To what extent do institutions matter for local and regional development?

Topics: International development, Policy, Sociology Pages: 7 (1756 words) Published: April 2, 2014
The question of the role played by institutions in regional and local development has taken a growing prevalence in recent years (Tomaney,Pike,2009), which has come as a result of extended criticism of the ‘one-size fits all’ development policy, which has yielded mixed results on a global scale (Rodriguez-Pose,2013). The debate surrounding the role played by institutions is broad, with a plethora of themes and routes for exploration. Due to the confines of this paper, the premise will be asserted that institutions do matter for local and regional development, with a deeper focus on how institutions effectively impact upon the success of development policy. In addition, it will be questioned how institutions can be effective and improved. Due to the lack of empirical and quantitative analysis of the roles played by institutions, case studies will be used to exemplify the important role played by institutions in regional development. Through analysis of theoretical debate and real-world examples, this paper will assert that institutions do matter for regional development, as they shape the variegation of process and outcomes of governance (Pike,Tomaney,2009). The structure of the paper is outlined in Figure 1 (below):

1. Definitions
Due to the theoretical debate surrounding the role of institutions being at an embryonic stage (Tomaney,2013), there is a lack of consensus of an assumed definition for what constitutes an institution. North’s definition of institutions being “the rules of the game in a society” (North,1990,p.477) provides an abstract description of an institution, however it is useful in understanding how institutions shape how society functions. This limits the role of institutions to basic formal institutions (Rodriguez-Pose,2013), such as: “constitutions, laws, charters, bylaws and regulations” (Rodriguez-Pose,2013,p.1038). However, there is a further element to the discourse surrounding institutions and that is the important role of informal institutions. These constitute “norms, traditions and social conventions” (Rodriguez-Pose,2013,p.1038). In the context of regional development, any definition of institutions should include localised features of informal institutions, which are especially relevant given the importance of local knowledge and tacitness in regional development (Rodrik,2000). As such, institutions can be considered in the context of both formal and informal institutions.

2. Critiques of the role of institutions
Whilst it is asserted institutions do matter for local and regional development, it is important to give credence to conflicting arguments. Glaeser, who attributes the success of development to human capital and discredits any role played by institutions, asserts the key to successful development is to “attract smart people and get out of the way” (Glaeser,2012,p.261). This “spatially blind” (Tomaney,2013,p.2) theory neglects other myriad factors, in particular, the important role institutions play by developing strategies attuned to the norms and history of a locality (Tomaney & Pike, 2009) and the specific geographies of production and consumption (Peck,Theodore,2007).

However, policy-makers should not use institutions as a ubiquitous answer for failed development. Sachs asserts while institutions matter, they “don’t matter exclusively” (Sachs,2003,p.38). He exemplifies this by considering the detrimental impact of barriers to development in sub-Saharan Africa, recommending greater efforts being extended to fighting endemic problems such as AIDS and malaria; which are arguably a greater barrier to growth than low quality institutions (Sachs,2003). Despite this, Sachs highlights the truly global nature of the debate surrounding institutions. Regional development is subject to spatial differentials and disparities that are unique, with institutions playing an essential role in synthesising different local requirements that are geographically sensitive.

3. It’s the...

References: 1. Crafts (2005a) and BIS calculations of ONS Regional Accounts, Available at: http://www.gov.uk/government/uploads/system/uploads/attachment_data/file/32113/10-1226-understanding-local-growth.pdf, [Accessed on: 10 November 2013.]
2. Glaeser, M
5. MacNeill, S. and Steiner, M. (2010), ‘Leadership of cluster policy: lessons from the Austrian province of Styria’, Policy Studies, 31:4, pp. 441-455.
6. North, D. (1990), ‘Institutions, Institutional Change and Economic Performance’, New York: Cambridge University Press.
7. OECD (2012), ‘Promoting Growth in All Regions’, Available at: http://www.oecd.org/site/govrdpc/49995986.pdf [Accessed on 01 November 2013).
8. Peck, J. and Theodore, N. (2007), ‘Variegated capitalism’, Progress in Human Geography 31:73, pp. 735-772.
9. Pike. A, Rodriguez-Pose. A, Tomaney. M (2006), Local and Regional Development, London: Routledge.
10. Pike, A. and Tomaney, J. (2009), ‘The state and uneven development: the governance of economic development in England in the post-devolution UK’, Cambridge Journal of Regions, Economy and Society 2, pp. 13-34.
11. Rodriguez-Pose, A. (2013), ‘Do Institutions Matter for Regional Development?’, Regional Studies 47:7, pp. 1034-1047.
12. Rodrik, D. (2000), ‘Institutions for High-Quality Growth: What they are and how to acquire them’, Studies in Comparative International Development, Vol.35, No.3, pp. 3-31.
13. Sachs, J. (2003), ‘Institutions Matter, but Not for Everything’, Finance & Development, 38-41.
14. Steiner,M and Ploder,D. (2012), ‘Styria – from old industrial area to technology orientated region. A case study in strategy development and economic change management’, Graz University.
15. Tomaney, M. (2013), ‘Region and place I: Institutions’, Progress in Human Geography 1-10.
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