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Regional Governance, Institutions and Development
Michael Danson and Geoff Whittam
(University of Paisley-Scotland)


1. INTRODUCTION

1.1 Context

Many areas of the industrialized world, and especially in Europe, are currently experiencing two parallel developments: the increasing political importance of the regional level and the proliferation of regionally-based initiatives in economic promotion. Both have important consequences for the distribution of the institutionalized capacity to make and influence decisions regarding the long-term future and development of a particular locality. in short these developments will affect the patterns of regional governance.

These developments can be placed in the context of the wider interests in regional governance and institutions which came to the fore in the 1980s in both the literature of economics and geography, when attention began to be given to such factors as institutional capacity, thickness, the invisible factors in regional development, networking and industrial districts .. This set of learning materials represents a timely and critical reflection on the prominent role of governance, institutions, institution-building and institutional change in regional development at the start of the new millennium. Although institutions, networks and partnerships rather than policies often seem to be the answer to regional problems, they have also been stimulated by the general acknowledgment across the social and regional sciences of the importance of governance ..

Two issues are central to this set of learning materials:

  • The question of governance - how does the ongoing process of institution-building affect the ways in which the regions and localities are governed? This question encompasses questions of democracy, participation, regional self-determination, public-private partnerships and accountability
  • The consequences of new modes of governance and institutional change for regional development strategies and policies, particularly in the context of large-scale industrial restructuring and city-region and urban regeneration

1.2 Developing Regional Governance and Institutional Capacity

In addressing the emerging issues of regional governance and institutional capacity this section draws upon material in a number of disciplines and links critically to a number of the other themes in the overall set. It is based on current research as well as the existing literature and a number of networks concerned with the analysis of institutions, governance and regional development.

The new institutional environment is characterized by agencies dedicated to the promotion of the regional development of their areas. A recent book (Halkier, Danson and Damborg 1998) found that institutions such as regional development agencies (RDAs) are beginning to evolve into organizations which do not aim to deliver economic development services directly as much as they try to coordinate the delivery. By acting as catalysts, these agencies have moved beyond simple bodies engaged in development themselves by working in partnership with other players in the regional economy.

Much analysis has been done of these agencies and that of federal, national and regional partnerships within different environments in Europe and the United States. These analyses have focused on their policies, programs and performances, utilizing traditional economic evaluation techniques. But these analyses reflect the traditional form of RDAs. The evolution of RDAs into new forms of development institutions suggests that new theoretical approaches and assessments are needed to analyze them. These institutions are significant in the delivery of regional economic strategies across the developed world, with RDAs having been established in most developed countries and regions. But there is a clear need to consider their position within the overall structures of regional governance.

The trend towards decentralization, albeit uneven across continents, is often primarily analyzed from the perspective of an increase in democracy, often with the national level being seen as an inherently centralizing force only reluctantly giving way to the rising tide of regionalism, with its demands for enhanced levels of self-determination. While this is an important part of the story, there is also another side to the trend toward decentralization, that of the federal or central government relieving itself of responsibility for policy areas that have become a liability. This can arise either because the federal or central government lacks the resources to manage them effectively, because the economic burden can be off-loaded by passing them onto lower tiers of government, or because the political burden of being responsible for unsuccessful policies is deemed to be high.

1.3 Structure of this Set of Learning Materials

This set of materials discusses questions related to the relationship between governance, institutional change and regional development under a number of main headings:

  • SECTION 2 : This section considers the theoretical bases for the study of regional governance, institutions and regional development. It follows with an exploration of the origins of much of this study in the work of Alfred Marshall in the late nineteenth and early twentieth centuries. Focusing on Marshall's analysis of industrial districts, the section argue that certain aspects of Marshall have been ignored in standard texts. In particular the section contends that Marshall can be seen in a different light than as the neo-classical "father of economics"
  • SECTION 3 : This section extends the theoretical bases to look at some of the approaches to analyzing regional governance and development. It discusses the application of economic and organizational theories to the study of different forms of strategy, introduces the concept of the RDA, and discusses the links between partnerships and networks
  • SECTION 4 : The strategic approach to dealing with the regional economic problem has increasingly become dependent on the RDA. This section explores the nature and rationale for such an institutional form of intervention in the market economy at the level of the region. How such agencies perform under different forms of regional governance is examined against a set of guiding principles
  • SECTION 5 : We explore the relationship between individual economic actors, development bodies and their environment on a micro-level . The section considers both the concepts underpinning industrial districts and the mechanics of networking among private and public economic players. Building strong relationships with private sector firms and organizations has been seen as a priority for public and semi-public development agencies; this section reviews the experience that North America and the European regions have had in building such relationships
  • SECTION 6 : On a meso-level we examine the role of government bodies and various forms of development agencies (both within government structures and beyond) in the political make-up of their regions. The increasing reliance on individual agencies or networks of development bodies raises important questions about the relationship between functional efficiency and democratic legitimacy
  • SECTION 7 : On a macro-level the relationship between regionally-based initiatives, federal levels of governance and the emerging European system of governance in western Europe is discussed under the heading of "Regional Development and Multilevel Governance". The last few decades have seen a decreasing role for the traditional regional subsidy programs of central government and an explosion of bottom-up development bodies and initiatives. Through federal or European Union Structural Funds these two levels have been linked together in an intricate pattern involving nations on different continents, such as the United States and Europe. In the search for knowledge about new developments on the regional and continent levels, the transformed role of central government has been overlooked
  • SECTION 8 : The final two parts of the section use case study materials to examine the arguments around governance and institutional structures in the encouragement of economic growth and development


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