Investment zones - good, bad or neutral?

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IvanV
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Re: Investment zones - good, bad or neutral?

Post by IvanV » Wed Oct 05, 2022 3:07 pm

Bird on a Fire wrote:
Tue Oct 04, 2022 10:29 am
These are just re-branded freeports, aren't they?

They'll be used for warehouses, commercial property, maybe sprawling housing developments.
You are probably right in the specific case we have in front of us.

But if we look at the general question, then you can make an investment zone something different from a freeport. I think that in general the idea of regional policies, to encourage the development of economically backward or depressed regions, is something that makes sense. There is considerable recognition in the literature that when you have some or all of a single market, a single currency, freedom of movement of labour, across a zone, then that can result in regional inequalities building up to a greater extent than would happen when those regions were separate countries with separate currencies, separate policies, and barriers to labour mobility, etc. That is why the EU had regional development funds, to try to ameliorate that effect.

So "investment zones" can be devised as a tool of regional policy. But only if you design them that way. The main problem with development aids to a particular zone is displacement. When you devise it as a tool of regional policy, you don't mind a bit of interregional displacement, it is kind of the point. What you really don't want is localised displacement. Or something that produces no additionality at all.

Our present rulers don't seem to be trying very hard to hide their pork barrel operations. So inevitably one suspects that any idea they have in mind will be implemented as a pork barrel rather than anything useful.

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dyqik
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Re: Investment zones - good, bad or neutral?

Post by dyqik » Wed Oct 05, 2022 6:29 pm

IvanV wrote:
Wed Oct 05, 2022 3:07 pm
Our present rulers don't seem to be trying very hard to hide their pork barrel operations. So inevitably one suspects that any idea they have in mind will be implemented as a pork barrel rather than anything useful.
I think you've got that backwards for the current government. They've got a lot of ideas for pork barrels, which they have to dress up as something useful for the voters writ large, rather than just their donors.

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Re: Investment zones - good, bad or neutral?

Post by IvanV » Thu Oct 06, 2022 9:15 am

dyqik wrote:
Wed Oct 05, 2022 6:29 pm
IvanV wrote:
Wed Oct 05, 2022 3:07 pm
Our present rulers don't seem to be trying very hard to hide their pork barrel operations. So inevitably one suspects that any idea they have in mind will be implemented as a pork barrel rather than anything useful.
I think you've got that backwards for the current government. They've got a lot of ideas for pork barrels, which they have to dress up as something useful for the voters writ large, rather than just their donors.
We are thinking more or less the same thing. My intended implication, that distracted you, is that I think they are doing the dressing up very thinly at the moment.

In contrast, when Mrs Thatcher introduced a business investment incentive scheme (I forget its name), that had a tendency to encourage stockholding businesses like wine merchants and fine art galleries, rather than investment in productive assets and R&D, that came over as cock-up rather than conspiracy. We generally thought it a mistake of poor design, rather than a deliberate feature to support Tory friends in the luxury goods trade. That thought was supported by the observation that the scheme did get closed down fairly quickly, and a lot of the wine merchants, etc, went bankrupt when the Lawson boom turned to bust.

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