Regional policy
Topic: Secondary Activities: Manufacturing and Industrial Location · NCERT: Class 12, Ch 5 "Secondary Activities"
Meaning
Regional policy is when the government sets up industries in chosen areas, or pushes firms to go there. The aim is "balanced" development, so that poorer or backward regions also grow. Governments use tax breaks, subsidies, special zones and new infrastructure. Because of this, an industry may locate somewhere that is not the cheapest place in pure cost terms.
Example
India gave incentives to industries in backward areas. It used freight equalisation (1952-1993) to keep the price of key inputs such as steel the same everywhere, set up Special Economic Zones (SEZ Act 2005) and is building industrial corridors. The European Union uses cohesion funds for the same purpose.
Don't confuse with
- Agglomeration economies: firms choose to cluster because it saves money. Regional policy is the state steering firms, sometimes against cost logic.
Related concepts
- Industrial location
- Access to market
- Weight-losing raw material
- Access to sources of energy
- Agglomeration economies