EFFICIENCY VERSUS EQUALITY IN REGIONAL DEVELOPMENT POLICY: THE CASE OF ROMANIA

Abstract

Researchers in the field of regional economy but also geographers have long been concerned about the problems caused by uneven regional development and how it can be reduced by appropriate regional policies. Recently, however, the traditional argument of regional policy to reduce the spatial concentration of economic activity in certain regions, in order to achieve economic efficiency and social justice at national level was questioned. The controversy is the fact that regional imbalance, i.e. spatial agglomeration or concentration of economic activity and workers in certanin regions, can be effective for the entire nation’s economic performance, generating growth. It follows that policies which seek to reduce regional economic disparities can be ineffective nationwide. This causes a compromise (“trade-off”) of political intervention, between maximizing national growth and minimizing regional inequalities. This idea has attracted the attention and interest of researchers and practitioners, and the success in empirical testing does go beyond the stage of idea, theory came to be known as the “trade-off” of regional policy. The theory holds that regional imbalance expresssed by concentrating economic activity and workers in certain particular regions, may be beneficial for national economic performance, generating growth. The paper aims to examine the new “trade-off” theory in Romania, investigating to what extent clusters supported by the industrial policy of the past two decades have led to national economic growth, but at the same time, increased regional inequalities. The authors aim to analyze the spatial concentration of economic activity in Romania and the competitiveness of the eight Romanian development regions (NUTS 2) in terms of clusters’ performance and correlate the results with national growth and inequality. The period chosen for the study (8 years, between 2006 and 2013) is significant for the proposed analisys, because it overlaps the development in Romania of industrial competitive clusters supporting policy. The analysis uses data from the Eurostat database, Romanian Cluster Association, Regional Competitiveness Index 2013 and maping clustering studies in Romania. Research limitations are related to the availability of statistical data on the performance of Romanian clusters.