Regional policy and inward investment
Broadly speaking there are two ways of addressing spatial differences in economic prosperity. Local economic development emphasizes a bottom-up approach and support for development from within by strengthening local institutions and business support services. Regional economic development is more of a top down approach that relies on central government discrimination in favour of some localities through its control of incentives, the location of major new investment projects and other resources for business growth. A general shift has occurred in Europe and elsewhere in favour of local economic development and away from regional policy of the form that discriminates between localities for the purpose of promoting growth in those areas that are most in need of additional employment. The philosophy underlying local economic development is that the gap between more and less prosperous areas will narrow if the right conditions for economic development prevail in all places and simultaneously this will uplift national economic performance. Regional policy has tended to be informed by the perception that spatially concentrated economic shocks can trigger a spiral of cumulative decline. Rather than relying on competitive processes to revive a region in decline, a real redistribution of resources is needed including an infl ux of inward investment, some of which may need to be diverted from its fi rst choice location.