ABSTRACT: There is a certain optimism among policy makers concerning the ability of producer services, viewed as locationally flexible, to stimulate economic growth in lagging regions. Four issues related to the location of producer services are used to critically examine this notion: (1) observed centralization and decentralisation trends. (2) the influence of corporate ownership and control, (3) intrafirm functional separation, and (4) the impact of telecommunications technology. Producer service growth has not benefited central and peripheral regions equally. The empirical and conceptual evidence presented suggests that these activities have little positive impact upon lagging regions. Some essential elements of a regional strategy involving producer services are proposed. CONCLUSION: The evidence that we have presented suggests that the conventional wisdom concerning the capability of "footloose" producer service activities to enhance the economic development prospests of peripheral regions is unjustifiably optimistic. The potential for high-order producer services to locate outside of major metropolitan certers is highly limited. The main locational shifts of producer services that most developmented economies are witnessing are occurring primarily at the intrametropolitan level. In terms of specific policy interventions to stimulate service activities in lagging regions, considerable caution must be exercised. It is not at all clear that such interventions will have a high probabilitity of success: even more than in the case of manufacturing, the forces of spatial concentration are very strong. Attempts to create an effective service policy for peripheral regions need to be grounted in a better understanding of the economics of high-order services and, particularly, of the factors governing the location of these activities. Further, such considerations cannot be divorced from the broader issues concering the future of regional policy, nor from those concerning the greater intergration of national science and technology policies with regional policy. Perhaps even more fundamentally, we are led once again to the classic exitential question of the regional development practitioner: is it really worthwhile to expand so much effort in attempting to resist the "natural" market trends? Download link: http://onlinelibrary.wiley.com/doi/10.1111/j.1435-5597.1989.tb01179.x/abstract
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