Economic Rationales For and Against Place-Based Policy

Maureen Kilkenny and David Kraybill

Staff General Research Papers Archive from Iowa State University, Department of Economics

Abstract: Most economists understand that "place-based" policies are justified by (i) place uniqueness (spatial heterogeneity), (ii) undesirable spatial consequences of economic growth and change, (iii) inefficiencies due to jurisdictional fragmentation, (iv) significant spatial interdependencies between metro and non-metro places, and (v) the potential to generate greater nation-wide welfare gains using place-based rather than other policies. This paper lays out the economic rationales both for and against place-based policy. The pitfalls and shortcomings of place-based policies include that the policies may (i) generate nothing but rents for the property owners in targeted places, (ii) attract or retain (trap) poor people in poor areas, (iii) distort business as well as human migration decisions, (iv) enable the postponement of necessary adjustments, (v) create dependencies, and are (vi) subject to abuse by place-based politicians.

Date: 2003-01-01
New Economics Papers: this item is included in nep-geo and nep-mic
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Persistent link: https://EconPapers.repec.org/RePEc:isu:genres:11730

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