All this was taking place in the global context of the ending of the ‘long post-war boom’ in the early 1970s. Profit rates were falling and there was a return of generalised capitalist crises, an intensification of competition and a consequent acceleration in the ‘internationalisation’ of production, as larger firms ‘went global’ in their search for restored profit levels. These developments not only exacerbated the problems of ‘problem regions’, they also led to fundamental changes in the relationships between regional, national and international economic processes.
This complex of factors, commonly referred to as ‘globalisation’, was accompanied by a revival of laissez-faire arguments against ‘state interference’, and a world-wide ‘privatisation’ of state-owned enterprises. State ownership and corporatist links between the state and ‘national’ capital generally became weaker and gave way to looser links with capitals of whatever ‘national’ origin or ownership that were located, or might potentially be located, within the state territory.
Globalisation, and particularly its economic aspect (though this cannot be divorced from the political), is perhaps the main or most general and basic factor behind the recent growth of regionalism. Economic development is the policy area where states are assumed to have lost much of their former independent powers and their control over their own ‘national economy’. It is also the area which provides the most widespread focus for the growth of regional and local politics as regions and localities strive to attract investment capital from external sources. Attracting external capital – ‘global’ in that it can in principle come from anywhere (and also might go anywhere else) – has become the touchstone of economic ‘success’ in more globalised markets. The social and institutional ‘support systems’ of local and regional economies and societies have been increasingly seen as crucial in the competition for attracting and retaining inward investment. Regional and local governments, and other regionally-based political and economic forces, became direct actors in transnational arenas, sometimes in association with central state institutions but now often bypassing them.
Particular regions became ‘success stories’ (for example, Emilia Romagna in Italy, which in per capita GDP went from forty-fifth to tenth richest region in the EU between 1970 and 1991). There were various attempts to explain ‘success’ in terms of a region's own attributes:
regions having their own elected government which could pursue regional as distinct from ‘national’ priorities;
a well-developed set of regional institutions and partnerships between the regional authorities and the private sector;
a good physical infrastructure in the region and a social infrastructure providing training and a skilled, reliable workforce;
regional specialisation, including for niche markets, and inter-firm linkages and sourcing which maximised the ‘value added’ within the region.
These various factors were given different weightings in different theories, but there developed a general consensus that economic success depended on regional governance and the ‘embedding’ of regional economies in a dense, supportive network of institutions (Simonetti, 2001). It was generally assumed or asserted that the region was indeed the best spatial scale for organising these prerequisites.
This orthodoxy or ‘new regionalism’ (Amin, 1999) has however been questioned by various sceptics. John Lovering points out for instance (Lovering, 1999) that it:
tends to systematically underestimate the continuing economic importance of the state (even in federalised states);
overestimates the coherence of most regions as a basis for development compared to the smaller scale of city or municipality;
is theoretically weak and based on relatively few, and in many ways exceptional, examples;
perhaps not surprisingly, has generally failed in practice to replicate ‘success’ in lagging regions.
Rather than being a theoretically grounded and empirically justified position, it is more an article of faith which in at least some cases is connected with a neo-liberal downplaying of nation states or concedes too much ground to this dominant ideology. It has interesting echoes in ‘Europe of the Regions’ ideology, as we shall see (Section 5).
Nevertheless, whatever the empirical and theoretical arguments against the ‘new regionalism’, regional authorities are under continuing pressure to appear attractive to investors and can hardly risk dismissing these ideas. They may be largely ideological but their sheer fashionableness gives them a material reality. Regions and regional governance are now an established part of political and economic life in Western Europe, and not least because of the EU.