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Growth Effects of Spatial Redistribution Policies

Author

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  • Calin Arcalean

    () (Indiana University)

  • Gerhard Glomm

    () (Indiana University)

  • Ioana Schiopu

    () (Indiana University)

Abstract

We develop a two-region, two sector model with migration and public investment in infrastructure and education. In a numerical example calibrated to Portugal, we find that the structural funds can improve the growth rate of the lagging region and slightly reduce the regional inequality, without necessarily producing convergence. When the mix of national public investment departs from optimum, the allocation of supra-national funds across infrastructure and public education can partially offset this national sub-optimality. We also find that the short-run growth-maximizing mix is different from the long-run mix. Moreover, the rich region has an incentive to bias the allocation of structural funds towards human capital formation.

Suggested Citation

  • Calin Arcalean & Gerhard Glomm & Ioana Schiopu, 2007. "Growth Effects of Spatial Redistribution Policies," Caepr Working Papers 2007-002, Center for Applied Economics and Policy Research, Economics Department, Indiana University Bloomington.
  • Handle: RePEc:inu:caeprp:2007002
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    Cited by:

    1. Jaime Alonso-Carrera & Maria Jesus Freire-Seren & Baltasar Manzano, 2008. "Macroeconomic Effects From The Regional Allocation Of Public Capital Formation," CAMA Working Papers 2008-09, Centre for Applied Macroeconomic Analysis, Crawford School of Public Policy, The Australian National University.
    2. Santos-Arteaga, Francisco J. & Di Caprio, Debora & Tavana, Madjid & O’Connor, Aidan, 2017. "Innovation dynamics and labor force restructuring with asymmetrically developed national innovation systems," International Business Review, Elsevier, vol. 26(1), pages 36-56.
    3. Calin Arcalean & Gerhard Glomm & Ioana Schiopu & Jens Suedekum, 2010. "Public budget composition, fiscal (de)centralization, and welfare," Canadian Journal of Economics, Canadian Economics Association, vol. 43(3), pages 832-859, August.
    4. Wei-Bin Zhang, 2014. "Multi-regional economic growth with public good and regional fiscal policies in a small-open economy," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(2), pages 409-429, March.
    5. repec:gam:jsusta:v:9:y:2017:i:8:p:1432-:d:108228 is not listed on IDEAS
    6. Dawid, H. & Harting, P. & Neugart, M., 2014. "Economic convergence: Policy implications from a heterogeneous agent model," Journal of Economic Dynamics and Control, Elsevier, vol. 44(C), pages 54-80.
    7. Chetan Ghate & Gerhard Glomm & Jialu Liu Streeter, 2016. "Sectoral Infrastructure Investments in an Unbalanced Growing Economy: The Case of Potential Growth in India," Asian Development Review, MIT Press, vol. 33(2), pages 144-166, September.
    8. Alonso-Carrera, Jaime & Freire-Serén, María Jesús & Manzano, Baltasar, 2009. "Macroeconomic effects of the regional allocation of public capital formation," Regional Science and Urban Economics, Elsevier, vol. 39(5), pages 563-574, September.
    9. Claudiu-Tiberiu ALBULESCU & Daniel GOYEAU, 2013. "EU Funds Absorption Rate and the Economic Growth," Timisoara Journal of Economics and Business, West University of Timisoara, Romania, Faculty of Economics and Business Administration, vol. 6(20), pages 153-170.
    10. Chetan Ghate & Gerhard Glomm & Jialu Liu, 2012. "Sectoral infrastructure investment in an unbalanced growing economy: The Case of India," Indian Statistical Institute, Planning Unit, New Delhi Discussion Papers 12-07, Indian Statistical Institute, New Delhi, India.

    More about this item

    Keywords

    endogenous growth; spatial redistribution; regional policy; European Union;

    JEL classification:

    • H7 - Public Economics - - State and Local Government; Intergovernmental Relations
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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