Industrial policy for rural areas can be harmful to economic development

The debate ''industrial policy for rural areas versus disconnection of rural areas'' misses the right alternative. Policy should not focus on spatial equalisation of economic production, it should instead focus on the (spatial) equalisation of living standards. As outlined in the World Development Report (WDR) 2009: Reshaping Economic Geography, one-size fits all solutions for development do not exist. Different stages of development require different policies. Therefore, industrial policy schould be reinterpreted in such a sense that it allows spatial concentration of economic activities, builds infrastructure to connect rural areas to the economic centres and only targets specific problems rather than trying to direct the whole development process.

Dr Sebastian Vollmer

Harvard University, Cambridge,
MA, USA and Leibniz Universität Hannover, Germany

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