Future Challenges and Institutional Preconditions for Regional Development Policy

Abstract

An important transmutation has taken place in the global economy. For perhaps the first time ever, firms in less developed countries can now access the better part of the world’s markets on increasingly equal terms and acquire some of the most advanced technologies available while simultaneously benefiting from knowledge of others’ successful organizational designs and marketing strategies. Many basic features of inequality are certainly still at work (Bairoch and Kozul-Wright 1996; Bienefeld 1994), but any crude center-periphery model of global economic development is, nevertheless, getting less valid as some of the former third world countries push ahead, and as it is becoming increasingly obvious that endogenous factors (including corruption, unproductive investments, conspicuous consumption, and ethnic tension) are at least as important for curtailing economic growth as any post-imperialistic dominance exercised from actors in the first world. The genuine new opportunities for domestic or foreign firms in some (but clearly not all) of the low-cost countries of the world has sometimes occasioned amazingly high rates of growth in these areas and a subsequent rise in wage levels and the general standard of living. The current discrepancies are, however, of a magnitude that makes any imminent leveling of labor cost across countries highly unlikely. Global differences in costs will be here to stay for a considerable time.KeywordsSocial CapitalForeign Direct InvestmentFuture ChallengeRegional Development PolicyAmerican Journal ofSociologyThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.