**The Urgent Need for Devolved Economic Renewal in Neglected Regions**
Across both wealthy and developing nations, regions that fall behind economically face a dangerous downward spiral when hit by adverse shocks, unless they receive timely, well-informed financial support. This core lesson, drawn from successful renewal efforts over the past 50 years, highlights a critical failure of highly centralized economic management, as seen in the UK Treasury’s approach. The problem is exacerbated by financial markets, which, contrary to the „market knows best” ideology, tend to withdraw capital from struggling areas and redirect it toward already successful regions like London. This has led to a devastating investment gap, where provincial cities are deemed as risky as junk bonds compared to the capital, breeding deep-seated neglect and despair. This sense of abandonment has manifested in significant political upheavals, such as the UK’s Brexit vote, and social unrest akin to the „deaths of despair” in neglected American communities, underscoring the severe consequences of spatial economic divergence.
**Successful Models of Renewal Through Localized Finance and Initiative**
Effective counterstrategies involve sustained public financial transfers that are decentralized and managed through local institutions. Germany’s reunification offers a powerful example: a 30-year, cross-party program of massive financial support, decentralized via local banks and public development bank KfW, boosted East German productivity from 20% to 85% of the West’s level. Similarly, Pittsburgh reinvented itself after its steel industry collapsed by leveraging America’s devolved governance, local leadership, universities, and business support. The common thread is that renewal cannot be imposed from the center; it requires local initiative where community leaders confront decline without nostalgia, envision a new future, and experiment with solutions. Other assets, like universities in England or cultural strengths in Colombia’s Atlantic-Caribbean region, can be catalysts, but they need localized financial systems that invest in scaling up local opportunities rather than channeling savings abroad.
**The Path Forward: Embracing Uncertainty and Decentralized Learning**
The recent crisis in Scunthorpe, UK—where a steel plant’s sudden closure prompted emergency nationalization—illustrates both the potential for action and the limitations of a centralized system. True renewal demands that communities embrace radical uncertainty, asking questions without known answers and fostering rapid learning through parallel experiments and trial and error. China’s economic transformation under Deng Xiaoping exemplifies this, as he decentralized governance, set ambitious regional targets, and created a „laboratory” for development through inter-regional competition and learning from neighbors. The remedy for left-behind regions is clear: devolved governance combined with large, sustained fiscal transfers that empower local institutions and communities to learn and adapt. While unrest may force governments to act, the goal should be proactive acceptance of this model to prevent further divergence and build inclusive, resilient economies.
Ez a cikk a Neural News AI (V1) verziójával készült.
Forrás: https://www.project-syndicate.org/magazine/new-economics-neglected-places-by-paul-collier.