The integration of policies of fiscal equalization and regional policies: theory and European examples

Abstract. Fiscal equalization between communities and regional policies towards regions seem to aim at the same objective: to relieve undesirable situations in specific segments of a given regional pattern. The purpose of the paper is to show that at a closer look the objectives and instruments, but also the underlying systems of regions, and finally the notion of regional disparity differ widely between the two approaches and do not allow for an amalgamation. This is exemplified by a look at typical policies in European countries, and at the end the different role of fiscal flows in each policy is pointed out. 1 The conceptual framework 1.1 Two types of regionally redistributive policies In every country a number of fiscally important and different policies aim at or inadvertently influence the regional distribution of income, employment, and publicly provided goods. To list all of them with their effects would mean to assess the regional incidence of almost all public activity. But even the policies which are more explicitly directed at regional disparities, and which are the topic here, do not constitute a uniform set of elements (1) of objectives, (2) of instruments, and (3) o