Uneasy bedfellows: can regional and urban policy be reconciled?

The crucial role of urbanisation processes in regional development has not always resulted in the coordination of regional and urban policy agendas. The significance of cities for regional economic growth has long been recognised by governments, policymakers and academics. Yet, traditionally, relatively few countries in Europe have had an explicit urban component to their regional policy goals.[i] Why is the relationship so uneasy?

  • Conflicting policy priorities. Priorities supporting city growth do not always sit easily with those promoting wider regional development and introduce a spatial dimension to long term policy debates between the pursuit of competitiveness on the one hand, and equity related goals on the other.
  • Definitional confusion. Different policy domains – ‘regional development policy’, ‘urban regeneration policy’, ‘city policy’, etc. – have separate but overlapping scope, scale and remits. This makes clarity in policy definition and implementation challenging.
  • Coordination complexity. The involvement of different sectoral national ministries and departments in the two policy areas and, in some countries, the strength of local authorities, complicates coordination. Ministries, agencies and cities often defend their portfolios and budgets which hinders integration.

Nevertheless, regional policy is increasingly recognising the role and function of urban areas, with implications for both people and places. Recent policy initiatives have emerged across Europe, seeking to draw regional and urban development agendas more closely together. What has prompted this change? What does it mean in practice and what are the benefits and costs?

New hope for reconciliation?

There is a reciprocal, but often paradoxical, relationship between urban and regional development. Cities, as centres of production, technology and innovation, have a clear potential to revitalise surrounding regions. Policies in many countries attempt to explore how regions can benefit from processes of diffusion and increased connectivity to vibrant or growing urban centres. However, evidence suggests that ‘spillover effects’ are not automatic. Indeed, over time, an acceleration of urbanisation processes means that cities face challenges that can make them a ‘drag’ on regional development.[ii]  These include, for example, an urban concentration of challenges such as social exclusion, poverty and environmental degradation.

Global trends such as digitalisation, technological progress, demographic transition and climate change all have specific urban impacts, again with reciprocal, but often conflicting, impacts on regional development. The differentiated nature of urbanisation patterns, very evident in the European context, further increases the policy reconciliation challenge between these two areas. Effective, coordinated policy responses in a region dominated by a compact metropolitan area will look quite different from those in polycentric or peripheral regions with diffuse distributions of smaller cities and towns.

Policymakers, therefore, face the paradox of tapping the potential of cities to revitalise regions while ameliorating the worst effects of urbanisation. The rise to prominence of ‘place-based’ initiatives in regional policy has offered one potential solution to this reconciliation dilemma.[iii] As with many fashionable terms, place-based measures tend to mean different things to different people. However, in essence, it means integrating policy interventions to suit different places and designing them to respond to specific structural opportunities and constraints.[iv] Three guiding principles of the ‘place-based’ agenda appear to offer policymakers a way forward in seeking to reconcile regional and urban policy agendas:

  • Integrated strategic frameworks. Rather than sectoral initiatives, place-based strategies combine urban and regional development issues and priorities, recognising their interconnectedness.
  • Recognition of spatial linkages. Instead of targeting administrative areas, they cover integrated functional spaces, capturing socio-economic processes that cut across local and regional government boundaries;
  • Governance rather than government. Place-based governance focuses on the quality of institutions and capacity for coordinated engagement of regional and local governments and other stakeholders.

What does this mean in pratice?

Recent ‘place-based’ responses to reconciling regional and urban agendas can be explored under three broad intervention areas: strategic frameworks, spatial linkages, and urban-regional governance (Figure 1).

Figure 1: Regional policy responses to urban issues – strategies, spatial links & governance


i.  Creating strategic visions and integrated plans

Integrated strategic frameworks and plans offer potential for aligning regional and urban agendas. These are identifying the complex, inter-connected impacts of socio-economic or environmental processes in cities and their regional hinterlands and developing shared priorities – ‘joint management by objectives’. Strategic visions cover a varied range of policy areas where regional and urban agendas are closely interconnected.

  • Innovation provides an overarching theme. Regional Innovation Strategies, Smart Specialisation Strategies and Smart City Strategies are increasingly linking city and regional innovation systems and coordinating strategic priorities. This includes exploring the potential for growth and job creation by bringing together urban cores and surrounding areas in terms of innovation chains. Strategies also increasingly focus on utilising digitalisation and technological progress outside of larger urban cores: for instance, the Finnish Smart City agenda supports urban areas in peripheral regions as centres of innovation, including in the development of digital solutions for peripheral and demographic challenges.
  • Similarly, regional and urban development have common cause when it comes to sustainable development and climate change. For instance, the Dutch Delta Plan for Spatial Adaptation distinguishes between climate change effects on cities and rural areas. The Swedish National Strategy for Sustainable Regional Growth and Attractiveness 2015-20 stresses the differentiated opportunities of urban versus rural areas in terms of developing innovative responses to climate change. The Strategy for Liveable Cities (2018) in Sweden reflects increasing policy attention on urbanisation and the importance of cities in promoting broader sustainable growth.
  • Strategic initiatives funded by EU Cohesion Policy (CP) recognise the importance of placing urban development within a wider regional policy context. Prominent examples are the urban and territorial strategies supported by CP: Integrated Sustainable Urban Development (ISUD), Integrated Territorial Investment (ITI) and Community Led Local Development (CLLD). In particular, steering CP funding to ISUD strategies addresses economic, environmental, demographic and social challenges in urban areas.

ii.  Strengthening spatial linkages

Regional policies are increasingly adopting a logic that treats urban areas as part of different functional spaces, capturing interconnections between core urban areas and regional hinterlands. The integration of regional and urban priorities is finding a specific spatial expression at several scales:

  • Functional urban areas. Several countries in Europe are exploring linkages across city-regions, or metropolitan areas – larger constellations of cities and towns that constitute a functional economy. This often consists of a city and its commuting zone whose labour market and socio-economic structure is highly integrated with the city. Investments in infrastructural projects innovation and business growth are made taking into account these functional linkages and the flows of people and resources across these spaces. One example of this is the United Kingdom, where City-Region Deals are key regional policy instruments addressing urban and regional development challenges such as job creation, transport and connectivity, innovation and productivity.
  • Urban-rural interactions. Current initiatives are also exploring the complex relationships between urban and rural territories. These linkages are increasingly seen as reciprocal, with rural hinterlands as vital partners for urban centres in sustainable development (e.g. in Norway). More coherent linkages are being pursued to address labour market issues in Portugal and in Finland, to strengthen territorial cohesion and facilitate better access to amenities and different types of services.
  • Medium-sized or small urban centres. There is also a growing regional policy focus on the role of smaller towns and cities. These may experience development challenges resulting from changing structural conditions, demographic change, etc. but they have a potentially vital role in driving development and contributing to territorial cohesion, particularly in less affluent or peripheral regions. In Poland, the new National Strategy for Regional Development 2030 includes measures targeting medium-sized cities. In Finland, the ‘Regional City’ programme addresses smaller cities with regional importance to strengthen their role in regional development.

iii.  Integrating urban and regional governance

Regional and urban policy integration depends on supportive institutional architecture and the creation of governance structures with linkages that correspond to the interdependencies inherent to cross-sectoral issues. Governance structures are being established for horizontal (across agencies, ministries) and vertical coordination (across levels of government).

  • Ministerial re-organisation or the work of cross-sectoral agencies and committees is aiming to improve coordination. This is addressing the coexistence of separate lines of management and responsibility for regional and urban economic development, spatial development, and sectoral development. In Poland, for instance, the Ministry for Development Funds and Regional Policy is now responsible for both the National Strategy for Regional Development, the National Urban Policy and packages of measures to support urban authorities in programming and implementation of revitalisation. In Finland, a dedicated ministerial committee consisting of multidisciplinary and cross-sectoral members brings together regional and urban policy portfolios to discuss common objectives.
  • Sub-national governance structures are also pursuing the integration of regional and urban agendas. Metropolitan and regional governance structures, inter-municipal and city-to-city co-operation are exploring how the shape of jurisdictions can map onto functional spaces. In some countries, such as France and England, decentralisation of policy competencies is helping metropolitan structures address interconnected regional and urban challenges. In turn, cross-municipal structures improve coordination of urban and regional policy initiatives and limit administrative fragmentation. In Sweden, a 2020 Parliamentary Committee report explored different options to increase efficiency, including voluntary municipal mergers, more strategic inter-municipal cooperation and the launch of pilots to test new measures designed to strengthen municipal capacities.
  • Contractual or ‘deal-based’ arrangements between multiple government levels are achieving integration through negotiation and communication. Several European countries are pursuing transactional mechanisms (contracts, agreements or deals), based on negotiation between national/regional governments, urban authorities and other stakeholders. These vary in the extent of empowerment, delegation or ‘policy sharing’ involved, territorial coverage and thematic focus. However, they often pool resources from different jurisdictions and coordinate investments to foster functional linkages between larger urban centres and their hinterlands. Examples are found in the United Kingdom (City Deals, Growth Deals), Italy (regional development Pacts) and the Netherlands (City Deals, Region Deals) where national, regional and urban authorities negotiate joint investment in different types of urban development.

Is this reconciliation sustainable?

Identifying the potential gains from integrating regional and urban development policies within a ‘place-based approach’ is one thing; actually making these complex, overlapping policies more comfortable bedfellows in practice is another. Policymakers will face risks and challenges, including:

  • The benefits of adopting strategies that integrate regional and urban development priorities must be weighed against the risk of overload or incoherence. By combining urban and regional priorities, these strategies can create more sophisticated responses to common challenges. At the same time, however, the multitude of priorities and objectives clearly increases the challenge of reconciliation. The focus of integrated strategies needs to be carefully set lest they become a ‘wish list’ of different activities (particularly when there are limited resources). If not, there is a risk that regions ‘copy’ economic and scientific domains of neighbouring regions rather than pursue their own strengths (as demonstrated in the context of Smart Specialisation).[v]  Economic, social and environmental priorities must be balanced in a coherent and realistic way for strategies to be effective and encourage more widespread buy-in.
  • There is a challenge for policy to keep pace with changing functional territorial boundaries. This is particularly the case in countries with polycentric urban structures and where there are substantial discrepancies between the borders of local jurisdictions and the urban form and the patterns of daily activities of their residents. In general, it is challenging to match policies and strategies to the fluid geographies covering linkages and flows between cities and other parts of regions.
  • Integrating governance comes at a cost: issues of administrative capacity, trust and democratic legitimacy must be considered. Participating in negotiated arrangements puts pressure on administrative capacities at national and local levels. The State must have the information and capacity to carry out tailored negotiations with regional and urban authorities and local actors require the capacity to define and develop ‘bottom-up’ plans. Trust is important in reducing transaction costs and strengthening the long-term efficiency of deal-based mechanisms, ensuring that actors have the will to fulfil their commitments. Structural readjustments to governance have to reflect democratic legitimacy. The active involvement of citizens and the private sector in needed to facilitate buy-in.

Finally, the impact of COVID-19 adds further complications. It is possible to envisage policy divergence and separation under the pressures created by the pandemic. Responding to the crisis could also strengthen recent processes of policy integration. The need for coordinated responses to the pandemic is giving impetus to the trend for city authorities to collaborate with national and regional governments and regional policy has renewed its focus on cities which have been particularly hard hit. Nevertheless, there is a real risk that regional policy will struggle to deal with new challenges in addressing urban issues. Budgetary and administrative capacity constraints, particularly at the city level, may limit the development of integrated strategies and governance.


Martin Ferry and Wilbert den Hoed, March 2021.



[i] Nordregio (2007) ‘The role of urban areas in regional development – European and Nordic perspectives)’, Proceedings of the Nordic Working Group on Cities and Regions Nordregio Working Paper 2006:4.

[ii] United Nations (2018) World urbanisation Prospects, as elaborated in Ferry, M and den Hoed, W (2020), Regional Policy and the Urban Paradox: Reinforcing the Urban Dimension in a Time of Crisis. Paper to the 41st meeting of the EoRPA Regional Policy Research Consortium, October 2020.

[iii] Venables, A. & Duranton, G. (2019) ‘Place-Based Policies: principles and developing country applications’, Economics Series Working Papers 893, University of Oxford, Department of Economics.

[iv] Barca, F., McCann, P. & Rodríguez-Pose, A. (2012) The case for regional development intervention: Place-based versus place-neutral approaches. Journal of Regional Science, 52:1, 134-152.

[v] Di Cataldo, M., Monastiriotis, V. & Rodríguez‐Pose, A. (2020) How ‘Smart’ Are Smart Specialization Strategies? Journal of Common Market Studies, online.

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