Impact of National Economic Policies on Subnational Regions

National economic policies may have very different effects on subnational regions. For example, policies that encourage export growth will benefit regions with good locational access to foreign markets, while high interest rates are likely to hit hardest areas dominated by heavy industry. Governments are often very concerned about such subnational effects, but thus far, work on such issues is relatively underdeveloped in the Bank. In this section, we selectively present case studies of various national policies that have differential subnational impacts including: macroeconomic-stabilization, trade liberalization, exchange rate adjustment, and industrial incentives. As cross-border issues often have considerable regional significance, we also include references to the recent work on frontier regions.