Chapter 3 Spatial theory as a basis for understanding regional economic development 37
3.5 Development linked to ideas of space, place & region
3.5.2 Place-based development
53 Having considered how spatial planning and development gives character to spaces, the next section, on place-based development, looks at the way places get developed using resources that they already possess.
54 In a relational perspective, place-based approaches see relational geographies as platforms for cooperative policy development and governance (Pugalis & Bentley, 2014), and discourse centres on functional regions and functional economic geographies (Barca, 2009). In relation to socio-economic practices, the focus is on the transcendent characteristics of boundaries.
Examples are given of interventions such as special economic zones and of simple daily commuting patterns of labour from one locality to another (Barca, 2009; Pugalis & Bentley, 2014). These examples show that place-based approaches are about the economic development of a particular place with a specific locality in mind.
Place-based development brings together a range of place-based economic strategies that are connected by various common attributes that could potentially form one ideal place-based policy model. The argument, however, is that each approach to place-based development is likely to be contextually distinct (Pugalis & Bentley, 2014). This is not a one-size-fits-all approach as it considers the specificity, complexity and interconnectedness of a place. There are globally framed currents that appear to be influencing places around the world but place- based approaches focus on the unique translation of these in particular contexts (Borggren &
Strom, 2014).
Place-based approaches to development emerge from place-based policies. Tackling uneven development is not easy, and competing approaches to reducing spatial inequalities have been spurred by the emergence of new theories of economic growth that emphasise endogenous processes, agglomeration economies, and institutions (Todes & Turok, 2015). According to Koster, Cheng, Gerritse and Van Oort (2016), through place-based policies, governments put effort into stimulating employment growth, fighting unemployment and spurring productivity.
The investments made in this regard are often not space-neutral although they may differ between regions and cities. The rationalisation for place-based policies is to improve the prospects and livelihoods of the poor and disadvantaged household (Koster et al., 2016). Place- based initiatives and investments may be more effective in reaching households than economy- wide investments (Koster et al., 2016).
Flaws that have been identified in place-based policies are chiefly related to targeting and coverage. Place-based policies explicitly target enhanced growth in particular locations and seek to ensure that localities utilise the resources they have at their disposal and exploit their strengths (Wijerathma, Smith, Naranpanawa & Bandara, 2015). According to Seravelli (2015:11), there is
55 a trade-off … between static and dynamic efficiency. Adopting a
redistribution policy in favour of people makes it possible to help many (coverage) who really need it (targeting). However, it does not usually make them self-reliant. A place-based policy runs the risk, in the short term, of favouring those who do not strictly need it, but, over time, it can allow the whole area- as well as its inhabitants to improve their lot.
In essence, place-based policies should be implemented in such a way that really teaches people to fish rather than give them a fish. Of course there must be fish in the river.
One argument against place-based policies is that governments should not single out particular localities for special support because market forces alone should determine which places can prosper (Todes & Turok, 2015). In terms of this argument, as these places prosper, economic integration through trade and migration will inevitably spread resources and narrow the gap between leading and lagging regions.
Another criticism of place-based policies comes from Seravelli (2015), who sees them as potentially having perverse effects where local authorities are tempted to adopt a direct exchange between votes and favours. To counter this possibility Seravelli calls for decentralisation to promote efficiency of resource allocation. Place-based policies are complex in their designed and this hinders their efficiency (Seravelli, 2015). In particular, they combine top-down and bottom-up approaches to development which have both given poor results.
Intervention from above fails to grasp the real potential of places, while bottom-up interventions have proved ineffective because locals are incapable, unwilling and inefficient (Seravelli, 2015). The most successful are those which integrate resources and knowledge from above.
Place-based policies that target deprived areas bring economic activity to the least productive places, thus potentially lowering overall productivity (Koster et al., 2016). Productivity also falls if poor regional performance can be traced back to negative spillovers from local people or firms. The distributional effects of place-based policies are also unclear. For example, beneficiaries of the aid may be the richer people in the impacted area, thereby increasing inequalities within the region.
According to Neumark and Simpson (2014), place-based policies often target underperforming areas such as deteriorating downtown business districts and disadvantaged regions. The policies represent government efforts to enhance economic performance of an area within its jurisdiction. Ladd (as cited by Neumark & Simpson, 2004) distinguishes place-based people
56 strategies from place-based policies that are less concerned about whether or not disadvantaged people live in an area. Focus on people can be direct or indirect. Direct forms of place-based policies seek to increase economic activity and strengthen labour markets where disadvantaged people currently live, while indirect policies may instead seek to increase access of those people to locations where labour markets are stronger (Neumark & Simpson, 2014).
The place-based policies that have attracted the most attention are enterprise zones (Neumark
& Simpson, 2014). Signatories to the BRICS agreement are examples of countries that extensively apply place-based policies and special economic zones to promote development (Koster et al., 2016). In China’s Shenzhen, for example, economic place-based policies have been carried out primarily to promote foreign direct investment, technology transfer, and exports (Koster et al., 2016). Science parks are also popular ventures in this regard, with included firms located in close proximity to each other to stimulate cooperation and interaction.
In essence, place-based investments in science parks foster agglomeration economies and innovation (Koster et al., 2016).
The preceding discussion has explored place-based development and its efforts to bring about betterment of places through utilising their already available resources and strengths. The next section looks at regional development.