Multi-regional economic growth with public good and regional fiscal policies in a small-open economy

This paper is concerned with multi-regional economic growth with environment, capital accumulation and regional public goods. The economy has a fixed number of regions, and there are a production sector and a public sector in a region. The production sector provides goods in perfectly competitive markets. The public sector, which is financed by the regional government’s tax incomes, supplies regional public goods. The public goods affect both firms and households. We show the existence of a unique equilibrium in the dynamic system. We simulate the equilibrium of 3-region economy and examine effects of changes in some parameters on the spatial economy. The comparative statics analysis provides some important insights. For instance, as the technologically least advanced region (TLAR) improves its productivity or amenity, the national output and wealth are reduced, and more people are attracted to the region from the more productive regions. The labor forces in the TLAR’s two sectors are increased, and the labor forces in the other two regions are reduced. The change pattern for the capital distribution is similar to the change in the population distribution. The output levels of the two sectors in the TLAR are increased and in the other two regions are reduced. The TLAR’s total and per capita expenditures on public goods are increased; the other two regions’ total and per capita expenditures are reduced. The per-worker output level, wealth and consumption level per capita, wage rate in the TLAR are increased, and those variables in the other two regions are reduced. The lot size falls and the land rent rises in the TLAR, and the trends are opposite in the other two regions.     

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     

Does spatial employment density spur inter-firm job switching?

Inter-firm job switching of workers is a much cited but seldom measured source of the productivity advantages of spatial employment density. It has been advanced as a conduit for localized knowledge flows as well as labor market matching efficiency. Using a matched employer–employee dataset for Sweden, we estimate the influence spatial employment density has on the probability of inter-firm job switching of private sector workers. Our estimates suggest that a doubling of employment density per square kilometer increases the probability that a random worker switches employer by 0.2 % points. The same effect is substantially higher for more skilled workers. While the effect of a doubling of density is limited, the actual differences in density across the regions in our data amount to a factor over 40, rendering differences in density an important explanation for regional variations in rates of inter-firm job switching.     

Regional growth and spatial spillovers: Evidence from an SpVAR for the Spanish regions

This paper provides a spatial vector autoregressive (SpVAR) analysis of growth spillovers for the Spanish regions over the period 1965–2003. First, a spatial Granger causality analysis is performed that indicates the relevant impact of spatial spillover effects across regions in Spain. Second, the empirical research offers a contribution in the context of the SpVAR modelling estimating the push‐in (from the neighbours to the region) and push‐out (from the region to its neighbours) effects of growth spillovers within a regional economic system. Finally, the proposed methodology reveals empirical evidence about both the short‐run and long‐term regional growth adjustment processes in space and time. The results for the Spanish regional panel data suggest the existence of strong spatiotemporal regional spillovers of growth output. This has important implications for the choice of regional policy goals and regional policy instruments.     

Nonlabor income measures of capital intensity versus capital stock measures in estimatingthe determinants of regional labor productivity differentials: The manufacturing sector

This study is concerned with the estimation and explanation of regional differentials in productivity and with nonlabor income per unit of labor is a usable capital intensity proxy in the estimation of Cobb-Douglas production functions. The approach is to estimate labor productivity as a function: first of regional dummy variables and urbanization; second, of these variables plus capital intensity and other production function variables; and third, of all these variables plus labor force characteristics. Large regional labor productivity differentials emerge. Adding capital intensity measured either as capital stock or nonlabor income per unit of labor substantially reduces these differentials. Adding labor force characteristics then completely eliminates the differentials in most instances. At this point, however, it becomes clear that the estimates based on nonlabor income per unit of labor are as good as, if not better than, those based on the capital stock measure. Finally, the productivity disadvantage of the South is related to its low levels of education and unionization.     

Trust and inventive activity in Europe: causal,spatial and nonlinear forces

This paper investigates the effect of trust on inventive activity. The paper uses generalised trust and about 20 other trust (and trustworthiness)-related indicators and investigates which trust-related variables explain inventive activity in 20 European countries divided into 135 regions with a special focus on causal, nonlinear and spatial forces. The findings indicate that only generalised trust and non-egoistic fairness have robust effects on inventive activity in Europe. Using historical data on the extent and existence of universities as instruments, a causal relationship between trust and inventive activity is set up. Even after controlling for causal, spatial and nonlinear forces, there is a significant direct impact of trust on inventive activity. The result show that a one standard deviation rise in general trust (a 12.5 % rise in the trust level) increases patents per million inhabitants on average by 2 %. Despite the growing literature that associate social capital to inventive activity at the regional level, the direct policy conclusions are weak. This paper argues that moving from “regional learning” to “learning region” may induce researchers to consider direct and down-to-earth policy implications.     

A dissection of the growth of regional disparities in Chinese labor productivity between 1997 and 2002

This paper quantifies the effects of some proximate causes for the regional productivity disparities of China in 1997 and their growth in the five years thereafter. A novel shift-share approach based on input–output data is used to divide the regional differences, so that explicit attention is paid to the regional consequences of China’s specific role in global production networks (with a focus on sectoral value added coefficients). In the process, a new method is proposed to deflate the data in constant prices. The results show that regions with high labor productivity levels in 1997 generally experienced increases of the employment shares in sectors with high productivity levels.     

The effects of labor market spatial structure and the built environment on commuting behavior: Considering spatial effects and self-selection

In response to the problems caused by urban sprawl, smart growth strategies have gained increasing popularity among researchers and policy makers. Although numerous studies have identified the importance of land use policies on travel behavior, the effects are still inconclusive mostly due to two issues: residential self-selection and spatial spillover effect. Using instrumental variables with a generalized spatial two-stage least square estimator (GS2SLS), I investigate the effect of land use on travel behavior after controlling for the self-selection problems and spatial autocorrelation together. Particularly, I attempt to explain the effects of not only land use variables, but also neighborhood labor market spatial structures on commuting patterns. The findings clearly reveal that labor market spatial structure and land use play a significant role in determining commuting behavior at an aggregate level. Specifically, higher jobs-housing balance, more retail and service jobs in a neighborhood, higher density, and walker-friendly environment reduce commuting time and car use and increase non-motorized travel.     

Inequalities in income and education and regional economic growth in western Europe

Does inequality matter for regional growth? This paper addresses this question, using regionally aggregated microeconomic data for more than 100,000 individuals over a period of 6 years. The aim is to examine the relationship between income and educational distribution and regional economic growth in western Europe. Our results indicate that, given existing levels of inequality, an increase in a region’s income and educational inequality has a significant positive association with subsequent economic growth. Educational achievement is positively correlated with economic growth, but the impact of initial income levels is unclear. Finally, the results suggest that inequalities in educational attainment levels matter more for economic performance than average educational attainment. The above findings are not only robust to the definition of income distribution, but also across inequality measurements.     

Pan-European regional income growth and club-convergence

Club-convergence analysis provides a more realistic and detailed picture about regional income growth than traditional convergence analysis. This paper presents a spatial econometric framework for club-convergence testing that relates the concept of club-convergence to the notion of spatial heterogeneity. The study provides evidence for the club-convergence hypothesis in cross-regional growth dynamics from a pan-European perspective. The conclusions are threefold. First, we reject the standard Barro-style regression model which underlies most empirical work on regional income convergence in favour of a two regime [club] alternative in which different regional economies obey different linear regressions when grouped by means of Getis and Ord’s local clustering technique. Second, the results point to a heterogeneous pattern in the pan-European convergence process. Heterogeneity appears in both the convergence rate and the steady-state level. But, third, the study also reveals that spatial error dependence introduces an important bias in our perception of the club-convergence and shows that neglect of this bias would give rise to misleading conclusions.     

Regional disparities in the spatial correlation of state income growth, 1977–2002

This paper presents new evidence of spatial correlation in USA state income growth. We extend the basic spatial econometric model used in the growth literature by allowing spatial correlation in state income growth to vary across geographic regions. We find positive spatial correlation in income growth rates across neighboring states, but that the strength of this spatial correlation varies considerably by region. Spatial correlation in income growth is highest for states located in the Northeast and the South. Our findings have policy implications both at the state and national level, and also suggest that growth models may benefit from incorporating more complex forms of spatial correlation. The views expressed here are those of the authors and not those of the Federal Reserve Bank of St Louis or the Federal Reserve System     

金融危机发生前后我国建筑业生产率变化的实证分析

应用非参数曼奎斯特指数方法计算了我国2005~2010 年建筑业的总产值和增加值的生产率变动指数,结合实际宏观调控和市场发展情况对比分析了金融危机发生前后建筑业生产率及其分解要素变动的原因,发现在此期间我国建筑业的生产率水平增长趋势主要依靠技术变动推动,且建筑业总产值和增加值的生产率在金融危机发生前后剧烈波动。并从动态和静态两个方面对比分析了我国七大经济区域建筑业的生产率变动情况,发现长三角地区效率最高、西南地区效率最低而东北地区的生产效率在金融危机后迅速提升;最后,根据计算与分析结果提出了缩小各区域建筑业生产效率差距和加快建筑业技术扩散的建议。     

Long-run effects of regional policy in an economic union

Regional policy in economic unions (e.g. in the European Union) is usually conducted with the objective of overcoming regional disparities. By developing a two-regional growth model with endogenous technological change, we address the long-term implications of regional policy measures. We show that regional policies aiming to support the less-developed region do not only change the location of production between the regions but also affect the overall growth performance of the union. By altering the incentive to accumulate knowledge capital, regional policies influence the steady-state growth rate. Our analysis shows that a potential trade-off between regional equity and dynamic efficiency exists.     

Regional determinants of total factor productivity in Japan: stochastic frontier analysis

As Japan’s birthrate declines and its society ages, governmental policies need to improve the productivity of regional economies in order to sustain regional growth. This study examines social overhead capital and population agglomeration as drivers of total factor productivity (TFP) growth in Japan. The use of stochastic frontier analysis demonstrates that social overhead capital contributes to TFP growth and, especially, influences productive efficiency. Furthermore, the findings reveal that population agglomeration underpins TFP growth in regional economies. Empirical results also indicate that productive efficiency is high in regions where manufacturing is concentrated and that productive efficiency improves when internationally competitive manufacturers concentrate in regional economies. This study endorses the development of social overhead capital to spur Japan’s regional TFP growth. As such, it indicates that providing social infrastructure and enhancing regional productivity are important strategies for the government to consider in its efforts to achieve sustainable regional growth.     

Entrepreneurship capital and regional growth

This paper introduces the concept of entrepreneurship capital and links it to the economic performance of regions. We give a definition of entrepreneurship capital and suggest different measures of this variable. Economic performance of regions is measured by the stock and the growth rate of regions, labor productivity. We find that entrepreneurship capital is stronger in urban areas and spatially correlated. Using regressions of production functions and growth equations, we find evidence that entrepreneurship capital has a positive and large impact on region's labor productivity. However for growth, this result holds only for risk-oriented measures of entrepreneurship capital and for densely populated regions. We derive policy implications from these findings.     

Technological change and regional development in europe

Recently, the spatial aspects of innovation have received increased attention, from researchers first, and later from policy makers. In this paper we show how some concepts of ‘macro’ innovation theory, such as ‘selection environment’ and ‘facilitators and constraints’ can be used to advantage in matters of regional development. From the results of some case studies for specific European regions we have drawn an outline of a regional innovation policy for the European Community. However, to be successful, such a policy needs to be tailored to the specific requirements of each region.     

Specialization, R&D and productivity growth: evidence from EU regions

The present paper analyzes the effect of regional specialization and R&D expenditures on labor productivity growth. Following Fingleton [Environ Plan 32:1481?C1498 2000], we assume positive externalities in labor productivity growth and technological spillovers depend on interregional distances and economy size. Regional specialization and R&D expenditures are assumed to enhance growth by affecting the level of technology. Although it may seem natural that specialization and R&D expenditures can convey great advantages on economic growth, evidence varies across sectors. We conduct an empirical analysis for two economic sectors and the economy as a whole. Recently developed spatial econometric methods are adopted to control for potential heteroscedasticity in the growth equation.     

A labor market based theory of regional economic development

The Borts and Stein (1964) theory of regional economic growth and development has been widely accepted and discussed in regional economic development literature. Given their assumption that labor demand conditions are invariant between regions and that the labor demand is highly wage elastic, they conclude that regional growth is primarily supply driven and differences in growth among regions arise due to differences in the growth of labor supply assuming that wage elasticity of labor supply is the same across regions. Muth (1968, 1971) claims to have verified the Borts and Steins (BS) conclusion. We propose a regional labor market based model of economic development similar to BS with certain modifications in assumptions and show that the Borts-Stein-Muth (BSM) conclusion is based upon a narrow view of labor demand and supply elasticities. Our theory demonstrates that regional development is mainly labor demand driven once we adopt a broader view of elasticities. The broader view incorporates the direct effect of wages on labor supply and labor demand as well as the indirect effects of wages through changes in inmigration and firms' formations in a region. Received: March 1998/Accepted: August 1998     

Intertemporal and interspatial productivity differentials in U.S. manufacturing

This study analyzes the role productivity plays in explaining the variation in regional manufacturing growth rates. Using the neoclassical growth accounting procedure, we measure productivity from an intertemporal and interspatial perspective. Previous regional studies of U.S. manufacturing look only at the contribution of intertemporal productivity growth in explaning regional growth. These studies ignore the level of productivity and its effect on regional growth. For each year of our study, we rank regions by their interspatial productivity index. We find little difference between the productivity growth rates among the regions of the north and south. Differences among the regions emerge only when we consider interspatial productivity differentials. The North's level of factor productivity is 25 to 30% higher than the South's. The absolute productivity disadvantage of the South, however, is offset by its low input prices. Thus, it is the cost advantage of the South and not its productivity advantage that explains the region's relatively high growth rate.     

A supply-side interregional model of the U.S. manufacturing industry: 1960–78

This paper presents a multiregional simultaneous model of the U.S. manufacturing industry based on the supply-side paradigm, focusing on the behavior of the primary inputs, capital stock and labor force, across the nine Census Regions. The estimated structure shows that the regional investment sensitively responds to the marginal productivity of capital in the respective region relative to the national average, while the net interregional migration basically follows the relative regional wages. As an application, the model is used for evaluating the economic value of migration and analyzing the relationship between the overall national growth and interregional equalization of income.Presented at Ninth Pacific Conference, Molokai, 1985.