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A Spatial Model of Regional Variations in Business Growth in Appalachian States

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Author Info

  • Gebremeskel Gebremariam

    ()
    (Department of Economics, Virginia Tech)

  • Tesfa Gebremedhin

    ()
    (Regional Research Institute, West Virginia University)

  • Peter Schaeffer

    ()
    (Division of Resource Management, West Virginia University)

  • Tim Phipps

    ()
    (Division of Resource Management, West Virginia University)

  • Randall Jackson

    ()
    (Regional Research Institute, West Virginia University)

Abstract

In this study, a spatial growth equilibrium model of business growth is developed and empirically estimated by Generalized Spatial Two-Stage Least Squares (GS2SLS) estimator using cross-sectional data from Appalachian States counties for 1990-2000. Beside the existence of spatial spillover effects, the results suggest that agglomerative effects that arise from both the demand and the supply sides were active in contributing to business growth in the study area during the study period. The policy implications of these findings are: (1) Regional cooperation of counties and communities is advisable and may even in fact be necessary to design appropriate policies that encourage business growth; and (2) Policy makers at the county level may need to design policies that can attract people with high endowment of human capital and higher income into their respective counties.

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File URL: http://rri.wvu.edu/wp-content/uploads/2012/11/wp2007-9.pdf
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Bibliographic Info

Paper provided by Regional Research Institute, West Virginia University in its series Working Papers with number 200709.

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Length: 36 pages
Date of creation: 2007
Date of revision:
Handle: RePEc:rri:wpaper:200709

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Related research

Keywords: spatial growth model; least squares; Appalachia; Regional Development;

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  1. Carlton, Dennis W, 1983. "The Location and Employment Choices of New Firms: An Econometric Model with Discrete and Continuous Endogenous Variables," The Review of Economics and Statistics, MIT Press, vol. 65(3), pages 440-49, August.
  2. Acs, Zoltan J & Audretsch, David B & Feldman, Maryann P, 1992. "Real Effects of Academic Research: Comment," American Economic Review, American Economic Association, vol. 82(1), pages 363-67, March.
  3. Todd M. Gabe & Kathleen P. Bell, 2004. "Tradeoffs between Local Taxes and Government Spending as Determinants of Business Location," Journal of Regional Science, Wiley Blackwell, vol. 44(1), pages 21-41.
  4. Uhlaner, L.M. & Thurik, A.R. & Hutjes, J., 2002. "Post-Materialism as a Cultural Factor Influencing Entrepreneurial Activity across Nations," ERIM Report Series Research in Management ERS-2002-62-STR, Erasmus Research Institute of Management (ERIM), ERIM is the joint research institute of the Rotterdam School of Management, Erasmus University and the Erasmus School of Economics (ESE) at Erasmus University Rotterdam.
  5. Michael Fritsch & Oliver Falck, 2003. "New Firm Formation by Industry over Space and Time: A Multi-Level Analysis," Discussion Papers of DIW Berlin 322, DIW Berlin, German Institute for Economic Research.
  6. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-99, June.
  7. Aki Kangasharju, 2000. "Regional variations in firm formation: Panel and cross-section data evidence from Finland," Papers in Regional Science, Springer, vol. 79(4), pages 355-373.
  8. Storey, David J & Jones, A M, 1987. "New Firm Formation--A Labour Market Approach to Industrial Entry," Scottish Journal of Political Economy, Scottish Economic Society, vol. 34(1), pages 37-51, February.
  9. Bartik, Timothy J, 1985. "Business Location Decisions in the United States: Estimates of the Effects of Unionization, Taxes, and Other Characteristics of States," Journal of Business & Economic Statistics, American Statistical Association, vol. 3(1), pages 14-22, January.
  10. Segarra-Blasco, Agusti & Callejon, Maria, 2000. "Geographical Determinants Of The Creation Of Manufacturing Firms: The Regions Of Spain," ERSA conference papers ersa00p300, European Regional Science Association.
  11. Kelejian, Harry H & Prucha, Ingmar R, 1999. "A Generalized Moments Estimator for the Autoregressive Parameter in a Spatial Model," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 40(2), pages 509-33, May.
  12. Ronald C. Fisher, 1997. "Effects of state and local public services on economic development," New England Economic Review, Federal Reserve Bank of Boston, issue Mar, pages 53-82.
  13. Guimaraes, Paulo & Figueiredo, Octavio & Woodward, Douglas, 2000. "Agglomeration and the Location of Foreign Direct Investment in Portugal," Journal of Urban Economics, Elsevier, vol. 47(1), pages 115-135, January.
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