INDUSTRIAL CENTERS AND REGIONAL GROWTH IN THE PRESENCE OF LOCAL INPUTS*

ABSTRACT. A large proportion of regional production takes place in nontraded goods and services. In addition, significant productivity increases can be observed in some segments of this sector. Starting from these two empirical observations we construct a model of growth in a two-region setting with factor mobility. The growth process is based on endogenous technological change in the nontraded input sector, whose output serves as an input in the production of one of the two final goods, the so-called industrial good. We consider two extreme cases, one with locally limited, the other with interregional knowledge spillovers. Conditions are established under which interior solutions with production of local inputs and steady-state growth in both regions result, and others under which we find a core-periphery pattern with growth concentrated in one region only. The stability of the equilibria is discussed by considering the transition processes. Finally, it is shown that catching-up as well as leapfrogging may occur, if new technologies become available.     

THE EFFECTS OF LOCAL TAXES AND PUBLIC SERVICES ON RESIDENTIAL DEVELOPMENT PATTERNS*

ABSTRACT. This paper incorporates an exogenous taxing and service-providing public sector into a dynamic residential land-use model in order to examine how local-government fiscal policies alter the pace and pattern of residential development. The model is used to derive the comparative-dynamic responses to variations in the income, sales, and property taxes and public-service time paths. The results show how tax and expenditure effects systematically depend upon the anticipated relative growth rates in rents to alternative uses and vary across locations within a given urban area as well as across urban areas themselves.     

LOCAL TAX BURDENS AND THE SUPPLY OF BUSINESS SITES IN SUBURBAN MUNICIPALITIES*

ABSTRACT. The purpose of this study is to examine the effects of local household tax burdens and other community attributes on the supply of business sites made available by local municipalities. A model of community site supply is tested in which municipalities trade off increased fiscal benefits from business location and reductions in environmental quality that accompany industrial and commercial development. This tradeoff is embodied in municipal zoning decisions. Empirical analysis of industrial and commercial zoning in two rapidly growing suburban counties of the Philadelphia metropolitan area provides considerable support for the tenets of community site supply theory.     

NESTED FISCAL IMPACT MEASURES USING THE NEW THEORY OF LOCAL PUBLIC GOODS*

In this paper, we use recent advances in the theory of local public goods to develop more-complete measures of the fiscal impacts of population change. Each fiscal impact measure extends the average-cost-based simple multiplier. The service-based impact measure accounts for the public service production function. The local welfare measure further allows the size of the public budget to vary. The global welfare measure additionally introduces interneighborhood substitution of public services. These four nested measures are calculated for police servims in Vancouver. We demonstrate that the commonly used simple multiplier is an unreliable estimator of fiscal impacts.     

THE POLITICS OF LOCAL GROWTH CONTROL

Local growth controls are categorized as controlling class composition, growth location, or growth rate. Literature concerning the motives for adopting these types of growth controls is examined. Four case studies are presented, two involving growth rate controls and two concerned with growth phasing (locational) controls. Our findings agree with earlier ones that tax minimization and quality of services are the chief motives for rate and location controls, followed by “environmental protection,” often meaning view protection or preventing traffic increases. Agricultural protection was a major factor in two of the cases. We found no desires for economic exclusion or property value enhancement in the adoption of the controls. Questions remain, however, concerning the exclusionary effect of perpetuating rate controls.     

THE DEBT/TAX CHOICE IN THE FINANCING OF STATE AND LOCAL CAPITAL EXPENDITURES*

ABSTRACT. State and local governments commonly finance investment in public capital by issuing bonds and by using current revenues. This paper presents a model of state and local governments' reliance on borrowing in which the optimal share of debt in the financing of capital investment depends on the relative costs of tax and debt finance. Equations are derived and estimated for spending on public capital and the share of debt in the financing of that spending. The results reveal that the level of private incomes plays an important role in both the capital investment and financial decisions of the jurisdiction. Even after controlling for Sunbelt-Snowbelt differences in incomes, grants, outstanding debt and certain demographic factors, the results indicate that state and local governments located in the Snowbelt rely more heavily on bond issues to finance capital investment. Finally, the estimated invariance of the level of state and local capital investment to the share of debt in the financing of the investment suggests that investment decisions are not greatly affected by factors influencing the willingness to issue bonds.     

SERVICE EXPORTS AND REGIONAL GROWTH IN THE POSTINDUSTRIAL ERA*

ABSTRACT. The role of service industries in the regional growth process has been debated for decades. Although the importance of services in providing an essential framework for the development of exports has long been acknowledged, their ability to initiate growth has never been generally accepted. In this paper the change in composition of exports from Canada's four western provinces between 1974 and 1979 is analyzed. It was observed that service exports increased more rapidly than exports of goods on both a direct and a direct-plus-indirect basis in 88 percent of comparisons. In absolute terms, the gain in service exports was equal to 89 percent of that for goods exports.     

MODELING DYNAMIC INTERINDUSTRY REGIONAL GROWTH IN THE PRESENCE OF STRUCTURAL SHIFTS AND OUTLIERS*

ABSTRACT. Kraybill and Dorfman (1992) propose a model of intermediate and export demand which uses ordinary least-squares and linear systems techniques to produce a state-space representation of the time element of output change. Their model produces dynamic multipliers which trace the temporal path of regional growth, and has many advantages over previously employed time series methods. This study extends their methodology to accommodate structural shifts and outliers found in the least-squares relationship between industry and export output by using a recently-introduced technique–multiprocess mixture estimation. An application of the Kraybill-Dorfman method and the extensions proposed here to monthly time series data on Ohio employment is used to illustrate these issues.