Background
An Assisted Area refers to a designated region within the United Kingdom (UK) that qualifies for special government assistance aimed at encouraging investment and addressing prolonged unemployment issues. These areas are identified under the state aid rules of the European Commission.
Historical Context
The concept of Assisted Areas in the UK dates back to the 1930s when various schemes were introduced to tackle regional disparities in unemployment rates. Despite decades of targeted interventions, regional inequalities in terms of unemployment rates and economic development remain persistent.
Definitions and Concepts
Assisted Areas qualify for specialized support from both the national government and the European Union (EU) to stimulate economic activity and reduce unemployment. These areas are sub-divided into Development Areas, which receive more extensive help, and Intermediate Areas, which receive moderate assistance. Grants from the European Regional Development Fund further support these regions.
Major Analytical Frameworks
Different economic schools of thought may view the rationale and effectiveness of Assisted Areas through varied lenses:
Classical Economics
Classical economists might view Assisted Areas with skepticism, positing that market forces should naturally correct regional disparities without government intervention.
Neoclassical Economics
Neoclassical economists might support limited government intervention in cases where market failures have resulted in persistent regional unemployment, advocating for minimal distortions to market mechanisms.
Keynesian Economics
Keynesians would typically endorse Assisted Areas, arguing that targeted fiscal stimulus can rejuvenate underperforming regions by boosting demand and reducing high unemployment levels.
Marxian Economics
Marxian economists might argue that the existence and persistence of Assisted Areas exemplify structural inequalities inherent in capitalist systems, requiring extensive and systemic intervention.
Institutional Economics
From an institutional perspective, Assisted Areas could be considered necessary to correct historical and social institutional imbalances that contribute to regional economic inequalities.
Behavioral Economics
Behavioral economists might examine the effectiveness of Assisted Areas by assessing how incentives influence the behavior of firms and workers, particularly in terms of their decisions to invest or seek employment in disadvantaged regions.
Post-Keynesian Economics
Post-Keynesian economists could support the idea of Assisted Areas, believing that continuous and comprehensive government intervention is required to address entrenched regional disparities and stimulate long-term economic development.
Austrian Economics
Austrian economists may criticize Assisted Areas for distorting the natural equilibrium of the market, arguing that better outcomes could be achieved through minimal government intervention and more emphasis on entrepreneurial discovery processes.
Development Economics
Development economists would likely argue for a tailored approach to Assisted Areas, emphasizing education, infrastructure, and institutional reforms to foster sustainable regional development.
Monetarism
Monetarists could be cautious about the expansive fiscal measures typically associated with Assisted Areas. They might prefer to see tight monetary policy combined with targeted, time-bound assistance.
Comparative Analysis
Assisted Areas are not unique to the UK and can be compared to similar initiatives internationally. For instance, Opportunity Zones in the United States offer tax incentives to stimulate investment in economically distressed areas.
Case Studies
A detailed examination of specific Assisted Areas, such as regions within Scotland or Wales, could provide insights into the efficacy and long-term impacts of these policies.
Suggested Books for Further Studies
- “Regional Economics and Policy” by Harvey Armstrong and Jim Taylor
- “Unemployment in Britain” byChristopher Worswick and Anne Worswick
- “Handbook of Regional and Urban Economics” by Peter Nijkamp and Edwin S. Mills
Related Terms with Definitions
- Regional Development: The policies and practices aimed at improving the economic well-being and quality of life in specific regions.
- State Aid: Public support granted by a government to certain companies, activities, or regions, under the oversight of regulatory bodies like the European Commission.
- European Regional Development Fund (ERDF): A fund deployed by the EU to strengthen economic and social cohesion by correcting imbalances between regions.
