Soviet Regional Policy and the East-West Debate

Abstract

It is commonplace that every production decision is simultaneously a location decision, that every choice about what to produce also entails a choice about where to produce it. However, in the Western world, it has only been in the postwar period (and, more specifically since the 1960s) that interest in regional planning problems and policies has grown, alongside a belated recognition that national and regional growth are inseparably linked and mutually interdependent. There are a variety of reasons for both the tardiness in recognition and the relatively large amount of attention recently paid to the field of study. With reference to the former: first, neo-classical economics ignored the spatial dimension until well into the twentieth century; second, the basic postulates of that discipline, suggesting a tendency towards equal returns to factors of production, implied that the essence of the problem (abolition of ‘regional inequalities ’, however defined) would solve itself, so-to-speak, over time; third, the immediate postwar emphasis on economic growth (and growth models based on the reigning Keynesian paradigm) swamped any consideration of either the spatial or non-spatial aspects of the distributional side of the equation and suggested to both the war-shattered economies of Europe and Japan and the newly emerging economies of Asia, Africa and Latin America that if they got their savings, investment and capital-output ratios right, the rest would follow more or less automatically.