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Robert J. Stimson, Alistair Robson and Tung-Kai Shyy

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Robert J. Stimson, William Mitchell, Michael Flanagan and Alistair Robson

This chapter reviews the role of endogenous factors in regional economic development that has received much attention following the development of the new growth theory. It refers specifically to the development of a new approach to modelling endogenous regional employment performance, which has been applied over a succession of decadal periods in Australia to identify the factors that explain spatial variations in that dependent performance variable across the nation. In particular, the chapter discusses the advantages of using a functional regions as against the usual de jure regions in addressing the spatial autocorrelation issue typically encountered when using the latter spatial base in spatial econometric modelling. The chapter provides some thoughts on the emergence of a new paradigm for regional economic development analysis and planning and the insights gained from the model applications in Australia.