Transportation–Communication Capital and Economic Growth: A VECM Analysis for Turkey

This paper analyses the short- and long-term relationships between the transportation–communication capital and the output for Turkey. The study applies a Cobb–Douglas production function under the assumption of constant returns to scale and employs co-integration analysis by estimating a vector error correction model (VECM). As a result of the VECM estimation, one co-integrating relationship is detected. The results based on the impulse response function analysis imply that per labour transportation–communication capital appears both to have been a crucial input in the Turkish productive process and to have had a positive crowding in effect on the per labour non-residential total capital formation. Moreover, the results support the argument that the transportation–communication capital has a lagged impact on economic growth. The long-term accumulated elasticity of output to transportation–communication capital has been found to be 0.59. The long-term accumulated marginal product was also calculated. It implies that a 1 Turkish Lira increase in per labour transportation–communication capital results in a long-term rise of 1.45 Turkish Liras in per labour output. All these findings suggest that transportation–communication capital may be a powerful tool for policy-makers to promote long-term per labour real output growth in Turkey.     

The Regional Allocation of Public Investment: Efficiency or Equity?

In this paper we examine the effect of public investment on the regional economies of Japan. The efficient policy for regional allocation of public capital is to invest in highly productive regions, whereas the actual policy pursues equity goals by allocating more public investment to depressed regions. We determine the effects of this equity- oriented allocation by estimating the aggregate regional production function and calculating the productivity of public capital stock for each region, using a cross-sectional time-series data set. Our results show that the marginal productivity of public capital has recently declined in most depressed regions, whereas the productivity in developed regions (e.g., Tokyo, Osaka) has increased slightly. We compare alternative policies of allocating public investment and their effects on the regional and national economies using numerical simulations. We then quantitatively describe the trade-off between the efficient and the equitable allocation of public investment.     

Talent,technology and tolerance in Canadian regional development

This article examines the factors that shape economic development in Canadian regions. It employs path analysis and structural equation models to isolate the effects of technology, human capital and/or the creative class, universities, the diversity of service industries and openness to immigrants, minorities and gay and lesbian populations on regional income. It also examines the effects of several broad occupations groups—business and finance, management, science, arts and culture, education and health care—on regional income. The findings indicate that both human capital and the creative class have a direct effect on regional income. Openness and tolerance also have a significant effect on regional development in Canada. Openness towards the gay and lesbian population has a direct effect on both human capital and the creative class, while tolerance towards immigrants and visible minorities is directly associated with higher regional incomes. The university has a relatively weak effect on regional incomes and on technology as well. Management, business and finance and science occupations have a sizeable effect on regional income; arts and culture occupations have a significant effect on technology; health and education occupations have no effect on regional income.     

ECONOMIC DEVELOPMENT TRENDS IN THE USSR, 1970-1988: PART I (PRODUCTION AND PRODUCTIVITY)

The first of two articles devoted to spatial and temporal trends in economic development and levels of living within the USSR focuses on changes in the pattern of absolute and per capita economic output—national income produced and gross value of industrial output (at the republic and economic regional level, respectively). It then investigates the question of whether divergence or convergence has occurred among republics and economic regions in terms of these indicators. Finally, it assesses patterns of change in labor and capital productivity across Soviet republics.     

The Dynamics of Regional Invention and Innovation: Innovative Capacity and Regional Change in the Twentieth Century

The twentieth century dynamics of United States regional invention trends are explored in this study. Historically, regions that become major loci of invention have always gained much influence, through innovation diffusion, their human capital infrastructures, and their national economic and political projection. The United States has experienced a remarkable inversion of regional roles on invention since the middle of the twentieth century, where the predominant position of heartland regions (the Northeast and the Midwest) is being overturned. This analysis develops a macro-level measure of inventive output, innovative capacity, to evaluate changes in regional inventive performance and the potential for innovation. The analysis of patent age cycles provides insights on the temporal structure of the national and regional innovative capacity, and on the dynamics of crisis periods for U.S. scientific and technological invention. A consideration of regional income trends over the twentieth century and of innovative capacity performance shows the potential importance of endogenously generated inventions for regional development.     

Knowledge Spillovers and Total Factor Productivity: Evidence Using a Spatial Panel Data Model

This article investigates the impact of knowledge capital stocks on total factor productivity (TFP) through the lens of the knowledge capital model proposed by Griliches (1979) , augmented with a spatially discounted cross-region knowledge spillover pool variable. The objective is to shift attention from firms and industries to regions and to estimate the impact of cross-region knowledge spillovers on TFP in Europe. The dependent variable is the region-level TFP, measured in terms of the superlative TFP index suggested by Caves, Christensen, and Diewert (1982) . This index describes how efficiently each region transforms physical capital and labor into output. The explanatory variables are internal and out-of-region stocks of knowledge, the latter capturing the contribution of cross-region knowledge spillovers. We construct patent stocks to proxy annual regional knowledge capital stocks for N =203 regions during 1997–2002. In estimating the effects, we implement a spatial panel data model that controls for spatial autocorrelation as well as individual heterogeneity across regions. The findings provide a fairly remarkable confirmation of the role of knowledge capital contributing to productivity differences among regions and add an important spatial dimension to discussions in the literature by showing that productivity effects of knowledge spillovers increase with geographic proximity.     

Regional Inequality in the EU: How to Finance Greater Cohesion

After outlining the overall scale and evolution of European Union (EU) public expenditure, this paper examines the mechanisms driving the allocation of Cohesion Policy resources. The analysis reveals the extent to which the outcome of the policy's principle- and formula-driven allocation mechanisms is modified by precedent and politico-economic considerations. In particular it shows that the consequent per capita final financial allocations (the intensity of aid) are greatest not for the poorest areas: up to 84% of EU GDP per head, aid increases as income increases. The analysis also emphasizes the on–off nature of the EU policy. In the light of these results a series of simulations are carried out. Attention is given first to a more economically sensitive treatment of transition regions, whose relative growth results in shifts from one category to another and to a mechanism capable of providing differentiated support to all disadvantaged regional economies. Attention is then given to ways of ensuring that final allocations are inversely proportional to income, and that most aid is concentrated on the most disadvantaged areas (Section 5). In the conclusions attention is paid to guidelines which might apply to the reform of the EU Cohesion Policy.     

DETERMINANTS OF KNOWLEDGE PRODUCTION AND THEIR EFFECTS ON REGIONAL ECONOMIC GROWTH

ABSTRACT We provide a Bayesian spatial Markov Chain Monte Carlo model composition (MC³) analysis of growth rates in European regional patenting activity. Based on theoretical models on innovation and growth, we identify a large set of candidate explanatory variables that characterize regional stocks of knowledge, including: human resources devoted to innovative activity, scientific and technical capabilities, public and private investments, government policies, as well as regional industry structure, and indicators of regional technology gaps that reflect distance from the technological frontier. Our analysis shows that accommodating spatial dependence and heterogeneity leads to different conclusions regarding factors important for technological transfer and knowledge spillovers.     

Impact of the Russian Financial Crisis on Stock Exchanges in Central and Eastern Europe

A German economist analyses the structure of capital flows to Central and Eastern European countries following the Russian financial crisis in August 1998. Special attention is devoted to the behavior of equity flows and their impact on the stock exchanges in the region and on enterprises' ability to raise capital. In addition, the paper provides an assessment of the effects of the establishment of pension funds on the development of the stock exchanges and evaluates the prospects for several newly established trading places for stocks of companies from Central and Eastern Europe. Journal of Economic Literature, Classification Numbers: F30, G15, G20. 1 figure, 4 tables, 24 references.     

Regional Efficiency in the European Union

This paper examines existing disparities in technical efficiency levels across the European regions over the period 1986–2002. The results reveal that technical efficiency is not randomly distributed across space in the European setting. On the contrary, the different tests performed highlight the presence of positive spatial autocorrelation and spatial heterogeneity in the distribution under consideration. In fact, we have detected several regional clusters characterized by similar efficiency levels distinguishing them from the rest of the sample. Nevertheless, the estimates carried out show the existence of a process of regional convergence in terms of technical efficiency during the study period. Our findings also reveal that factors such as the regional stock of capital per worker or the patterns of productive specialization are relevant in explaining the changes in technical efficiency experienced by the European regions between 1986 and 2002.     

On the Comparative Effectiveness of the Economic Structure of Regions

An important problem in insuring optimal operation of the centrally planned and state-controlled economy of the Soviet Union is to measure the efficacy of the industrial structure and productive specialization of republics and economic regions. Several measures of the efficacy of regional economies have been proposed, involving various relationships between labor productivity, the value of capital plant and equipment and the value of output. All these measures are unsatisfactory, in the author's view, and an alternate approach is suggested, using the net concept of national income produced by regions. This approach has been made possible by the recent calculation of input-output tables for republics and economic regions. The idea of using national income as a measure of regional economic efficacy was first proposed in the Soviet literature by A. Ye. Probst, whose comments appear elsewhere in the issue of Soviet Geography.     

The effects of public capital on private sector performance in Turkish regional manufacturing industries1

This article investigates the impact of public capital formation on private manufacturing sector performance in the seven geographical regions of Turkey and in aggregate. A vector autoregression (VAR) model has been employed to estimate long run accumulated elasticities of private sector variables with respect to public capital for the time period 1980–2000. The results show that public capital affects private output positively in aggregate and in all regions apart from the Black Sea and Mediterranean regions. The results also reveal that only in the Marmara region, the impact is positive both on input and output. The public capital crowds in private sector inputs in some regions.     

Human capital accumulation and long‐term income growth projections for European regions

We propose an econometric framework to construct projections for per capita income growth and human capital for European regions. Using Bayesian methods, our approach accounts for model uncertainty in terms of the choice of explanatory variables, the nature of spatial spillovers, as well as the potential endogeneity between output growth and human capital accumulation. This method allows us to assess the potential contribution of future educational attainment to economic growth and income convergence among European regions over the next decades. Our findings suggest that income convergence dynamics and human capital act as important drivers of income growth for the decades to come.     

EFFECT OF ENVIRONMENTAL REGULATIONS ON STATE- LEVEL MANUFACTURING CAPITAL FORMATION*

ABSTRACT We quantify the effect of environmental regulations on regional capital formation in the manufacturing sector. Our model integrates environmental regulations into a choice-theoretic model derived from Tobin's q theory of investment. It is postulated that more stringent environmental regulations raise the firm's cost of production both directly and indirectly, thus reducing the firm's q value and lowering the rate of capital formation. The empirical results indicate that the effect of environmental regulations on net capital formation is modest. We do find that environmental regulations affect regions differently. More stringent environmental regulations will improve the relative position of manufacturers in the North-east, South Atlantic and West. Over one-fourth of the dollar losses in manufacturing capacity would occur in five states: Texas, California, Pennsylvania, Ohio and Michigan.     

THE IMPACTS OF TRANSPORTATION INFRASTRUCTURE ON PROPERTY VALUES: A HIGHER-ORDER SPATIAL ECONOMETRICS APPROACH

ABSTRACT.  We evaluate the impacts of enhanced transportation systems on property values for U.S. manufacturing firms, allowing for higher-order spatial error correlation. We use a state-level model of production cost and input demand that recognizes the productive contribution of public transportation infrastructure stocks. Our findings include significant impacts on property shadow values and input composition from both public highway and airport investment. We also find that these effects have a spatial dimension that depends on the proximity of the transport system; at least one and as many as three spatial error lags are significant in our estimating equations. Further, recognizing production growth from transportation system improvements augments the associated incentives for private capital investment.     

MULTIREGIONAL STOCK ADJUSTMENT EQUATIONS OF RESIDENTIAL AND NONRESIDENTIAL INVESTMENT IN STRUCTURES*

ABSTRACT. Despite the importance of predicting investment expenditures for regional economic forecasting and policy simulation, little has been published on predicting regional investment expenditures. The primary reason is the lack of data on regional investment and capital stocks. Using two constructed investment data sets, this paper specifies and econometrically estimates stock adjustment equations of residential and nonresidential investment for the fifty states plus Washington, D.C. Unique aspects of the approach include maximum use of United States and regional data, and pooled estimation. The estimated pooled equations provide satisfactory historical fits to investment for most states. Also, the paper presents out-of-sample forecasts and simulated investment responses to an exogenous production increase.     

High‐speed railway to success? The effects of high‐speed rail connection on regional economic development in China

We find that high‐speed railway connection in China has led to a reduction in GDP per capita for connected peripheral prefectures. We use the least‐cost path‐spanning tree network to address the nonrandom route placement issue. We find that the reduction of GDP per capita is driven by significant contractions in capital input, industrial output, and skilled labor outflow. We present evidence to support a trade‐based channel in light of falling transportation costs between peripheral and metropolitan regions. Our finding highlights the importance of the cost of human transport.     

DECENTRALIZED TAX COMPETITION FOR BUSINESS CAPITAL AND NATIONAL ECONOMIC EFFICIENCY*

ABSTRACT For a nation composed of independent regions, the effects of local tax competition for business investments are examined. It is first shown that atomistic regional authorities tax only local resources to finance the provision of public services to business. Thus, an efficient interregional equilibrium is induced. Various political/institutional constraints are shown to cause misallocation of the capital stock and an inefficient provision of public services. The characterization of the inefficiency is shown to vary widely, depending upon the constraint under consideration.     

Unwritten Factors Affecting Structural Funds: The Influence of Regional Political Behaviours on the Implementation of EU Cohesion Policy

While EU regional policy has the ambitious objective of supporting lagging regions and promoting inter-regional convergence, its impact is dependent on the ability of regional policymakers to secure and use EU funding to meet the region's needs. This paper aims to show under which conditions politics has a defining influence on the distribution, allocation and utilization of structural funds (SF), specifically in Objective 1 regions. The empirical analysis focuses on the 2000–2006 programming cycle in France, Germany, Italy, Spain and the UK. The results show that regions politically aligned with national governing coalitions tend to perform better in terms of received SF support and enjoy more flexibility in implementing SF. However, the influence of regional political behaviours on economic performances is very limited. The findings confirm the importance of politics in influencing SF implementation, but its limited influence on economic outcomes.     

TheConvergence of the Italian Regions and Unemployment: Theory and Evidence

We explore the links between the halt of the convergence process of Italian regions at the beginning of the 1970s and the increase in regional unemployment dispersion. We consider a neoclassical exogenous growth model with an imperfect labor market and show that during the transitional dynamics the imperfections of the labor market negatively influence the output growth rate. In particular, the model implies that centralized bargaining is likely to set a national minimum wage that is too high with respect to the labor productivity of the less developed regions, resulting in a negative impact on their per capita output growth. We test the implications of the model on a regional panel data set using the GMM framework. Both our market distortion measure and the unemployment rate are found to significantly lower the growth rate of per capita output.