Perspectives, Measurement and Empirical Investigation
New Horizons in Regional Science series
Edited by Robert Stimson, Roger R. Stough and Peter Nijkamp
Chapter 14: Economic Development Incentives and the Measurement of Local Endogenous Growth: Is There a Need for Modeling Adjustment?
Terry Clower INTRODUCTION Over the past quarter-century there has been much addition to and improvement in theoretical constructs of endogenous growth models. Those improvements include addressing human capital characteristics and investments (Romer, 1986), the role of firms in regional economies (Markusen, 1985), innovation diffusion (McCombie, 1982), entrepreneurship (Acs and Armington, 2004), local leadership (Stough et al., 2007) and many others. Of course, this sampling of contributions does not include notable works by many researchers, nor does it cover the extensive theoretical debates centered on regional convergence/divergence. While the theoretical debates and theorem proofs are rich, relatively little of this research has employed empirical techniques to test these theories. The first, and in many respects foremost, challenge in assessing and quantitatively modeling endogenous growth at the local level is determining the best measure of growth to serve as a dependent variable. Unlike national and state-level analyses, which can rely on well-tested measures of gross product output, there are few demonstrably valid measures of regional product available from public sector sources for sub-state regions. Nascent efforts by the US Bureau of Economic Analysis are just beginning to offer a measure of regional product for Metropolitan Statistical Areas, but these data are only available for a few areas/years. The author is not aware of any public sources for local/regional output estimates for Australia, the UK or Canada. While there are estimates of US local area output available from several private vendors, these data can be cost-prohibitive for research requiring hundreds of cases to...
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