Abstract
Regional scientists commonly concern themselves with topics involving regional inequalities—why they occur and persist, how inequality may be reduced or what exacerbates it, and the impact of policy interventions. Regional nequalities fuel our research and its policy relevance. For most of us, these investigations are in the context of exogenously defined “regions,” with political and administrative boundaries originating in a decentralized government context. The regions that are our units of analysis seldom reflect economic realities, yet their boundaries, once drawn, are very persistent and to a large extent determine the degree to which inequalities may be reduced over time, either through private decisions or through government policy. This paper offers a descriptive illustration of fundamental differences among Canada’s provinces as a potential constraint on the possibility of convergence over time, interregional migration responses, and the impacts of an explicit national government equalization.
Highlights
My address about regional inequality and decentralized governance is illustrated with some stylized facts from Canada and its provinces
The question I pose is the following: starting with highly diverse provinces, has the combination of private decisions in response to economic signals and government policy led to convergence among the provinces over time? I do not conduct an analysis that would establish a cause-effect relationship, but rather present some descriptive statistics to examine whether the observed patterns are consistent with theoretical expectations, and raise some questions regarding potential unintended effects
In this paper we focus on the ten provinces because the arrangements between the central government and the territories is fundamentally different
Summary
My address about regional inequality and decentralized governance is illustrated with some stylized facts from Canada and its provinces. The political/administrative boundaries and jurisdictions of subnational units in a federation both define the opportunities for, and the constraints on, reducing regional inequalities—a common national policy objective. The provinces that make up Canada today were defined and assembled over a period of more than 80 years The reasons for their origins and subsequent development were largely political and administrative, sometimes with boundaries drawn quite arbitrarily. The demarcation of provinces was not based on notions of cohesive local economies or functional economic areas Perhaps not surprisingly, this resulted in a high degree of regional inequality in many respects. Within a decentralized governance framework, some degree of horizontal equity across subnational units is generally a federal policy objective. The question I pose is the following: starting with highly diverse provinces, has the combination of private decisions in response to economic signals and government policy led to convergence among the provinces over time? I do not conduct an analysis that would establish a cause-effect relationship, but rather present some descriptive statistics to examine whether the observed patterns are consistent with theoretical expectations, and raise some questions regarding potential unintended effects
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