Regional policy always has been controversial and it is undeniably interventionist. Regional disparities are the inevitable outcome of market system, something to be tolerated until market forces such as labour migration, capital investment and expanding trade combine to revitalize low – wage depressed regions automatically. Supporters of regional policy are sceptical of ability of market forces to solve long – standing regional problems. An array of arguments is marshalled in support of an active goverment – led regional policy and the main arguments are:
Equality and fairness. Regional policy is seen as a way of ensuring that all parts of society can share in the benefits of a modern, grooving economy.
Extra income and production. Regional policy is portrayed as a being essential if underutilized resources – particularly unemployed labour – are to be drawn into productive use.
Lover inflation and faster growth. The concentration of economic in few already – prosperous regions means that during periods of economic upturn markets in regions such as South East England quickly tend to overheat. The resulting surge in wage levels, house prices or rents sends a wave of inflationary pressure rippling across the remainder of the economy and also results in a rise in imports to meet the growing demand, thus worsening the balance of payments position. Regional policy, by spreading economic activity, eases bottlenecks in the market economy. This is turn allows the economy to enjoy lower inflation and more sustainable growth over time, to the benefit of all.
Fewer urban problems. Economic activity in Europe is heavily concentrated in the big metropolitan areas and capital cities of the member states. Regional policy offers a way of easing the pressures on the big cities by diverting part of the economic activity elsewhere.
These are powerful arguments and most are as valid now as they ever where. They do not in themselves, however, constitute a case for an EU regional policy. There is no suggestion that they should be laid down in favour of a single EU regional policy. Arguments are:
The vested interest argument. The nation states of Europe are becoming increasingly integrated economies. Rapidly expanding trade links, together with much freer capital mobility and more slowly grooving cross – border labour migration, are being stimulated by EU initiatives. The economic well – being of citizens of one member states depends on the prosperity of the economies of other member states. The presence of disadvantaged regions experiencing low incomes and high unemployment is in the interests of no one or the citizens of one member state have a vest interest in ensuring that the regional problems in other member states are reduced.…
