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


  • Buhr, Walter


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.

Suggested Citation

  • Buhr, Walter, 1995. "Regional Economic Growth by Policy-Induced Capital Flows: I. Theoretical Approach," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 29(1), pages 17-40, February.
  • Handle: RePEc:spr:anresc:v:29:y:1995:i:1:p:17-40

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    References listed on IDEAS

    1. Brander, James A. & Scott Taylor, M., 1998. "Open access renewable resources: Trade and trade policy in a two-country model," Journal of International Economics, Elsevier, vol. 44(2), pages 181-209, April.
    2. Graciela Chichilnisky & Geoffrey Heal, 1993. "Global Environmental Risks," Journal of Economic Perspectives, American Economic Association, vol. 7(4), pages 65-86, Fall.
    3. Li, Chuan-Zhong & L Fgren, Karl-Gustaf, 1998. "A dynamic model of biodiversity preservation," Environment and Development Economics, Cambridge University Press, vol. 3(02), pages 157-172, May.
    4. Edward Barbier & Bruce Aylward, 1996. "Capturing the pharmaceutical value of biodiversity in a developing country," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 8(2), pages 157-181, September.
    5. Scott Barrett, 1994. "The biodiversity supergame," Environmental & Resource Economics, Springer;European Association of Environmental and Resource Economists, vol. 4(1), pages 111-122, February.
    6. Dockner Engelbert J. & Van Long Ngo, 1993. "International Pollution Control: Cooperative versus Noncooperative Strategies," Journal of Environmental Economics and Management, Elsevier, vol. 25(1), pages 13-29, July.
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