Presenter and Abstract

Mission-led and place-based policy outcomes in European regions

Mission-led industrial policies, which have increasingly gained traction over the past decade, are often aimed at addressing societal challenges, yet concerns have been raised about their potential impact on regional disparities. We use a spatial general equilibrium model to examine the potential tensions between mission-led and their counterpart, place-based policies which are mostly associated with reducing disparities, by focusing on firm support under Horizon 2020 and European Cohesion Policy. We glean that regional and shock distributions resembling place-based policy investments yield lower regional GDP returns compared to mission-led equivalents. Employment adjustments are higher under a place-based configuration, while regional inequality and disparities increase under a mission-led approach, compared to a decrease under a place-based allocation. This highlights potential contradictions in regional policy-making under mission-led approaches and underlines the need for careful consideration of collateral regional disparities in mission-led policy design.