A policy intended to boost economic activity in a specific geographical area that is not an entire country and, typically, is in worse economic shape than nearby areas. It can include offering firms incentives to provide jobs in the region, such as soft loans, grants, lower taxes, cheap land and buildings, subsidized labor and worker training. Is it necessary? A region's problems should be somewhat self-correcting. After all, simple theories of supply and demand would suggest that firms will move to areas of low wages and high unemployment to take advantage of cheaper labor and surplus workers, or that workers will move away from such areas to where more and better-paid jobs exist. But some economic theories suggest that rather than moving to areas where wages are lowest, firms often cluster together with other successful businesses. Regional policy may need to be extremely generous to tempt firms to give up the advantages of being in a cluster.