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Regional Economic Growth by Policy-Induced Capital Flows: I. Theoretical Approach

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  • Buhr, Walter

Abstract

In view of regional income disparities this paper discusses alternative allocation strategies of regional economic growth policy: "movement of the workers to the jobs" (passive factor stocks adjustment) versus "jobs to the workers" (active factor stocks adjustment). For policy evaluation of this classical question a dynamic two-regions model is presented (Part I). Its implications will be analyzed on the basis of selected parameters to give an example of possible model applications (Part II). In Part I the analysis will start with general remarks on model construction (stressing the relevance of supply-side growth barriers), then describe the relationships of the model and finally refer to some selected aspects of possible extensions (introduction of a third region as the outside world of the two regions, modification of the model to deal with the no-growth case, consideration of the size of the regions, and incorporation of independent regional investment functions). The concluding remarks will focus on the essential policy parameters of the model.

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Article provided by Springer in its journal Annals of Regional Science.

Volume (Year): 29 (1995)
Issue (Month): 1 (February)
Pages: 17-40

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Handle: RePEc:spr:anresc:v:29:y:1995:i:1:p:17-40

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