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Somik Lall - Place, Productivity, and Prosperity: Revisiting Spatially Targeted Policies for Regional Development

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Somik Lall Place, Productivity, and Prosperity: Revisiting Spatially Targeted Policies for Regional Development
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Place, Productivity, and Prosperity: Revisiting Spatially Targeted Policies for Regional Development: summary, description and annotation

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Place matters for productivity and prosperity. Myriad factors support a successful place, including not only the hard infrastructure such as roads, but also the softer elements such as worker skills, entrepreneurial ability, and well-functioning institutions. History suggests that prosperous places tend to persist, while left behind? regions, or those hurt by climatic, technological, or commercial shocks, struggle to catch up. This division gives rise to demands to do something? about the subsequent spatial inequality. Such pressures often result in costly spatially targeted policies whose outcomes disappoint because of a lack of analysis of the underlying barriers to growth and structural transformation and a fair appraisal of the possibility of overcoming them.The latest volume of the World Bank Productivity Project series, Place, Productivity, and Prosperity: Revisiting Spatially Targeted Policies for Regional Development makes three broad contributions. First, it provides new analytical and empirical insights into the three drivers of economic geographyagglomeration economies, migration, and distanceand the way in which they interact. Second, it argues that these forces are playing out differently in developing countries than they have in advanced countries: urbanization is not accompanied by structural transformation, leaving cities simply crowded and accruing all the negative aspects of urbanization without being productively concentrated. Long-term amelioration of poverty in lagging regions requires advancing the overall national agenda of structural change and productivity growth. Third, the volume provides a heuristic framework with which to inform policy makers assessments of place-based policy proposals, enabling them to identify the regions in which policy is likely to have an impact and those that are nonviable; to clarify the implications of various policy options; to think critically about policy design priorities, including necessary complementary policies to, for instance, infrastructure investment; and to navigate implementation challenges.

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Place, Productivity, and Prosperity

Revisiting Spatially Targeted Policies for Regional Development

Arti Grover, Somik V. Lall, and William F. Maloney

2022 International Bank for Reconstruction and Development The World Bank - photo 1

2022 International Bank for Reconstruction and Development / The World Bank

1818 H Street NW, Washington, DC 20433

Telephone: 202-473-1000; Internet: www.worldbank.org

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This work is a product of the staff of The World Bank with external contributions. The findings, interpretations, and conclusions expressed in this work do not necessarily reflect the views of The World Bank, its Board of Executive Directors, or the governments they represent. The World Bank does not guarantee the accuracy, completeness, or currency of the data included in this work and does not assume responsibility for any errors, omissions, or discrepancies in the information, or liability with respect to the use of or failure to use the information, methods, processes, or conclusions set forth. The boundaries, colors, denominations, and other information shown on any map in this work do not imply any judgment on the part of The World Bank concerning the legal status of any territory or the endorsement or acceptance of such boundaries.

Nothing herein shall constitute or be construed or considered to be a limitation upon or waiver of the privileges and immunities of The World Bank, all of which are specifically reserved.

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This work is available under the Creative Commons Attribution 3.0 IGO license (CC BY 3.0 IGO) http://creativecommons.org/licenses/by/3.0/igo. Under the Creative Commons Attribution license, you are free to copy, distribute, transmit, and adapt this work, including for commercial purposes, under the following conditions:

AttributionPlease cite the work as follows: Grover, Arti, Somik V. Lall, and William F. Maloney. 2022. Place, Productivity, and Prosperity: Revisiting Spatially Targeted Policies for Regional Development. Washington, DC: World Bank. doi:10.1596/978-1-4648-1670-3. License: Creative Commons Attribution CC BY 3.0 IGO

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All queries on rights and licenses should be addressed to World Bank Publications, The World Bank Group, 1818 H Street NW, Washington, DC 20433, USA; e-mail: .

ISBN (paper): 978-1-4648-1670-3

ISBN (electronic): 978-1-4648-1794-6

DOI: 10.1596/978-1-4648-1670-3

Cover image: Remedios Varo, Spiral Transit (1962). 2021 Remedios Varo, Artists Rights Society (ARS), New York / VEGAP, Madrid. Used with the permission of Artists Rights Society (ARS), New York / VEGAP, Madrid. Further permission required for reuse.

Cover design: Bill Pragluski, Critical Stages, LLC.

Library of Congress Control Number: 2021949870

Contents

Foreword

Preface

Acknowledgments

About the Authors

Abbreviations

Executive Summary

Place, Productivity, and Prosperity: An Introduction

Introduction

The Attraction of Place-Based Policies

Three Forces Shaping the Economic Landscape

Lagging Places, Left-Behind Peopleand Perhaps, Missed Opportunities

Notes

References

Agglomeration Economies, Productivity, and the Persistence of Place

Introduction

A Virtuous Cycle of Economic Concentration, Higher Productivity, and More Prosperity

The Developing Country Urban Productivity Puzzle

Changing Drivers of Spatial Activity: The Future Isnt What It Used to Be

Unpacking the Association of Density with Productivity

Measuring the Benefits of Spatial Concentration

Measuring the Full Costs of Agglomeration: Accounting for the Extra Expense of Working in Developing Country Cities

Conclusion

Annex 2A. Estimating Productivity, Marginal Cost, and Markups

Notes

References

The Promise of Labor Mobility

Introduction

The Evidence on Internal Migration

The Barriers to Internal Migration

Conclusion

Notes

References

Globalization and Digital Development: Bridging Distances within Countries

Introduction

Globalization and Regional Growth within Countries

How Trade Costs, Infrastructure, and Institutions Affect Growth within Countries

The Role of Digital Connectivity in Narrowing Disparities between Regions

Conclusion

Notes

References

Lagging Places: Missed Opportunities, Left-Behind People

Introduction

Two Tales of Cities: Not Every Place Has Potential for Growth

Why Is a Region Not Thriving Already?

Three Arguments Often Used to Support Place-Based Policies for Nonviable Regions

Complementarities, Silver Bullets, and Big Pushes

Conclusion

Notes

References

A Framework for Appraising Place-Based Policies

Introduction

Principles for Appraising Place-Based Policies

Dealing with Challenges in Fully Appraising Policies: Using the Framework as a Heuristic Tool

Lessons from World Bank Evaluations of Projects to Enhance Agglomeration

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