hankyoreh

Regional and spatial inequalities are one of the great challenges across the Organisation for Economic Cooperation and Development (OECD) – most rich countries have poor regions. Think about the beautiful but deprived south of Italy and the prosperous industrial north near the Alps, or the rich urban centers along the coastlines in the US and the rural south and west of the country. Inequality has important socio-economic dimensions – economic deprivation and the lack of opportunity for those in disadvantaged regions, among others.

But there are also political implications that are no less important, as social discontent can build up and express itself at the margins of the political spectrum. We have observed dangerous political polarization with the rise of populism in many countries. Trumpism in the US might be an extreme example of these developments, but one cannot ignore similar trends in many parts of Europe.

Britain presents one of the greatest regional inequalities in the OECD – with economic activity concentrated in London and the southeast of the country. Much of the birthplace of the industrial revolution has never really recovered from the de-industrialization forced through by the conservative Thatcher government of the 1980s that left large parts of the country economically behind with profound social consequences. Men in Glasgow for instance – a proud city with an impressive industrial heritage – have a life expectancy that is more than a decade shorter than in affluent Westminster at the heart of London, reflecting considerable differences in income and wealth. Growing regional imbalances also have the potential to exacerbate existing social inequalities in prosperous economic centers. Certainly, London, like its Korean counterpart, offers great opportunities, but rising costs of living (especially real estate) put a great burden on a rising number of inhabitants.

These challenges have not escaped the government's notice. Undoubtedly, the Brexit vote – the country’s referendum decision to leave the European Union (EU) – was, to a considerable extent, driven by the discontent of those in the midlands and the north who felt left behind and ignored by political elites in London. Apparently, previous attempts to tackle regional inequality made little difference, even though the issue gained greater prominence after the financial crisis of 2009 when policy makers across the political spectrum reiterated their ambition to “level up,” recognizing that the British economy relied far too much on London and its financial sector.

The then newly elected conservative government of David Cameron announced its plan to “rebalance the economy”; and as part of this strategy, the government wanted to build a so-called “Northern Powerhouse” to boost economic activity and prosperity outside London and the South East. Whilst the Northern Powerhouse was meant to include the northern “core” cities of Manchester, Liverpool, Leeds, Sheffield, Hull and Newcastle, the most attention went to the relatively prosperous Manchester. To “level-up” northern England, connectivity became a key issue, and especially better transport links between London and the north by proposing a new high-speed railway.

At the same time, however, the government failed to commit the financial resources to improve connectivity between northern cities as demanded by their local leaders. Also, the government has not developed a clear industrial strategy for driving regional development in these cities and beyond. Instead, most recently, Prime Minister Boris Johnson proposed establishing a new government hub in the great northern cathedral city of York.

Symbols are important in politics, as they can provide important political momentum – but these alone are not enough. Fast trains and relocating civil servants are certainly insufficient for reducing profound and longstanding regional imbalances. For this, integrated strategies are imperative, including forward-looking industrial policies. Not only what are the industries of the future, but also how can the government encourage the development of these future industries in disadvantaged regions to create good jobs for those who have fallen behind? Transport is without question important, but what is the role of skills and university/industry collaboration, for instance? Also, Britain, like Korea, is highly centralized with most political power concentrated in the corridors of Whitehall, the central government in London. But are strongly centralized political structures still suitable for decision-making in increasingly complex economic and social ecosystems?

Look at Germany, for instance, which has, admittedly, its own regional problems (especially the persistent struggle of East Germany to catch up with the West three decades after unification) but it presents a much more polycentric economic structure, rather than the capital-city focused economies of Britain and Korea. Germany’s more balanced economic structure rests on more decentralized political structures that do not only ascribe considerable political authority to regional and local governments but also promote greater involvement of non-government stakeholders in regional development. Rather than top-down government, we find complex governance systems that facilitate deliberation and experimentation in the quest for innovation in industrial and education policy, for instance. This suggests that inclusive growth strategies that take regional inequality seriously not only require different policies but also different political structures that allow more inclusive policy making that gives voice to different groups.

The political centers might struggle with giving up authority, but increasingly complex societies rely on governance, rather than just government, to address the burning issues of our time. This is not to argue that centralized political systems should turn into federal ones like Germany – this sort of transfer of political institutions would be rather ahistorical and would be likely to fail. But countries like Britain and Korea should explore as to how they can promote greater participation and deliberation in decision-making to improve the problem-solving capacity of their political systems. London and Seoul do not necessarily know best what is needed to promote economic development of their less prosperous regions to overcome the capital-city focus of their countries.

Timo Fleckenstein

By Timo Fleckenstein, associate professor of social policy at the London School of Economics and Political Science

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