Incorporating demand-side aspects into regional policy: variations in the importance of private investment decision factors across regions

Most regional programs focus on the supply side of regions, emphasizing the attraction conditions offered, such as infrastructure, labor skills, tax incentives, etc. This study analyzes one aspect of the demand side, that is, how investment decisions of private firms are made by asking the question: “Do corporations decide the same way on investments in different parts of the territory?” The paper analyzes the investments of 373 large Brazilian firms during 1996–2004. Based on the investment decisions of these firms, the role of sales, cash-flow, external financing, and working capital is investigated through regression analysis. The regional influence is captured by explanatory variables representing regional and firm characteristics, and by interaction dummies between the region and the main investment determinants. The results indicate significant differences across regions in the importance of investment determinants. This information is important for regional development policy, because different mechanisms should be used in different regions to foster private investments.     

BOT模式下公租房产权激励机制探讨

民间资本不愿意投资公租房项目的主要原因是项目投资回报率低。为了以BOT模式成功引入民间资本参与公租房投资建设,有必要建立相应的投资激励机制。产权激励是最主要的投资激励手段之一,因此本文在建立公租房项目收益函数的基础上,定量分析产权激励政策的激励效果,为促进我国公租房建设提供政策参考。     

Regional Planning and Economic Development in the South West Region,Western Australia

Abstract

The paper examines the influence of a regional planning and development authority (the South West Development Authority) on economic growth in the South West Region of Western Australia. Employment and population changes are analysed along sectoral and spatial criteria. The findings show that between 1983 and 1989, the Authority's influence on the creation of employment opportunities was limited, being confined mostly to some gains in the public sector and to the promotion of the region and the city of Bunbury as tourist destinations. This ineffectiveness is associated with a lack of power to attract private and direct public investment to the region.     

基于风险分摊的PPP项目投资决策与收益分配研究

以公私合作模式(PPP)进行基础设施建设有利于解决政府建设资金紧张以及政府在公共投资管理上的低效问题.文章首先讨论了公私合作投资双方的投资规模上限,通过模型分析得出合作投资有利于项目总风险的降低.其次,建立了公私合作投资双方的最佳投资比例模型,讨论了PPP合作项目风险的识别以及风险科学分配方法,以建立公平的合作关系,充分调动合作双方的积极性.再次,综合考虑投资和风险因素,使用综合评价方法,给出公私双方的风险分摊系数和收益分配比例,并进行了实例分析以验证该方法的有效性.     

Industrial agglomeration of Hong Kong and Taiwanese manufacturing investment in China: a town-level analysis in Dongguan

Dongguan, an emerging world-famous manufacturing metropolis in South China has attracted considerable attention of both academic and policy research over the past two decades. Industrial clusters driven by the influx of foreign direct investment (FDI) in Dongguan have been primarily based on qualitative analysis, while without any differentiations of the sources of FDI. Based on the firm-level statistical data and on-site investigation, this study attempts to explore quantitatively and comparatively the extent and patterns of industrial agglomerations of Hong Kong and Taiwan manufacturing investment in Dongguan. Through comprehensive town-level quantitative analysis, the paper exemplifies that Hong Kong and Taiwan manufacturing agglomerations in various towns of Dongguan that have evolved in different sectoral and spatial patterns. Being consistent with the earlier qualitative analysis, the distinctive trajectories could be interpreted by the different firm linkages and comparative advantages of Hong Kong and Taiwan as source regions, as well as the distinct interactions with Dongguan as host region in the context of global economy.     

Growth effects of regional policy in Germany: results from a spatially augmented multiplicative interaction model

Private investment subsidies are a key instrument for regional policy making to foster the economic development in lagging regions. In this paper, we analyze their effect on labor productivity growth for German labor market regions for the period from 1994 to 2006. A spatially augmented multiplicative interaction model based on neoclassical growth theory is used, which allows us to assess the marginal effect of regional policy proxied by overall payments of the main German regional development program on the region’s convergence speed conditional on its initial income position as well as policy-related spillovers from its spatial neighborhood. Our results show a statistically significant positive effect of regional policy on labor productivity growth, which increases, the further away the supported region is from its steady-state income level, and the more grants are provided to its geographical neighborhood. The latter effect highlights the existence of positive spatial spillover effects from regional policy in Germany, which enhance the attractiveness of the whole macro region for private sector investments. The additional growth stimulus provided by a 1 % increase in the region’s funding volume is thereby related to an up to 0.3 % gain in terms of labor productivity growth. For regions with the highest initial gaps to steady-state income in the sample distribution, the regional policy stimulus accounts for almost 8 % of the regions’ productivity growth performance.     

Location of foreign manufacturers in China: Agglomeration economies and country of origin effects

Using data from China, this article finds that agglomeration economies derived from the clustering of manufacturing and foreign investment activities, combined with better access to markets, influence the location of foreign manufacturers. Foreign enterprises are attracted to cities with investment incentives, but they avoid high labour cost locations. The locational patterns also suggest country of origin effects. American, Hong Kong and Taiwanese manufacturers tend to value access to domestic markets, while Japanese investors favour port cities. Further analysis indicates the presence of origin of country effects at the sectoral level.Received: 7 May 2002, Accepted: 12 November 2002, JEL Classification: F23, O18, O53Special thanks go to Jessie Poon, Zhaoyong Zhang, Breandán Ó hUallacháin and three anonymous reviewers for their constructive comments and suggestions. Any remaining errors belong to the author.     

Regional policy and spillovers from FDI in the UK

This paper tests one of the fundamental assumptions of regional policy makers over the last 20 years. Western governments, in seeking to attract internationally mobile capital have spent significant sums of public money on subsidies and grants. This is justified on the basis that the social returns to FDI are significantly greater than the private returns, due to productivity or technology spillovers from inward investors to domestic industry. However, this paper generates some estimates of these spillovers for both assisted areas and non-assisted areas in the UK, and questions the size of these social returns, arguing that productivity spillovers do not occur in regions where significant inward investment incentives are available.Thanks are due to Holger Gorg, Sourafel Girma, Jim Love, Max Munday, Nigel Pain, Jim Taylor, Colin Wern and to seminar participants in Cardiff, Aston, Lancaster and London for comments on an earlier version of this paper.Received: June 2001/Accepted: May 2003     

The Sudden Rediscovery of Housing Supply as a Key Policy Challenge

Housing supply was suddenly rediscovered as a major challenge for English housing policy in the early 2000s, after nearly three decades of neglect. There does appear to be a problem of inadequate and unresponsive housing supply in England, by international or historical standards. Although shortcomings of the house building industry and limited public investment play a part, the most important factor explaining England's housing supply problem is the operation of the land-use planning system. Policies, procedures and incentives are all implicated. The most important impact is a long-term real rise in the price of housing, differentiated by region, which is damaging both economically and socially, although there are some compensating benefits in terms of the environment. The Barker Inquiry has proposed a radical supply agenda, which has been substantially accepted by the present government. This proposes that planning targets should be geared to affordability, with more land released and market-contingent mechanisms, more social housing and supporting infrastructure investment. There is room for debate about the magnitudes involved, the role for more proactive approaches to development and the best fiscal mechanisms and incentives. However, given the fraught political economy of housing and planning in the pressured regions, there is considerable doubt as to whether these measures will be implemented on the requisite scale.     

Gentrification in new-build and old-build transit-oriented developments: the case of Bengaluru

Indian cities have seen substantial investment in building metro systems, with a few cities operating full-fledged metro. In the case of city of Bengaluru, the influx of public investment on transit and favourable zoning incentives are attracting around 26% of housing investment in transit-oriented developments (TODs). This paper examines whether such a large-scale influx of public and private capital is leading to gentrification in TODs. The findings indicate that the new housing projects in TODs are causing new-build gentrification, but the old build existing housing remains ungentrified. Towards mitigating gentrification issues, the paper recommends inclusive and equitable TOD strategies.     

Optimal investment in a tax increment financing district

In this paper we introduce a general model of property tax increment financed redevelopment. The model illustrates how expenditures on public infrastructure and housing induce private capital investment and growth in property values. It can be used to frame the problem of how best to manage a tax increment financing (or TIF) fund to realize redevelopment objectives. The solution to this problem suggests when the use of TIF is appropriate. We present estimates of the model‘s parameters for a TIF district in Urbana, Illinois, a solution to the fund management problem, and an evaluation of TIF‘s suitability in this case. Received: November 1997/Accepted: March 1998     

ECONOMIC AND POLITICAL DETERMINANTS OF REGIONAL INVESTMENT AND TECHNICAL CHANGE IN CANADA

ABSTRACT This paper seeks to develop an understanding of the most significant determinants of spatio-temporal patterns of private capital accumulation in Canadian regions by focusing on both economic and political attributes of the regional investment context. Economic variables include spatial variations in profitability of production. labor costs, and aggalomeration economics, while the chief political dimension is the extent of union organization and militancy within the regional labor force. Analysis of provincial manufacturing activity1 investigates the relative importance of economic versus political variables in shaping the histories of investment and technical change in individual provinces from the mid-1980s to the present.     

REINDUSTRIALIZATION IN DETROIT: CAPITAL MOBILITy AND CORPORATE INFLUENCE

The absence of a national economic development policy and the need of officials in older cities to rebuild the urban tax base have produced intense competition among municipalities and states to attract corporate investment. Local economic development programs combine state enabling legislation and federal funds to provide financial incentives and facilitate site preparation for new industrial and commercial facilities. The winners in this competition, however, have not been cities and their residents, but large corporations, whose position as major local revenue producers enables them to shape policies, not through behind the scenes manipulation, but through their capacity to withdraw badly needed private capital Although city officials are responsible for formulating development packages, they exercise little policy discretion: the mobility of corporate capital forces them to offer the maximum incentives allowed by state and federal laws.     

The impact of uncertain environmental regulatory policy on optimal plant location and anti-pollution technology selection

This paper considers pollution tax rate functions that decrease progressively with distance in order to examine in depth the effectiveness of pollution tax incentives. We find that pollution tax incentive policies, regardless of the level of incentives or the size of increases in incentives, can impel the firm to purchase anti-pollution equipment. However, increases in the size of incentives cause the firm to relocate back to city centers. The size of incentive increase thus has an uncertain impact on location choice, suggesting that increases may also produce the opposite of the intended effect by “pulling” plants back to city centers. This confirmed the argument of Oates and Baumol (Economic analysis of environmental problems, Columbia University Press, New York, 1975, p. 104) that taxes on polluting activities may fail to do their job with full effectiveness. In addition, we have also found that increased uncertainty over pollution tax policies tends to increase purchases of anti-pollution equipment for a risk-averse firm. This impact is unrelated to the investment flexibility of anti-pollution equipment. These results are different from those of Carlsson regarding risk-neutral firms. In addition, the findings of this study that increases in pollution taxes tend to cause a firm to purchase additional anti-pollution equipment and leave city centers differ from those of Hwang and Mai in the latter result.     

Swedish experiences of incentives for the protection of nature

In Sweden, the maintenance of biological diversity is considered a key element in the development towards a sustainable society. However, the link between sustainable development and biodiversity is far from clear to everybody. It is an important task to explain this link. A cornerstone of Swedish biodiversity policy is that each sector in society has a sectoral responsibility to ensure that its own activities do not cause any long-term loss of biodiversity (but instead help to maintain it). The concept of sectoral responsibility is an important feature of environmental policy in the context of developing new incentives. Besides ‘traditional’ nature conservation tools — such as the protection of sites, purchasing land and general environmental legislation — new, more market-oriented incentives have emerged during the last few years, e.g. certifications schemes in forestry and eco-labelling in agriculture. These new incentives have developed alongside political processes (parliament, government, agencies etc.) and have been formulated and negotiated by ‘market players’. Environmental NGOs, such as WWF Sweden and the Swedish Society for Nature Conservation, have often taken the lead role in this process. Another feature of these incentives is that they not only apply to products but also to production; an example of this is in forestry where not just the wood but also forest management are in focus. The national agri-environmental programmes, within the context of the European Union's subsidy programme for environmental measures in agriculture, provide a powerful tool for conserving and enhancing biodiversity. In Sweden at least, there is nowadays complete acceptance for the basic view that it is both desirable and necessary to pay the farmers for their ‘production’ of common benefits such as biodiversity in well-managed pastures and meadows. Market-oriented incentives, such as eco-labelling and certification schemes, have an important role to play and should complement other, more traditional tools such as general environmental legislation and protection of sites.     

Effects of dynamic and spatial externalities on local growth: Evidence from Brazil

This paper analyses the impact of economic externalities on the local growth emphasizing the industrial, geographic, and temporal scope of agglomeration economies. Thus, we estimated a spatial dynamic panel model using GMM associated with the use of data at different levels of sectoral aggregation. Estimation takes into account the endogeneity of agglomeration economies. Our database consists of 558 Brazilian regions for 1995–2015. The main results suggest that while externalities act in a local dimension they also have a regional scale. These externalities are determined by their temporal trajectory. The effects of agglomeration economies on local growth are sensitive to the choice of sectoral aggregation. Local growth exhibits positive specialization effects and negative diversity effects. However, greater industrial diversity of neighbouring regions has a positive impact on local growth.     

An application of the Beckmann-Ingene argument to a monopsonist's spatial pricing problem

The purpose of this note is to show that an analogue of the Beckmann-Ingene proposition on price policies of a spatial monopolist applies to a properly formulated profit maximization problem for a spatial monopsonist. The proof of this fact uses the same linear transformation employed in the Beckmann-Ingene argument. Received: 15 October 1998 / Accepted: 9 January 1999     

The uneven geography of housing affordability stress in Canadian metropolitan areas

Housing in‐affordability is a growing problem within Canadian urban areas. This research asks an as‐yet unanswered spatial question: where do those suffering high rates of housing affordability stress reside and what do the spatial patterns imply about policies intended to address this housing problem? This paper tabulates and maps the spatial distribution of households that pay excessive amounts of their income for rent in order to identify locations within metropolitan regions where housing affordability stress is greatest. It is found that significant unevenness characterises the spatial distribution of housing affordability problems in major Canadian census metropolitan areas (CMAs). Only a minority of places conform to the North American stereotype that concentrates this problem near the city centre. Where some CMAs have concentrations of the problem in the inner city or, alternatively inner suburb, other metropolitan areas exhibit a more diffuse pattern of housing in‐affordability. The locus of the problem is also variable depending on whether the household is of the family or non‐family type. The interpretation of the uneven patterns relates broadly to features of supply and demand that have been identified in previous research. From both a policy and theoretical perspective this work demonstrates that greater attention needs to be paid to the spatial aspects of housing affordability and to the related, economically‐induced risk of homelessness in Canadian metropolitan areas.     

Regional investment incentives in Germany: Impacts on factor demand and growth

The aim of this paper is to analyse the effects of regional investment incentives – a main component of regional policy in West Germany – on regional factor demand (investment and labor), growth and convergence of per capita income for the period 1978 to 1989. Demand for investment and labor arise from a model of cost minimization at given output with a putty-clay production function. The production function allows for regional technical efficiency. To model the output effect on factor demand an auxiliary output function is specified. In estimating the functions attention is given to the short-run dynamics and the long-run behaviour of factor demand by error-correction models. The empirical long-run relationships are then used to simulate the effects of regional investment incentives. In contrast to most studies for other countries the empirical results provide evidence that regional policy in Germany induces not only additional investment but also creates positive employment effects. However, the effects of regional investment incentives on growth and convergence of labor productivity are negligible. Received: October 1996/Accepted: May 1999     

Urban and regional change in Australia: an empirical introduction

Recent changes in the spatial distribution of the population in Australia are examined. In particular, changes in population by state are analyzed for the period 1971-1981. The relationship of these changes to shifts in economic activity, private investment, and banking activity is considered. "Results show there have been only small shifts toward population growth areas. These results are interpreted in part as a consequence of nonlocal multipliers and linkages back to established areas, but also as a reflection of the unique features of the Australian urban and regional system."