What Steps Can a Nation Take to Achieve Economic Growth

What Steps Can a Nation Take to Achieve Economic Growth.

Territorial development in LAC

View from San Bernardo Colina in Salta, Argentina. IStock

What happens when people and economic activity are full-bodied in just a few cities inside a state? From an economic perspective, we know this concentration tin be positive overall – living conditions tin can improve, poverty rates can decline, companies can acquire from each other, and connections can be built between employees and firms.

But what happens to those people who get stuck in poor regions where there are no opportunities? It becomes more difficult for them to access jobs and have a skilful quality of life. Discontent then often ferments, and civil unrest erupts.

To ensure that opportunities reach all corners of a country and all citizens inside its borders, a Territorial Development approach is necessary when designing public policy
. This means applying differentiated policies, to differentiated needs – highlighting the importance of programs that take into account the interdependence betwixt different sectors (for example matching investments in road paving with the location of schools) and the relationships betwixt the different authorities levels.

To employ this territorial approach, the first step is to assess the evolution landscape along three fundamental dimensions:

  • Scale, because people and firms often concentrate in but a few places, proving that proximity is valuable.
  • Specialization, because when places are ameliorate connected, they can either specialize in what they produce all-time, or diversify and innovate, both of which let the benefits of concentration to be spatially spread out.
  • Convergence, because spatial concentration of people and firms can exist harnessed to improve living weather condition everywhere, enabling the convergence of living standards beyond the territory.

Analyzing these three dimensions in a state can so help policy makers identify and prioritize policies that support economic growth while improving living standards in all territories. The challenge for policy makers is to reconcile these 2 objectives.

Merely how tin they exercise this? Our written report “Territorial Development in Argentina” (Volume ane – Diagnosing Key Bottlenecks as the First Step Toward Constructive Policy and Volume 2 – Using Differentiated Policies to Reduce Disparities and Spur Economic Growth) addresses this question.

Information technology diagnoses Argentina’s functioning in those three dimensions using a wide range of indicators; identifies the principal bottlenecks to reconciling the objectives of supporting economical growth while improving living standards; and extracts main lessons from instruments used in more than than 20 countries to reduce territorial inequalities.

These instruments include the introduction of institutional frameworks in Australia and the European Marriage that empower subnational governments to choose the policy instruments that improve aligned with their needs; fiscal operation-based instruments to amend service delivery and strengthen local chapters in the United Kingdom; or funding mechanisms with clear objectives to promote investments in basic infrastructure in Peru or to reach convergence and growth in the European union.

While the inventory of instruments is by no means exhaustive, information technology highlights the about commonly used tools to promote territorial development and it assesses their strengths and weaknesses to extract main lessons that can inform policy decisions. Once the main bottlenecks to promote economic growth and convergence of living standards are identified, we can and then blueprint the appropriate instrument to utilize in the right context.

Our report of these international cases points to the importance of three pillars to enable territorial development: efficient and effective institutions, potent capacities, and alignment of financing to meet responsibilities
. A comprehensive Territorial Evolution Program tin can bring these together past helping to build improve institutions; and providing the framework for subnational governments to take the lead in designing and implementing solutions in their territories, while coordinating investments from different sectors – ultimately enabling the benefits of development to reach anybody, everywhere.

What Steps Can a Nation Take to Achieve Economic Growth

Source: https://blogs.worldbank.org/latinamerica/how-can-countries-support-economic-growth-and-improve-living-standards-across-all