This introduction to the OECD Regional Outlook Policy Forum presents a brief overview of the long-running debate over the “New Economic Geography” and its relevance for policy, before reflecting on the significance of this debate for the wider development agenda that is central to this Outlook. The introduction then examines some recent changes in US policy in the context of this discussion. This is followed by brief introductions of the contributions to the debate that follows.

This chapter begins with an essentially sceptical critique of the case for “placebased” policies, presenting “a rule of thumb for calibrating regional development policies” that specifies those circumstances in which a place-based approach might make sense. It then compares the Irish, Iberian and Italian approaches to regional policy over the last few decades, concluding that there is a strong association between growth and agglomeration and arguing that regional policies should facilitate agglomeration, migration and specialisation rather than resisting them. The chapter then looks at the implications of this view for public policy in the current tight fiscal environment, with particular emphasis on social policy and connectivity.

This chapter argues the case for a new balance between policies that target places and those that target specific groups of people, without regard for where they are. While accepting the case for policy interventions to address some spatial inequities, it calls for a much more rigorous understanding of their causes. It suggests that in most cases policies are best applied in a way that reaches those in need regardless of where they live and that attempts to reduce spatial inequities can be highly distortionary, especially when addressing intra- rather than inter-regional disparities.

This chapter focuses on the effects of agglomeration, distinguishing certain nonmarket effects – particularly the tendency of many governments to bias public investment spending in favour of primary or capital cities – from market effects (productivity gains, transportation costs, etc.). The chapter emphasises that agglomeration is not only an economic phenomenon but a political and social one and that its determinants are similarly complex. For policy makers, it is important to distinguish between the non-market effects and market effects of agglomeration. Regional policy responses to agglomeration processes will differ between developing and developed countries, and these responses need to reflect the full range of market and non-market causes of agglomeration.

This chapter argues that “spatially blind” policies are rarely spatially neutral, because they typically end up as capital-city promotion policies. Ostensibly, this reflects the economics of agglomeration, but to a great extent it is a product of the national rent-capturing influence of capital-city elites in all areas of public life. Since the evidence suggests that many core urban centres will grow without the need for significant policy interventions, the chapter raises the question as to whether development objectives should be shifted from promoting efficiency in the core to enhancing the potential for growth and development in every territory. The chapter argues that place-based approaches offer a greater possibility of harnessing untapped potential in all regions in a co-ordinated and systematic way.

This chapter concludes the OECD Regional Outlook Policy Forum with an examination of the intersections and divergences between alternative approaches to regional development, paying particular attention to their underlying assumptions about markets and other institutions. The chapter then relates this analysis to the emergence of the OECD’s “New Regional Paradigm”, as well as to recent developments in regional policy in the European Union, the United States and elsewhere.