European Regional Policies in Light of Recent Location Theories

Despite large regional policy expenditures, regional inequalities in Europe have not narrowed substantially over the last two decades, and by some measures have even widened. Income differences across states have fallen, but inequalities between regions within each state have risen. European states have developed increasingly different production structures and European regions have also become increasingly polarised in terms of their unemployment rates. This Paper describes these trends, and discusses how recent location theories can help us to explain them and reconsider the role of regional policies, and especially of transport infrastructure improvements, in such an environment.