Cecile Gaubert, 14 November 2018

In order to encourage economic growth and development, governments often put in place a range of policies aimed at attracting firms to specific areas of a country. Yet relatively little is known about their implications for efficiency.This column argues that such subsidies have costly long-run effects, both on the productive efficiency of the economy and in terms of welfare. Moreover, place-based policies do not necessarily decrease spatial disparities. 

Magnus Wiberg, 03 September 2014

Regional policy is a primary expenditure item for many countries. A substantial share of the regional policy budget is allocated to firms in poor regions. This column argues that electoral concerns and rent-seeking behaviour bias regional policy in favour of smaller regions. However, this bias lowers total welfare.  

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