Territorial competition: Some lessons for policy

Abstract.

This paper analyses the policy implications of territorial competition; that is the promotion of local economic development in competition with other territories. It does so both in analytical and empirical terms moving from a wider supranational and analytical standpoint to a more practical and local one. The impact of territorial competition in welfare terms depends critically on the perspective adopted. Some policies are pure waste even from the point of view of the initiating territory. Other policies may have a positive impact in economic welfare terms, viewed from the perspective of the territory, but be zero sum from a wider perspective. There may also be policies, however, which increase economic welfare, both locally and from a wider perspective. This suggests that there is a case for providing a supranational regulatory framework. The empirical section first examines the evidence as to whether local policies for economic growth do, in fact, have any impact. The paper concludes with an examination of the actual policies pursued in a sample of European regions and draws out some conclusions for local policy makers.