Theoretical Arguments versus Empirical Evidence in Strategic Planning

Abstract

The question this paper raises is whether implicit theoretical premises of seminal strategic planning documents are confirmed by empirical data. It is necessary to answer this question in order to assess the validity of proposed regional policy measures; in this respect, these measures may vary significantly depending on their academic basis. It is shown that, despite the latest achievements in regional science, current regional policy remains trapped in the theoretical frameworks of the twentieth century. That being said, there are obvious problems with empirical confirmation of agglomeration economies. The difficulties in interpreting observable data relate to the use of macroeconomic indicators for testing initially microeconomic models. One is compelled to use this practice for methodological reasons and due to a lack of data. We verify empirically the assertions that the territorial concentration of economic activity in cities and towns creates absolute advantages in terms of production efficiency, ensuring national economic growth and reducing regional disparities. According to our estimates, higher labor productivity is not inherent only to large cities; there is no sufficient evidence in favor of concentrating economic growth in agglomerations; rising interregional inequality is observed in most countries, including ones with high per capita income. We conclude that the results contradict widely disseminated declarations about the higher economic efficiency of agglomerations. It is particularly disturbing that some of these declarations are included in the Fundamentals of the State Policy of Regional Development of the Russian Federation until 2025 and in the Spatial Development Strategy of the Russian Federation until 2025, thus having acquired the force of law.