REGIONAL INCENTIVES AND THE QUALITY OF MOBILE INVESTMENT IN THE LESS FAVORED REGIONS OF THE EC

The renewal of interest in the development potential of inward investment within the less favoured regions (LFRs) has been the outcome of disenchantment with strategies based on small firm entrepreneurship. However, it is also the product of changing analysis of the positive contribution to regional development from new organisational tendencies in large firms, notably the decentralisation of decision-making and production. This study, based on research commissioned by the Regional Policy Directorate of the European Commission, critically evaluates the latter proposition, and explores the regional policy requirements for attracting and rooting high quality investment in the less favoured regions of the European Community. It reviews new theorisations of large firm behaviour, to draw out the locational and policy requirements of so-called quality investment in the context of LFRs. It goes on to examine whether the 1980s have witnessed a change in the nature and quality of mobile investment in LFRs, through a study of major projects in selected EC regions. The study concludes that the recent experience of LFRs challenges the text-book analysis of the emerging decentralised corporation. To the extent that evidence of upgrading was discovered, this tended to reflect innovative policy efforts at the regional level, rather than changing corporate practices. It ends with an outline of the EC regional policy reforms and local institutional improvements needed to secure locally embedded projects in Europe's LFRs.