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The relative efficiency of automatic and discretionary regional aid

Swales, J. Kim (2010) The relative efficiency of automatic and discretionary regional aid. Environment and Planning A, 42 (2). pp. 434-451. ISSN 0308-518X

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Abstract

For the last two decades, the primary instruments for UK regional policy have been discretionary subsidies. Such aid is targeted at "additional" projects - projects that would not have been implemented without the subsidy - and the subsidy should be the minimum necessary for the project to proceed. Discretionary subsidies are thought to be more efficient than automatic subsidies, where many of the aided projects are non-additional and all projects receive the same subsidy rate. The present paper builds on Swales (1995) and Wren (2007a) to compare three subsidy schemes: an automatic scheme and two types of discretionary scheme, one with accurate appraisal and the other with appraisal error. These schemes are assessed on their expected welfare impacts. The particular focus is the reduction in welfare gain imposed by the interaction of appraisal error and the requirements for accountability. This is substantial and difficult to detect with conventional evaluation techniques.

Item type: Article
ID code: 8085
Notes: Strathclyde Discussion Papers in Economics
Keywords: regional aid, economics, regional policy, discretionary subsidies, Economic Theory, Political institutions (Europe), Environmental Science (miscellaneous), Geography, Planning and Development
Subjects: Social Sciences > Economic Theory
Political Science > Political institutions (Europe)
Department: Strathclyde Business School > Economics
Depositing user: Strathprints Administrator
Date Deposited: 27 May 2009 15:21
Last modified: 26 Mar 2015 16:09
URI: http://strathprints.strath.ac.uk/id/eprint/8085

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