions and the diversity of regions themselves. This highlights the importance of effective and ongoing monitoring and assessment of intervention strategies that includes both ex–ante (before) and ex–post (after) evaluations so as to improve our understanding of causal links and maximise the potential impact of future activities. Effective policy assessment must identify the counterfactual — that is, anticipated performance in the absence of the intervention — taking into account private sector activities that would have likely occurred irrespective of the use of public subsidies or other forms of assistance, and the possible displacement of other productive activities.

Regional policy evaluation is supported by development of clear, unambiguous objectives for interventions, flexibility in approach to allow for incorporation of improvements through periodic monitoring, and analysis to guide future evidence–based policies.

 

Publication Details
Publication Place: 
Canberra
Published year only: 
2003
15
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