Regional Economic Development - Essay Example

?Regional Economic Development: Assignment 2 Part 1. Critically assess those areas of European Union economic policy that have had important effects on regional economies within the union. The European Union policy of innovation and Research and development, and the implementation of financial and management instruments reflect the creation and dissemination of innovation in the area of European Union, as well as complexity of the Research and development policy and implementation processes. In the research is conducted, that innovations and Research and development in the context of the European Union policy is determining factors for the growth of regional economy and the stimulation of competitiveness. Also various financial mechanisms are created that induce Research and development activities, business participation in pursuing them, partnership between higher education and private sector. Regarding political context, consolidated investments in Research and development activities are particularly promoted to be enhanced, especially in business sector. Correlation analysis of the European Union Research and development policy, higher education activities, innovative business participation and regional economic growth justifies the European Union Research and development policy and financial mechanisms applied in the European Union regions, where coherence is stimulated. According to the conducted research it can be stated that in these regions expenditure of business sector on Research and development activities increases the GDP per capita in PPS, the labour productivity per hour worked, but governmental sector expenditure on Research and development activities has a small negative influence on the GDP per capita in PPS. Higher education sector expenditure on Research and development activities in these regions induces the increase of the number of students, but no influence on economic indicators is noticed. However, the correlation analysis shows the differences exist regarding the influence on regional economic development between the different regions of the European Union, the USA and Japan. Some premises could be made, which may create difficulties in the European Union regions, where cohesion is stimulated, to implement some financial and management mechanisms, aimed to stimulate Research and development activities, and that are used in the European Union regions, where cohesion is not stimulated, in the USA and in Japan. Paragraph Sources:- i. European Communities (2006). Creating Innovative Europe. Report of the independent expert group on R&D and innovation appointed following the Hampton Court Summit and chaired by Mr. Esko Aho Luxembourg: Office for Official Publications of the European Communities ii. Eurostat (2009). Accessed on 2009-01-10 by http://epp.eurostat.ec.europa.eu/portal iii. Melnikas, B.; Dzemydiene, D. Evaluation of Regional Economic Clusters In Central And Eastern Europe. Intellectual Economics. 2007, 1: 46–54. 2. How has regional policy within the union developed in an attempt to promote cohesion and balanced geographical growth Substantial progress has been made in understanding the sources of uneven economic Development at the regional, national and international scales, but no single theory or Disciplinary perspective is up to the task of such understanding. This literature review Suggests that traditional theories of economic growth have been complemented by three Principal advances in theory and measurement: economic geography, and especially Theories of the relationship between transport/trade costs and spatial agglomeration; Economic growth theories and especially those that focus on the sources of innovation And knowledge-creation in the economy, and on their territorial distribution; and Institutional theories, which centre on the capacities of economies to absorb knowledge And innovate, to organize them efficiently, to adapt to change, and to avoid lock-in By inefficient practices or rent-seeking interest groups. Taken together, they go a long Way toward helping us understand both the powerful forces for convergence among territories and the endogenously-generated barriers to such convergence. Collectively, While they draw on some of the insights of standard models of production, comparative Advantage and trade, they go well beyond these models to suggest foundations for Economic development policy that is considerably different from those that emerges from the standard models. Paragraph Sources:- 1. Acemoglu, D. (2006) "Modeling inefficient institutions," NBER Working Papers 11940, National Bureau of Economic Research, Inc. 2. Acemoglu, D. and Johnson, S. H. (2006a) “De facto political power and institutional Persistence,” forthcoming, American Economic Review 96(2): 325-330. Part 2: “The experience of Wales demonstrates just how difficult it is for regional economic development agencies to help regions left behind in the changing global production system” Discuss The Government along with regional development agencies have responded emphatically to Regional development agencies concerns by moving them to the heart of the productivity and growth agenda. Larger budgets and much greater flexibility open up tremendous opportunities for the English regions. The business-led Regional development agencies will respond to this challenge. As we move from strategy to strategic delivery, Regional development agencies need a further response from Government to a new agenda: consolidation of the single pot, stronger support for Regional Economic Strategies, new roles on Europe, ICT and enterprise, and 21st century answers to the distribution of public spending and regional governance. In the past few decades, it has been clearly proved that the development of left behind regions is not that easy for the government and regional development agencies to tackle the development in these areas. Because of the increasing geographical and economical balance between the developed regions and left behind regions. Due to an impact of Globalisation, these regions have lost the track as compared to the developed regions and are lagging behind. According to a report recently released by European economic authority, the expanses given to these areas for geographical and economical development has gone double in the past decade, the government is trying it’s level best to get this area out of the tag of “Left behind areas”, but the main problem is cooperation of the local bodies and the inhabitants of the local areas is must. Talking on the above topic, this will not be completely true to say that the government has been completely unable to tackle the development issues for these areas, because in a vital part, the government policies and plans have been successful. In regions such as Yorkshire and Humber, any early concerns about business-led RDAs clashing constantly with local government-led Regional Chambers have not materialised. This is no accident and is a direct result of genuine partnership working, involving clear communication, mutual respect and compromise on both sides. It will be important to build on such success and continue the evolutionary process of strengthening regional governance without slowing down decision making or diluting the hard choices that need to be made. The above report proves that, the policies and the steps implemented by the government are not completely failure, but in such extents they have worked a bit. But the government along with regional development agencies have to be a bit more curious about making new plans and budgets for these areas, as it needs some sort of modification as of now. The development agencies have to be a bit practical in understanding the outcomes and then to take any kind of decisions for these areas. Paragraph source :- 1. http://www.smith-institute.org.uk/file/TowardsaNewRegionalPolicyDeliveringGrowthandFullEmployment.pdf 2. Durlauf, S. N. and Fafchamps, M. (2004) "Social capital," NBER Working Papers 10485, ational Bureau of Economic Research, Inc. Read More