'Top-down' policies, such as the Common Agricultural Policy, can be a more effective way of channelling resources to the most deprived areas compared with other methods, according to new research.
Interventions which rely on the direct action of local people has been found not as effective, according to research from the London School of Economics and Political Science (LSE).
The paper ‘The EU Cohesion Policy in Context: Does a bottom-up approach work in all regions?’ shows that while money spent through ‘bottom-up’ policies – such as the EU Cohesion Policy and Rural Development Policies (RDP) – does improve regional growth, it is most effective in those regions which are already performing better socially and economically.
Professor Riccardo Crescenzi, Professor of Economic Geography and co-author of the paper said: "The research challenges the conventional wisdom that bottom-up policies are intrinsically better able to promote regional development by tailoring programmes to local conditions and maximising local involvement.
"In fact, the top-down approach of the CAP is more effective in areas of highest economic distress.
"This is probably because it does not require a lot of planning capacity locally – which deprived areas are unlikely to have."
Policy coordination
The analysis also shows that the EU Cohesion Policy is most effective when employed alongside RDP and CAP funds, showing the importance of policy coordination and the integration of bottom-up and top-down policies.
Professor Crescenzi said: "As the UK considers what subsidies to fund after 2020 – when its guarantee to fully replace current funding from the EU expires – it needs to consider the ‘optimal’ mix of top-down, centrally controlled funding versus a more locally driven approach.
"Providing effective support to the poorest regions is essential if the UK Government is to avoid exacerbating existing disparities and discontent in the UK.
"The latter is writ large in Cornwall’s strong vote to Brexit despite having a lot to lose in terms of existing subsidies."
The research looked at the impact of different policies on the economic performance of very different EU regions.
It has relevant lessons for the USA, where agricultural policies still absorb large shares of public funds, as well as for emerging countries, such as China and India, where agricultural and rural development policies are often the main source of funding for regional development in poor areas.
