OPTIMAL REGIONAL GROWTH MODELS: MULTIPLE OBJECTIVES, SINGULAR CONTROLS, AND SUFFICIENCY CONDITIONS

ABSTRACT We develop a generalized Harrod-Domar type of model for optimal regional growth which allows determination of the optimal allocation of regional public investments and which considers multiple growth objectives, as well as both normal and singular fiscal instruments. This general model is shown to include most of the previous optimal regional growth models as special cases. Necessary conditions for some special cases of the general model are analyzed in detail, and decision rules associated with derived optimal regional growth policies are articulated. These special cases verify that singular controls do exist in certain instances, and that they must be considered for the complete specification of optimal regional growth policies; this is significant because singular controls have not been previously analyzed in the literature. We conclude the paper with a discussion of sufficiency conditions for optimal regional growth models which is more general than that given by previous authors.