the concept of regional planning

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THE CONCEPT OF REGIONAL PLANNING Benjamin Higgins One of the many by-products of the Great Depression of the 1930‘s was an upsurge of interest in regional planning and regional economics. During the first Roosevelt administration, at least, some of the proposals for curing unemployment ran in terms of sectors, regions, and areas. More or less specific remedies were proposed to deal with the particular problems of unemployment in agiculture, mining, manufacturing; or to deal with peculiar difEiculties in the Old South, the New England area, the Great Lakes, and the like. With the “Keynesian revolution,” however, both economic thought and economic policy crystallized in a rather digerent form. Interest was concentrated upon highly aggregative measures undertaken by the central government, particularly in the fields of monetary and fiscal policy. The faith in “the new economics” continued throughout the Second World War, and was indeed strengthened by the success in mounting a gigantic war effort with very limited increases in cost of living, partly, at least, by the application of a Keynesian analytical framework to the special problems of financing total war. Many econo- mists thought that the maintenance of steady growth after the war, through similarly aggregative and centralized policies, would be a fairly simple affair, given onlv sufficient understanding among the general public and within thc government-, The appearance since the Second World TVar of simultaneous inflation and large-scale (or even increasing) unemployment in advanced countries, particularlv the United States and Canada, combined with slow rate7 of growth in per capita income, has nidely shattered this \imple faith in “the new economics.’’ It has comc to be recognized, at least bv some, that the economies of these countries are a good deal less inte~rated than was formerly thought. As a corollary it is now recognized tLtt asgregativt policies of the central government can go only so far in achieving high levels of employment without idation. HOWfar, is itself a matter for controversy, but no one now believes that the levels ot unemployment characteristic of the war period can be maintained, n ithout inflation, hy monetary and fiscal policy alone. As a consequence, interest in specific regional, area, and sectoral problems has revived, and rtgional economics has taken on ;i new vigour. The relationship between over-all underdevelopment and the wide gaps between productivity and incomes of major regions of a colmtn has become a familiar part of the theory of underdevelopment. The recent stress on “balanced-growth” in 164

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THE CONCEPT OF REGIONAL PLANNING

Benjamin Higgins

One of the many by-products of the Great Depression of the 1930‘s was an upsurge of interest in regional planning and regional economics. During the first Roosevelt administration, at least, some of the proposals for curing unemployment ran in terms of sectors, regions, and areas. More or less specific remedies were proposed to deal with the particular problems of unemployment in agiculture, mining, manufacturing; or to deal with peculiar difEiculties in the Old South, the New England area, the Great Lakes, and the like. With the “Keynesian revolution,” however, both economic thought and economic policy crystallized in a rather digerent form. Interest was concentrated upon highly aggregative measures undertaken by the central government, particularly in the fields of monetary and fiscal policy. The faith in “the new economics” continued throughout the Second World War, and was indeed strengthened by the success in mounting a gigantic war effort with very limited increases in cost of living, partly, at least, by the application of a Keynesian analytical framework to the special problems of financing total war. Many econo- mists thought that the maintenance of steady growth after the war, through similarly aggregative and centralized policies, would be a fairly simple affair, given onlv sufficient understanding among the general public and within thc government-,

The appearance since the Second World TVar of simultaneous inflation and large-scale (or even increasing) unemployment in advanced countries, particularlv the United States and Canada, combined with slow rate7 of growth in per capita income, has nidely shattered this \imple faith in “the new economics.’’ It has comc to be recognized, at least bv some, that the economies of these countries are a good deal less inte~rated than was formerly thought. As a corollary it is now recognized tLtt asgregativt policies of the central government can go only so far in achieving high levels of employment without idation. HOW far, is itself a matter for controversy, but no one now believes that the levels ot unemployment characteristic of the war period can be maintained, n ithout inflation, hy monetary and fiscal policy alone. As a consequence, interest in specific regional, area, and sectoral problems has revived, and rtgional economics has taken on ;i new vigour. The relationship between over-all underdevelopment and the wide gaps between productivity and incomes of major regions of a colmtn has become a familiar part of the theory of underdevelopment. The recent stress on “balanced-growth” in

164

THE CONCEPT OF REGIONAL PLANNING 165

deveIoping countries has included emphasis on the importance of narrow- ing these gaps. The development programs of a good many such countries include special measures to accelerate growth of their poor and lagging regions.

Professor Gunnar Myrdal, looking at the European experience, was perhaps the first to suggest that underdeveloped countries are charac- terized by large and increasing gaps in productivity and income among major regions, advanced countries by small and diminishing ones. The correlation between the degree of regional integration and maturity of the occupational structure, and between both of these and per capita income, is indeed very high. Even small underdeveloped countries like Ceylon, Guatemala, and Greece have sharply defined rich and poor, leading and lagging regions; while in larger countries like Brazil, Chile, Indonesia, Italy, and Mexico the regional contrasts are dramatic. One might even be tempted to define underdevelopment in these terms: an underdeveloped country is one with large and increasing differences in per capita income among major regions, and has a large proportion of the population living in the poor and lagging regions; an advanced country has small and diminishing gaps among regions, and only a small proportion of the labour force is employed in the poorer and relatively lagging regions.

The economic growth of any country involves the leading and lagging sectors, frequently identified with leading and lagging regions. Healthy growth, however, seems to require that the lagging sectors and regions be converted into leading ones before too much time has passed. Other- wise the agglomerative pull of the leading sectors may become so strong that lagging sectors are converted into poor ones, like the Italian or Mexican South, or the Brazilian Northeast. The problems seem to be especially acute when sectors and regions overlap, as they do in many underdeveloped countries. At best, idenntification of lagging and leading sectors with lagging and leading regions aggravates the problem of reallocation of resources. In many cases the leading sector is identified not merely with a region but with a few cities. Latin American countries are already substantially urbanized and are rapidly becoming more so. Asian cities have grown fantastically since 1940. The agglomerative pull of the capital cities is particularly strong, but in some cases (such as Siio Paulo, Medellin, and Bombay) there are commercial, financial, and industrial centres, in addition to the capital city, that show rapid rates of growth.

TECHNOLOGICAL DUALISM

The sharp division of underdeveloped countries into two distinct and contrasting sectors, frequently identified with two distinct regions, has

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been labelled “technological dualism.” The general theory of technological dualism and the population explosion has been presented in some detail e1sewhere.l A very short summary of it must suffice here.

In most underdeveloped countries investment has been concentrated in the “modem” sector: planations, mines, oil fields, and the financing, transport, and processing operations associated with these. Because of the highly capital-intensive nature of this investment, it has provided less increase in employment than in output and exports. Yet it was accompanied by a “populatioii explosion” because industrialization brought public health measures, law and order, and improved transport which reduced the dangers of famine. Thus the process of industrial investment meant rapid growth of the number of people who had to be employed in the other main sector: peasant agriculture and the small or cottage industries, plus the finance, transport, and processing con- nected with these, together labelled the “rural” sector.

While good land was abundant the rural sector could absorb increased numbers without a fall in per capita income or unemployment, But as good land gave out, diminishing returns to labour on the land, work- spreading devices, underemployment and disguised unemployment appeared in the rural sector. Technological progress was increasingly confined to the industrial sector, where skilled labour was scarce and labour-saving innovations worthwhile. In the rural sector, where labour was redundant, there was no incentive for introduction of labour-saving devices. Productivity and incomes in the two sectors grew farther and farther apart, The level of investment in the industrial sector was frequently sufficient to create inflationary pressure in markets where monetary transactions predominated, without reducing unemployment in the rural sector.

Under conditions of technological dualism it is possible to have very substantial investment in the modem sector and quite satisfactory increases in per capita income in that sector, without making any dent in the problem of poverty in the traditional sector and region, That is precisely the situation in Brazil, Italy, and Mexico today. Impressive though it is, the investment taking place in the modem sector does not provide new employment opportunities at a rate high enough to permit even a relative decline in the proportion of population living in the traditional sector and region, which may prove necessary for a solution to the problem of poverty in that region. In Greece, on the other hand, thanks to large-scale emigration from the country as a whole, even the absolute level of population in some poorer areas is declining,

In the worst cases the lagging sectors and regions are associated with

1Benjamin Higgins, Economic Detlebpment: Problems, Principles, and policies, New York, 1959.

THE CONCEPT OF REGIONAL PLANNING 167

less highly developed social groups as well. In these cases, moving people from low-productivity occupations to more highly productive ones is not only a matter of moving them from one part of the country to another; it is also a matter of moving them from one socio-cultural framework to another. For a Brazilian peasant in the Northeast or a Mexican peasant in the South both the geographic and cultural distances that many people must move to obtain jobs in the progressing sector of the society may be very great indeed. Once technological and sociological dualism set in together, a “feedback” mechanism tends to appear, for the simple reason that the pattern of emigration tends to dilute the quality of the population-without sufficiently reducing its quantity. The best educated, best trained, most progressive, most ambitious, men and women-those with the highest level of “need-achievement” in McClelland’s terminofogy -will be the ones who will leave the lagging region for the progressive one. Thus the lagging region is denuded of the very qualities that are needed to reconstruct it and reverse the trend, launching a process that will narrow the gaps in productivity and income. Meanwhile, at the other end of the migratory route, underdeveloped countries suffer from urban congestion, slums, urban underemployment, and urban parasitism.

AREAS AND REGIONS

If an underdeveloped country is one where the lagging region absorbs a large share of the population and where the index of dispersion is rising, is a lagging region one in which a large proportion of the popula- tion lives in “depressed areas,” and in which the index of dispersion between depressed areas and growing points in the region is rising? Certainly some recent programs and legislation seem to rest on the assumption that it is. The “trial and demonstration zones” of the European Productivity Agency were implicitly, if not explicitly, based on the assumption that lagging or poor regions are haphazard collections of depressed areas. The Area Redevelopment Act in the United States provides for technical and capital assistance from the Federal govern- ment to designated “development areas,” defined mainly in terms of chronic unemployment. The Canadian legislation concerning the Area Redevelopment Agency is similar in tone. The underlying rationale of such legislation is that the unemployment problem consists primarily of a collection of rather small areas with peculiar employment problems, and that the solution is to create job opportunities in precisely those areas.

Regional Planning The resurgence of interest in regional economics has been accompanied

by a growing literature on, and widening interest in, regional planning. In part, this interest reflects a belated realization that interregional

168 CANADIAN PUBLIC ADMINISIXATION

relationships are a fundamental factor in the level and rates of growth of national income and employment. The literature, however, is still more concerned with “regional planning” than with “regional science.”

The term regional planning may mean any of three different things: ( i ) It may mean planning for a region (city, state, group of states,

depressed area, river valley, metropolitan region, etc.) as a separate economy. Regional planning in this sense implies that there is some authority which has regulatory arid fiscal powers for the geographic unit in question. It is of course possible to prepare “plans” for regions, such as the United States Southwest, for which no discrete authority exists, in the hope that federal, state, and local governments will take account of such plans in framing their own policies. However, regional planning in this sense is a somewhat fruitless undertaking unless there is some governmental authoritv, or group of authorities, which can give effect to the plan.

(ii) Regional planning may mean testing the consistency of regional plans ( including plans for states, cities, dhtressed areas, metropolitan cities, etc. ) with each other and with the national plan. If the constitution allocates certain powers to regional governments, and if these govern- ments have budgets of their own, it is important at some stage in the over-all planning process to makc, certain that the two or three levels of government are not preparing plans which conflict with each other. Ideally, the aggregation of regional plans would add up to an over-all allocation of land, labour, and capital for the economy as a whole, which would be identical with the allocation required by the national plan.

( i i i } Regional planning may mean putting “space-tags” on projects in the national plan, with two objectives in mind: ( a ) to assure the best possible location of industry, and ( b ) to reduce gaps in productivity and income among various regions in the country. ( I t may well turn out that these two objectives are mutually inconsistent, beyond a certain margin of total development investment. )

Planning for a Region When constructing a plan for a subnational geographic unit considered

as a separate economy, it is possible, and perhaps even desirable, to carry through all the exercises involved in national development plan- ning. It is unusual for data at the regional level to be as abundant and as good as those for the nation, but one can try to do the best job possible with the data available. A regional plan should begin with surveys of natural and human resources. It may be worthwhile consbud- ins social accounts for the region. These may be refined to the point of constructing an input-output matrix of whatever degree of complexity is possible with reasonable accuracy. The income-output matrix could be projected, in terms of the desired product-mix, in a target year.

Linear programming techniqucs could be used to assure consistency

THE CONCEPT OF REGIONAL PLANNING 169

in detailed objectives of the plan. Incremental capital/ output ratios and incremental capital employment ratios could be applied to the regional development budget, in order to forecast its impact on output and employment. An industrial complex analysis may be undertaken, to assist in decisions regarding the location of industries within the region. In assigning priorities, cost-benefit analyses may be undertaken, or priority formulae applied. One may wish to apply a regional multiplier to the investmant budget, in order to determine its inflationary impact within the region, and its effect on regional balance of payments. Such analysis may suggest the proper tax policies of governments operating effectively in the region. One may even endeavour to measure the “regional linkage” effects of projects undertaken within the region?

So far as such operations are concerned there are no obvious differ- ences in techniques between regional planning and national planning. As a matter of practice, however, it would appear that as the geographic unit becomes smaller, the relative role of physical planning (or land use planning) in the over-all planning process becomes greater and greater. The same is true of the design aspects of planning.

At this stage, we might say that this kind of regional planning has four features which distinguish it from national development planning.

( i ) The differences in the availability of data, and the consequent differences in statistical ingenuity required, are so great as to constitute almost a difference in kind. The procedures for empirical analysis inevitably take different forms at the national and regional levels.

(ii) For any country the external sector is a bigger proportion of individual regional economies than it is for the national economy. The “balance of payments” aspects of development require even greater attention for regions than they do for the whole nation.

(iii) The mobility of resources, and especially of labour, is greater within any country than the mobility between countries. Study of migration and capital flows is consequently a more essential component of regional planning than of national development planning.

( i v ) As national development planning runs mainly in terms of capital use, and city planning mainly in terms of land use, regional planning provides a kind of “no man’s l a n d where the two approaches meet. Some integration of economic and physical planning at the regional level is therefore essential.

( v ) The branch of economic theory underlying regional planning (location theory) is in a particularly unsatisfactory state, providing only limited guidance for policy formation.

It is perfectly clear that in any of the concepts of regional planning

‘See for example, Walter Isard and John H. Cumberland, eds., Regional Economic Planning, Techniques for Analysis for less Deueloped Areas, Paris, 1961, 64. See also Walter Isard et al., Methods of Regional Anulysls: An Introduction to Regional Sdence, esp. chaps. 6 and 9.

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listed above, the design aspect has almost totally disappeared. There will of course be problems of the routing and design of highways, the design of multiple purpose river valley projects, irrigation schemes, and the like. However, when it comes to regional planning, the special training of the architect and the engineer really becomes important only in the imple- mentation phase and has little to do with the actual plan preparation. Of course the planners may need to consult architects and engineers on the physical and design problems involved in the regional plan but the process of planning itself, as already indicated, is mainly one of decision- making with respect to resource aIlocation.

Determining the Consistency of Ilegional and National Plans Some of the exercises that should he undertaken to assure consistency

of regional plans with each other and with the national plan are outlined in the ECAFE report on Development Programming Techniques. Others are suggested in the volume on Regional Economic Planning edited by Isard and Cumberland, especially in Chapter I. Most of these boil down to good common sense. For example, a project may seem unjustified if only the regional market, expanded in accordance with the plan, together with existing markets in other parts of the country are taken into account; but it may seem highly desirable when the development plans of other parts of the countw are considered. Professor Isard illustrates with the case of a modem glass plant. A careful analysis shows that the regional markets, taking into account the ,growth of regional income and employ- ment generated by the plan, together with existing exports from the region, would be inadequate to absorb the output of a modem glass plant. But when the growth of t:xports resulting from the execution of other regional plans was added, the glass plant was clearly worthwhile. Professor Isard goes on to point out that consideration of the impact of plans of other regions and of the national development plan as a whole i s an important factor in deciding the appropriate size of plants to be constructed in any one region.

There is also a quite different line of approach to integration of regional and national plans. The execution of national development plans may carry with it a good many undesirable by-products which necessitate action at the regional level to prevent or offset them. (We are still including cities, metropolitan regions, distressed areas etc., as “regions.”) These undesirable by-products may include slums, urban blight, traffic congestion, increased crime and delinquency, housing shortages in some areas combined with an excess supply of housing in others, overcrowded schools in some cities while others have excess capacih, and the like. Social scientists now regard the “evils” of industrial- ization as largely unnecessaxy, and insignificant in comparison with the evils of lack of industrialization and contrived poverty. What concerns us

THE CONCEPT OF REGIONAL PLANNING 171

here is less the question of whether and to what degree the undesirable social by-products of national development may be avoided or offset, than the fact that the measures needed to offset or avoid them are of a kind which is frequently left to state and local governments. Even where there are national programs for housing, social welfare, health, employment services, and the like, they must be organized and admini- stered at the local level. In many countries the subnational governments have a major responsibility for projects of this kind. Consequently the process of development planning as a whole must make sure that the necessary allocation of financial and real resources for education, training, and re-training, housing, public health, recreation, social welfare, and family guidance, are provided.

Integration of Economic and Physical Planning

There is no particular logic behind the tendency for the relative role of physical planning to increase as the geographic unit becomes smaller. Both economic and physical planning are needed at all levels of govern- ment, and integration of "land-use planning" with "capital-use planning" is essentials The neglect until very recently of the spatial aspects of economic development is all the more unfortunate because it is gradually being realized that the spatial relatianships are the very core of the development problem There are almost no completely "underdeveloped countries." There are only underdeveloped areas, and an underdeveloped country is one in which the underdeveloped areas are a large proportion of the total economy.

On the other side of the coin, the addition of economic development planning to the responsibilities of government makes it all the more essential for physical planners to decide exactly what it is that they are doing that is different from what any other government officials or advisers are doing, and which require special training geared to that activity. Once the scope of physical planning is sharply delimited and its methods clearly defined, there still remains the problem of deciding how physical planners are best brought into the administrative organiza- tion of planning in general.

In the Western democracies in which physical planning grew up, there was for a long time little conflict arising from the growing scope of physical planning. The reason was that no other planning was being undertaken. The Western democracies found physical planning, under- taken at the local govemment level for the most part, with a good deal less of it at the state level and still less at the federal level, acceptable.

Wharles Haar, Benjamin Hig 'ns, and Lloyd Rodwin, "Economic and Physical Planning: Co-ordination in Deve Y oping Areas," Journal of the Awwican Institute of Planners, March, 1960.

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Anything called national planning, or even economic development planning, was not acceptable.

In underdeveloped countries, on the other hand, the central govern- ment has assumed sweeping responsibilities for planning economic development. There can be no doubt that location of industry, land use patterns, and rural-urban relationships are essential parts of a national development plan. Indeed in many of them the rural-urban pattern is the very core of the economic development problem. Consequently, in countries doing both physical and development planning, the overlap between the current concept of physical planning in the West and the new task of development planners is readily apparent.

Producing a “Ratchet” Effect There can be little doubt that the third concept of regional planning is

the most important one. Maximizing spread effects among regions, while reducing regional gaps, must be the main aim of regional development policy. Economic development means eliminating the lagging sectors and taking full advantage of the leading sectors or “growing points,” maxi- mizing the “spread effect” of growth where it occurs and overcoming the tendency for productivitv of “leading” and “lagging” sectors to pull farther and farther apart. 14n economic development plan must be defined in terms of intersectoral and so interregional relations. In short, a development plan is necessarily concerned with interspatial relationships and urban-rural relations.

REGIOX 4L PLASSING AYD PROBLEJf S OF BICLlLTURrlLISM

In conclusion I yhould like to outline briefly some ideas regarding the application of regional planning to a somewhat novel field, namely the economic aspects of biculturalism and bilingualism. These ideas are the result of a summer’s work for the Royal Commission on Biculturalism and Bilingualism, during which I concentrated on differences in economic status between French Canadians and other Canadians and the possi- bilities of using regional and area development policy to reduce these cliff erences.

French Canadians as a group have average incomes not very far below the Canadian average; personal incomes of the French Canadian labour force in 1961 werc 87.7 per cent of the Canadian average. Unfortunately from the standpoint of cultural relations, it is precisely in the province of Quebec, where French Canadians are most heavily concentrated, that Canadians of British origin are most prosperous. In Quebec, since thw constitute three-quarters of the population, French Canadians inevitably have average incomes close to the average for the province as a whole: 91.7 per cent. British Canadians, however, earn, in Quebec,

THE CONCEPT OF REGIONAL PLANNING 173

incomes which are on the average 140 per cent of the provincial mean. Clearly, it is the living standards of British Canadians in Quebec that are most apparent to French Canadians as a group.

It is worth noting, however, that the difference in income between French Canadians in the province where they are richest, and French Canadians in the province where they are poorest, is substantially greater than the difference between French and British incomes in any province. Thus in Prince Edward Island French Canadians earn only 66 per cent of the average income of French Canadians in the country as a whole, while in British Columbia they earn 117 per cent of the national average for French Canadians. Thus differences in regional productivity and income are a major factor in the differences in income between the major ethnic groups.

French Canadians are also over-represented among the unemployed. The Province of Quebec has the second highest level of unemployment of all provinces, and the sharpest increase in unemployment in recent years. In the Atlantic provinces, where unemployment is especially high, French Canadians are heavily represented among the unemployed. The same may be said of poverty and of submarginal farms. Both among the poor and among the submarginal farmers the proportion of French Canadians is higher than their proportion of the total population. It follows that national policies directed primarily towards reducing gaps in income among regions and subregions, towards the elimination of poverty, reduction of unemployment, and the gradual abolition of sub- marginal farms, will have as a by-product the effect of diminishing differences in economic status between French Canadians and others.

The second prerequisite for effective use of regional and subregional development programs to reduce the differences in economic status between French Canadians and others is that the French Canadians should be concentrated geographically. It is clear that they are. To begin with, 4.2 millions of Quebec’s 5.5 millions (75 per cent) are French. Outside of Quebec, the biggest group of French Canadians (648,000) is in Ontario, where the French Canadians constitute only 10 per cent of the total population. However, even within Ontario there is a good deal of concentration of French Canadians by area, including the Ottawa River Valley, the St. Lawrence Valley, and the mining districts of Northern Ontario. In Cochrane, for example, there are 47,000 French Canadians as compared to 27,000 British and 22,000 others.

In New Brunswick, which has the second biggest groups of French Canadians outside of Ontario, the French are even more concentrated, especiaIly in the Northern counties. For example, Madawaska County is 93.8 per cent French and Gloucester County is 85 Ber cent French. In the prairie provinces and in British Columbia the Fiench Canadians are more scattered, but in these provinces the ratio of French language to

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French origin is relatively low, indicating that in these provinces the French population is already becoming assimilated into the general population. Moreover, in these provinces, and particularly in British Columbia, French Canadians are relatively prosperous. Thus it appears that the geographic concentration of the French population is sufficient to permit significant reductions in economic gaps through regional and area development policies of ont: kind or another.

My investigations led me to the conclusion that some form of peman- ent organization will be needed within the governmental structure after the Royal Commission has made its final report. This organization would have two major functions: first, to study policy proposals and the implementation of existing legislation in terms of their implications for cultural relations; and secondly, to study and propose policies for the reduction of gaps in economic status among major ethnic groups. As things are now, most Canadians are willing to admit that the relationships between French and other Canadians are in a crisis stage, and that successful emergence from this crisis is a prerequisite to every other branch of Canadian national policy. But, very few Canadians-even those in the federal government charged with responsibility for regional and area development programs-seem to feel a direct responsibility for measures designed to allekiate tensions among ethnic groups by improving the economic status of the underprivileged. At the very least, the federal government should endeavour to avoid the actions which aggravate tensions among ethnic groups, whenever it is possible to do SO

without sacrificing other national objectives which are clearly of higher priority. Unfortunately the forniulation and implementation of federal government policy has not always conformed even to this minimum criterion in recent years, as the statement to the Federal-Provincial Conference by Premier Lesage clearly shows. -4 national policy of seeking to reduce differences in economic status

of French Canadians and others through area and regional development policy (including education) means essentially treating the Atlantic provinces and Quebec as “regions” whose rate of economic growth is to be accelerated, with special attention to subregions within the Atlantic provinces and Quebec, which either have particularly pressing problems of unemployment, low incomes, or low agricultural productivity, or conversely, which offer particularly promising potential for economic growth, of a kind which would generate spread effects to the rest of the region. Thinking in terms of a campaign against poverty, unemployment, and submarginal agriculture. a policy would also involve some attention to subregions in the prairie provinces, and perhaps also in British Columbia and Ontario, which are either particularly distressed, or offer particularly promising possibilities for expansion.

If we speak of a national policy for reducing gaps in regionaI economic

THE CONCEPT OF REGIONAL PLANNLNG 175

status, however, we are by defhition talking about some redistribution of developmental investment as between the richer regions and the poorer ones. In effect, we are speaking of a system of “foreign aid” from the federal government to the “developing regions” within Canada with funds provided by the richer regions. The foreign aid would involve capital assistance in support of regional development problems, and perhaps technical assistance as well, wherever the human resources at the provincial level are inadequate. Such a policy also implies, as it does at the international level, abandoning a concept of identical, unified, or equivalent policies throughout the nation, based on formulae and simple criteria, in favour of deliberate discrimination and differentiation in favour of those regions which are most disadvantaged. Hopefully, the range of administrative discretion could be limited by a clear statement of principles in the legislation, as is the case in the foreign aid programs under the auspices of the United Nations, Canada, the United States, the Organization of American States, and similar programs.

In the Canadian case, a reduction of gaps between the levels of income and unemployment in rich regions and poor would make the rich regions richer, not poorer; such a reduction in gaps is necessary, at this stage of Canadian economic development, for the acceleration of the growth of the national economy as a whole. The “redistribution” involved, is a relative one, not an absolute one. While growth in poor regions is raised let us say from 2 to 6 per cent annually, in rich regions it might rise from 3 to 4 per cent. In any one year, however, such a policy means the appropriation (or relinquishment), of federal funds in order to increase investment in the poorer regions, or possibly in other regions if it is known that the “spread effects” from other regions to the poorer regions are substantial.

The achievement of this objective will probably require an increase in provincial responsibilities, for both the planning and the implementation of regional development. Under a system of federal government assistance to regional development plans, there would really be no need for federal programs such as ADA and ARDA; these would be replaced by industrial and agricultural development projects within the regional development program. The provincial governments would need fiscal powers to permit them to adopt patterns of economic and social development different from those in other parts of the country, corresponding to the tastes of the people of the region and to the differences in basic economic and social situations. Where for example, private entrepreneurship is deficient in one region, governments should have sufficient fiscal powers to permit a higher ratio of public to private enterprise in that region than in others, at least until the shortage of private entrepreneurship has been overcome. Moreover, some provinces may simply want a larger public sector than is typical of other provinces for political and social

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reasons, If so, they Fhould be able to give expression to this preference. On the other hand, the federal government must retain sufficient fiscal powers to permit it to achieve national objectives which cannot properly be allocated to the provinces (such as national defence, post office administration, etc. ) and also to achieve a substantial redistribution of financial resources, and thus ultimately of income and employment, between rich regions and poor.

Such a policy would presumably require a small regional planning group attached to the federal government. This group could absorb the present functions of the Atlantic Provinces Development Board and add certain responsibilities with regard to the Province of Quebec and other regions. Possiblv within this group there could be some specialists particularly concerned with problems of biculturalism and bilingualism.