Regional infrastructure and regional competitiveness

Today Business Week looks at infrastructure investment in Bangalore, India . Bangalore is being displaced by other cities in India like Hyderabad and Pune.

Infrastructure shortcomings are cited as the main reason. Bangalore's "rapid growth has led to traffic jams on potholed roads, overcrowded public transport and irregular power supply." Government policy doesn't appear to helping much in overcoming these infrastructure problems:

"But investors may be discouraged by an ongoing dispute between the state government and a consortium that is building an expressway from Bangalore to Mysore, 110 km (70 miles) away."

"The state government has accused the consortium of buying more land than necessary for the $600 million project to build the road, industrial hubs and new townships."

Could competition between regions within a country make a country overall more competitive?

Although regions away from the capital and large cities may have more competitive costs of labor and real estate will infrastructure and local government prove, at least initially, to be great obstacles?