Central places and development : an economic appraisal of the portuguese regional decentralisation

Abstract

A dynamic central place model due to BECKMANN (1995) is used to evaluate the efficiency of the regional decentralisation in Portugal. The location of administrative functions depends on the interplay of economies of scale (which promote spatial concentration) and transport costs (which lead to decentralisation). Therefore it is shown that the efficient rate of decentralisation has an upper bound which depends directly on the rate of increase of aggregate product in the peripheral regions and depends inversely on the rise of fixed costs of establishing new public services there. The problem associated with regional decentralisation lies in that the institutional format is quite uniform across regions although the demographic and economic growth rates vary considerably. Any common level of decentralisation which fits a region will be inadequate for the others. In order to overcome this flaw, regional administrative structures should be flexible and the regional division of the country should lead to the minimisation of interregional asymmetries.