How do you measure the impact of public policies on different regions?

1 What is regional impact analysis?

Regional impact analysis is a method of evaluating how a public policy affects the economic activity, income, employment, population, and other indicators of a specific region. A region can be defined as a geographical area, such as a city, a state, or a country, or as a functional area, such as a market, an industry, or a sector. Regional impact analysis can help you understand how a public policy influences the distribution of resources, opportunities, and costs among regions, and how it affects the regional competitiveness, inequality, and sustainability.

2 Why is regional impact analysis important?

Regional impact analysis is important for several reasons. First, it can help you design better public policies that take into account the regional diversity and heterogeneity, and that address the specific needs and challenges of each region. Second, it can help you assess the potential benefits and costs of a public policy for different regions, and identify the winners and losers, the trade-offs and synergies, and the spillovers and feedbacks. Third, it can help you communicate and justify your public policy decisions to the relevant stakeholders, such as regional authorities, businesses, and citizens, and foster their participation and cooperation.

3 What are the main steps of regional impact analysis?

Regional impact analysis involves four main steps. The first step is to define the policy scenario and the counterfactual scenario, that is, what would happen with and without the public policy. The second step is to select the region of interest and the indicators of impact, that is, what aspects of the region you want to measure and how. The third step is to choose the analytical method and the data sources, that is, how you want to estimate the impact and what information you need. The fourth step is to interpret and report the results, that is, what you can conclude and recommend from the impact analysis.

4 What are some examples of analytical methods for regional impact analysis?

When it comes to regional impact analysis, there are numerous analytical methods to choose from, depending on the type and complexity of the public policy, the region, and the indicators. Input-output analysis is a popular approach, as it measures how a change in the demand or supply of a sector impacts the output, income, and employment of other sectors and regions. Computable general equilibrium analysis is another method, which examines how a change in prices or quantities of a sector affects the equilibrium of the whole economy. Econometric analysis uses statistical models and data to measure how a change in a policy variable affects a regional outcome variable. Lastly, simulation analysis explores different scenarios and assumptions to measure how a change in a policy parameter affects a regional system.

5 What are some examples of public policies and their regional impacts?

Different types of public policies can have varying impacts on different regions, depending on their objectives, instruments, and mechanisms. For instance, fiscal policy involves taxes and public spending to affect aggregate demand and supply, which can lead to differences in regional income, consumption, investment, and savings. Monetary policy uses interest rates and money supply to control inflation and exchange rate, which can result in differences in regional competitiveness, trade, and financial markets. Industrial policy relies on subsidies, regulations, and incentives to influence the development and innovation of specific sectors or industries; this can lead to disparities in regional productivity, employment, and growth. Lastly, environmental policy employs standards, taxes, and markets to manage natural resources and ecosystems; this can create environmental externalities or benefits among regions.

6 Here’s what else to consider

This is a space to share examples, stories, or insights that don’t fit into any of the previous sections. What else would you like to add?