43rd Congress of the European Regional Science Association: "Peripheries, Centres, and Spatial Development in the New Europe", 27th - 30th August 2003, Jyväskylä, Finland
Regional policies have long been implemented in most industrialized countries with the purpose of achieving a better balance of the spatial distribution of economic activity. What regional policy has to be implemented to make up for a regional productivity handicap - The a-spatial cost of capital expression is derived from the well-known neoclassical theory of investment. It can be extended in order to account for regional differences in productivity. By differentiating the "spatialized" cost of capital, it is possible to determine how important the economic policy must be for balancing productivity differences. The paper will introduce the method and give prominence to some of the main results.