We are pleased to provide a forum for disseminating works-in-progress that support our mission to promote excellence in interdisciplinary, scholarly research on the economic and social development of lagging regions. These research papers focus on theories and history of regional development, methods for studying regions, and policies for stimulating their development. We expect that most of these papers will be published in both national and international academic journals.
Woody Biomass Processing: Potential Economic Impacts on Rural Regions
Randall Jackson, Amir B. Ferreira Neto, and Elham Erfanian
Working Paper 2016-04
WP 2016-04 (pp. 40, 2,652 KB)
Abstract: This paper estimates the economic and environmental impacts of introducing woody biomass processing (WBP) in a rural area in central Appalachia. WBP is among the most promising additions to energy generation portfolios for reducing import dependency and at the same time providing economic opportunity to stimulate regional economies, especially in rural regions where economic development options are often limited. We use an input-output framework to assess regional economic impacts of introducing WBP under three different pathways, fast pyrolysis, ethanol and coal/biomass to liquids. Based on an analysis of local biomass feedstock supply and using the results of life cycle assessments to parameterize the three production functions, we find that the proposed WBP will increase the regional output by $333.3 to $564.0 million dollars; it will increase income by $51.31 to $70.75 million dollars and employment by 850.7 to 1670 jobs in the region. Of these impacts, the direct portions are 63% to 77% of the total impact, depending on the chosen pathway. The results from the accompanying environmental assessment show that only the ethanol pathway has both economic and environmental benefits.
The RRI Co-Authorship Network Analysis: 1965-2014
Jing Chen and Randall Jackson
Working Paper 2016-03
WP_2016-03 (pp. 25, 1,952KB)
Abstract: The year 2015 marks the West Virginia University (WVU) Regional Research Institute’s (RRI) 50th year anniversary and this article conducts a case study to explore the scholarly collaborations by social network analysis (SNA) in the RRI research community since its inception in 1965. We have discovered that the evolving endogenous and exogenous co-authorship networks grow and gain complexity as the Institute develops and incorporates more researchers. However, this case study also uncovers and verifies several social network analysis (SNA) limitations on research pattern analysis.
Object Orientation, Open Regional Science, and Cumulative Knowledge Building
Randall Jackson, Sergio Rey, and Péter Járosi
Working Paper 2016-02
WP_2016_02 (pp. 36, 764 KB)
Abstract: Despite the growing need for an improved understanding of complex relationships among interacting systems, critical air, water, energy and socio-economic system research is carried out independently far too often. When it is comprehensively approached within integrated modeling environments, research teams often must recreate modeling foundations on which to base their own research, often because they are unable to access similar foundations already established by others. Moreover, there is an increasing awareness that energy, water, and environmental issues are best studied at the regional level, and many of the most relevant human-environmental interactions are tied to production and consumption technologies that themselves are tightly bound to regional economic systems that comprise national economies. We need to integrate and model these interacting systems comprehensively, and in an open access environment that promotes interaction among scholars, and database and model sharing to eliminate wasteful and redundant foundation infrastructure building. The pace of new knowledge development can be advanced radically by adopting a common and well-tested integrated systems modeling approach for widespread scientific use and development, supporting a research community that spans a wide range of problem domains.
The future of regional science research thus lies in the integrated and comprehensive modeling of interacting systems. This paper describes our vision of this open science future, which we believe will rest on an open source and object-oriented foundation. We describe OASIS, a specific exemplar project now underway designed to fill the current integrated systems science infrastructure void with a framework whose evolutionary character will ultimately reflect the conceptual strengths and contributions of a large community of scholars. The result will be distinguished not only by the collective wisdom of the modeling community, but also by careful attention to the mechanisms that support replication and reproducibility. With the advantage of 21st century technology, object oriented open source open science will deepen our understanding and radically accelerate the pace of knowledge building in coming decades. We see this as a fundamentally new knowledge building paradigm that will dominate future integrated systems research.
What is Near and Recent in Crime for a Homeowner? The Cases of Denver and Seattle
Adam Nowak and Juan Tomás Sayago-Gómez
Working Paper 2016-01
View Paper (pp. 29, 2,217 KB)
Abstract: This paper analyzes the effects of the concentration of crime on housing prices using nonparametric methods. Specifically, we use a modified local K-function in order to measure crime concentration. This technique provides us with a crime measure that is not dependent on pre-defined boundaries. Results from this analysis suggest a decrease in housing prices of two percent to seven percent for crimes in the past six months that occur within a quarter of a mile of the house.
Impact Evaluation of Investments in the Appalachian Region: A Reappraisal
Juan Tomás Sayago-Gómez, Gianfranco Piras, Donald J. Lacombe, and Randall Jackson
Working Paper 2015-06
View Paper (pp. 36, 1,197 KB)
We evaluate the impact of the Appalachian Regional Commission’s investments on its members counties over almost fifty years. We apply different propensity score methods to find the most appropriate matching and to identify the effect of policy implementation in the most accurate way possible.
The general evidence is that counties that received ARC funding had higher per-capita income growth compared to the control counties. Per-capita income growth rate in ARC counties grew an average of 5.5 percent over the entire study time period compared to the control counties. Employment grew significantly faster in ARC counties compared to the control counties for most of the study period. The average difference in growth rates between the counties that obtained ARC investments and those matched counties that did not receive ARC investments was approximately 4.2 percent.
Looking Behind the Scenes: An Assessment of the Interdependence of Brazilian Cultural Industries
Amir B. Ferreira Neto, Fernando S. Perobelli, and Alexandre Rabelo
Working Paper 2015-05
View Paper (pp. 24, 1078 KB)
How important is Brazil’s cultural industries to its economy? We provide an answer to this question by evaluating the interdependence of the cultural activities in the Brazilian production structure and its evolution over the last few years (2005 – 2009). To accomplish this, we disaggregate 13 cultural economic industries in the Brazilian input-output table and calculate several indexes, such as, the production multiplier, linkage indexes, fields of influence and extraction analysis. Results show that the only cultural sector with high links to other sectors in the production structure is Telecommunication, edition and news agencies and that this sector provides the greatest loss in output when removed from the economy. Moreover, the sectors Jewelry, music instruments and toys, and Manufacture of telecommunication equipment have output multipliers higher than the average of the economy.
Fellows Address: Are Industry Clusters and Diversity Strange Bedfellows?
Working Paper 2015-04
In this address, I review industry clustering and diversification strategies to compare and contrast their underlying foundations. The lack of consensus choice of one or the other for regional economic development strategies along with the recognition that in the dynamic process of development these two processes are related leads me to conclude that clusters and diversity need not be such strange bedfellows after all, and that a rational approach to economic development can leverage the strengths of each and offset weaknesses. I follow this discussion by introducing a cluster assessment diversification strategy (CADS) apparatus that can be used to measure existing cluster strength, to identify industrial strengths and deficit bottlenecks, and to explore the regional consequences of potential cluster diversification strategies
A Framework for Measuring County Economic Resilience
Kahsai MS, J Yu, M Middleton, PV Schaeffer, and RW Jackson
Working Paper 2015-03
View Paper (pp. 21, 386 KB)
The study provides a framework to develop economic resilience index for West Virginia counties based on the premise that county economic resilience depends on its physical and human resources, structure and diversity of its economic base (employment and income diversity), entrepreneurial activity and business dynamics and scale and proximity (spatial issues). Using 17 indicators along four of the six proposed dimensions, a preliminary economic resilience index has been created for West Virginia counties for the years 2000 and 2005. Geospatial maps are also developed to explore the evolution of the geographical patterns of economic resilience across time. The effectiveness of the index is further affirmed in correlation analyses where the contribution of economic resilience to unemployment reduction and employment growth is highly signiﬁcant. These preliminary results are encouraging and appear to be pointing in a useful direction. The discussion in this study can serve as a starting point for building a broad-based, standardized, and consistent deﬁnition and measure of economic resilience.
Cost-effectiveness as energy policy mechanisms: the paradox of technology-neutral and technology-specific policies in the short and long term
Paulo Henrique De Mello Sant’Ana
Working Paper 2015-02
View Paper (pp. 22, 644 KB)
When choosing policy mechanisms to design and deploy energy policies, policymakers typically seek cost-effective ones, linking cost effectiveness to the lowest cost of support for RES-E generation and/or consumer costs. The objectives of this paper are to analyze the cost-effectiveness of renewable portfolio standards (RPS), feed-in tariffs (FIT) and auctions in the short and long term, considering both technology-neutral and technology-specific approaches. Results show that RPS and auctions are more cost-effective than feed-in tariffs (FIT) in the short term if cost-effectiveness is defined as minimizing consumer costs. Also, if one or more emerging technologies with higher levelized life cycle costs (LCC), low cumulative production and high experience elasticity are considered in the pool of RES-E policy design, a technology-neutral approach in the short-term could lock out these emerging technologies, avoiding a long term LCC reduction. In this case, a technology-specific policy used in the short-term would reflect lower total generation policy costs in the long term if compared with a technology-neutral policy in both short and long term. This paper calls this phenomenon the paradox of technology-neutral and technology-specific policies in the long term. Considering the results, this paper suggests a mix of technology-neutral and technology-specific policies using RPS or auction mechanisms to promote RES-E.
Toward Consistent Cross-Hauling Estimation for Input-Output Regionalization
Christa D. Court and Randall W. Jackson
Working Paper 2015-01
View Paper (pp.18, 319 KB)
Although the literature has provided steps in the right direction, conceptual shortcomings still exist in the cross-hauling adjustment methods that are currently being applied in the literature. This paper represents an attempt to 1) characterize the cross-hauling adjustment methods that exist in the literature; 2) identify the shortcomings that exist with the most widely applied method, CHARM; 3) provide an empirical analysis to tackle the notion of just how ubiquitous crosshauling is and the potential impact it has on input-output multiplier estimates; and 4) suggest directions for future conceptual and theoretical development that will lead to consistent cross-hauling measures for use.
China’s Inter-regional Trade of Virtual Water: a Multi-regional Input-output Modeling
Working Paper 2014-04
View Paper (27 pp., 1228 KB)
This study focuses on the measure of inter-regional trade of virtual water, defined as the freshwater consumed for producing traded goods and services, to explain the relationship between China’s regional virtual water and the increasing water demand. By using the multi-regional input-output (MRIO) tables of 2002 and 2007 with the regional sectoral water use, this study analyzes virtual water in trade, domestic trade in virtual water, and the regional trade balance of virtual water. The results show that: (1) water use efficiency has increased in China; (2) the major source of the regional virtual water in trade are domestic inter-regional trade; and (3) a region’s virtual water depends on its water resources availability, economic structure, as well as the region’s position in domestic supply chain.
Cross-Hauling and Regional Input-Output Tables: The Case of the Province of Hubei, China
Yongming Huang, Anthony T. Flegg and Timo Tohmo
Working Paper 2014-03
View Paper (42 pp. 1,327 KB)
Data for the Chinese province of Hubei are used to assess the performance of Kronenberg’s CHARM, a method that takes explicit account of cross-hauling when constructing regional input−output tables. A key determinant of cross-hauling is held to be the heterogeneity of the products of individual sectors, which is estimated using national data. However, contrary to the authors’ earlier findings for Finland, CHARM does not generate reliable estimates of Hubei’s sectoral exports, imports and volume of trade. It is crucial, therefore, especially in relatively small regions, to make adequate allowance for any known divergence between regional and national technology and heterogeneity.
Cross-Hauling in Input-Output Tables: Comments on CHARM
Working Paper 2014-02
View Paper (5 pp, 349KB)
This brief note draws further attention to cross-hauling in regional input-output table estimation, and specifically identifies conceptual issues associated with Kronenberg”s CHARM method for adjusting input-output regionalization methods. Despite the shortcomings of the CHARM approach as it now stands, this is a very important line of research. I believe that progress made on the CHARM method is encouraging, and hope that future work will resolve remaining issues.
An Integrated Environmental and Economic Modeling Framework for Technological Transitions
(Paper presented to the Western Regional Science Association, San Diego, CA, February 17, 2014)
Working Paper 2014-01
There is an increasing demand for models that address both environment and economy, and that also estimate or forecast the impacts of introducing new and markedly different technologies from those already existing in the systems under study. Because most conventional models are calibrated to recent data characterizing current economic structure and conditions, their standard turn-key operation will need to be replaced by more comprehensive algorithms and procedures designed to explicitly accommodate shifts in technology and economic structure. This paper lays out one viable alternative for integrating environmental and economic modeling frameworks, and focuses specifically on one of the major challenges to this kind of modeling, that of dovetailing life cycle assessment and input-output modeling frameworks. (Acknowledgements: This material is based upon work supported by the National Science Foundation under Grant No. 1235684 and USDA NIFA Award 2012-67009-19660.)
On the Finite Sample Properties of Pre-test Estimators of Spatial Models
Gianfranco Piras and Ingmar R. Prucha
Working Paper 2013-07
View Paper (pp. 22, 182 KB)
This paper explores the properties of pre-tst strategies in estimating a linear Cliff-Ord -type spatial model when the researcher is unsure about the nature of the spatial dependence. More specifically, the paper explores the finite sample properties of the pre-test estimators introduced in Florax et al. (2003), which are based on Lagrange Multiplier (LM) tests, within the context of a Monte Carlo study. The performance of those estimators is compared with that of the maximum likelihood (ML) estimator of the encompassing model. We find that, even in a very simple setting, the bias of the estimates generated by pre-testing strategies can be very large in some cases and the empirical size of tests can differ substantially from the nominal size. This is in contrast to the ML estimator.
The State of Play in Poland”s Unconventional Shale and Oil Development
J. Wesley Burnett, Randall W. Jackson, and
Working Paper 2013-06
View Paper (pp. 20, 801 KB)
Following the huge gas and oil rush in the US, the world”s gas and oil companies have been eyeing reserves in other countries including Poland, which is believed to be sitting on one of the largest reserves in the European Union. The Poles, seeking to diversify their energy sources and meet EU emissions standards, which are driving up electricity costs, met the news with tremendous fanfare. Following initial geological assessments, major international oil and gas companies soon made announcements to begin drilling operations in Poland. However, one of the major challenges of shale gas development is that is often requires voluminous speculative activity before the gas is successfully extracted. In the U.S. this was not such a problem because of several adventuresome energy firms willing to take on risk, but in Poland (and Europe in general) such firms are rare, and in former communist countries these firms are rarer still. This lack of critical infrastructure coupled with bureaucratic red tape in the permitting process has led to slow growth in exploration activities in Poland. Will Poland be able to successfully develop these resources? This manuscript explores the current state of play in Poland”s unconventional gas and oil development.
Impact estimates for static spatial panel data models in R
Working Paper 2013-05
View Paper (pp. 10, 411 KB)
In the present note we demonstrate how to implement the Lee and Yu (2010) procedure for fixed effects spatial panel data models available from the R (R Development Core Team 2012) package splm (Millo and Piras 2012). Additionally, we also show how to compute the impact estimates introduced by Kelejian, Tavlas, and Hondroyiannis (2006) and formalized in LeSage and Pace (2009). Unlike Matlab (MATLAB 2011), there was no R function specific to static panel data models for the calculation of the impact measures. After receiving numerous requests from the users of splm, we decided to extend the cross sectional functions available from spdep (Bivand 2013) to spatial panel data models.
Can Spatial Dependence Enhance Industry Sustainability? The Case of Pasture-Based Beef
Inocencio Rodriguez, Gerard D”Souza, and Thomas Griggs
Working Paper 2013-04
View Paper (pp. 23, 737 KB)
Can sustainability be enhanced by maximizing the sum of private and social benefits from an industry? This might take place, for example, by identifying production options that increase profitability side-by-side with societal goals such as renewable energy production and carbon sequestration, healthier communities, environmental quality, and economic development. We explore this issue for pasture based beef (PBB), a nascent industry where industry profitability, community development, and quality of life can be enhanced by explicitly linking the PBB supply chain spatially and intertemporally, thereby increasing the sum of private and social benefits. We develop a framework based on optimal control theory that integrates a spatial component in which the production of PBB and alternative energy production as well as greenhouse gas emission reduction enhances private as well as social wealth. This model provides a basic foundation for developing agglomeration economies in a spatially dependent industry in which other locations are able to supply resources to given locations as a way of improving regional economic and environmental conditions. The framework is subsequently employed to identify possible industry conditions and configurations that demonstrate how profits, economic development, and environmental improvement can be created through increased pasture-beef production in a region where economic activities across locations play a crucial role across the spatial domain. Of course, the intensification of benefits derived from the agglomeration economies require coordination and cooperation among the key players within the impacted region.
A J-test for Panel Models with Fixed Effects, Spatial and Time
Harry H. Kelejian and Gianfranco Piras
Working Paper 2013-03
View Paper (pp. 42, 529 KB)
In this paper we suggest a J-test in a spatial panel framework of a null model against one or more alternatives. The null model we consider has fixed effects, along with spatial and time dependence. The alternatives can have either fixed or random effects. We implement our procedure to test the specifications of a demand for cigarette model. We find that the most appropriate specification is one that contains the average price of cigarettes in neighboring states, as well as the spatial lag of the dependent variable. Along with formal large sample results, we also give small sample Monte Carlo results. Our large samples results are based on the assumption N → ∞ and T is fixed. Our Monte Carlo results suggest that our proposed J-test has good power, and proper size even for small to moderately sized samples.
Estimation of Spatial Models with Endogenous Weighting Matrices and an Application to a Demand Model for Cigarettes
Harry H. Kelejian and Gianfranco Piras
View Paper (pp. 29, 304 KB)
Weighting matrices are typically assumed to be exogenous. However, in many cases this exogeneity assumption may not be reasonable. In these cases, typical model specifications and corresponding estimation procedures will no longer be valid. In this paper we specify a spatial panel data model which contains a spatially lagged dependent variable in terms of an endogenous weighting matrix. We suggest an estimator for the regression parameters, and demonstrate its consistency and asymptotic normality. We also suggest an estimator for the large sample variance-covariance matrix of that distribution. We then apply our results to an interstate panel data cigarette demand model which contains an endogenous weighting matrix. Among other things, our results suggest that, if properly accounted for, the bootlegging effect of buyers, or “agents” for them, crossing state borders to purchase cigarette turns out to be positive and significant.
Comparing Implementations of Estimation Methods for Spatial Econometrics
Roger Bivand and Gianfranco Piras
Working Paper 2013-01
View Paper (pp. 38, 869 KB)
Recent advances in the implementation of spatial econometrics model estimation techniques have made it desirable to compare results, which should correspond between implementations across software applications for the same data. These model estimation techniques are associated with methods for estimating impacts (emanating effects), which are also presented and compared. This review constitutes an up to date comparison of generalized method of moments (GMM) and maximum likelihood (ML) implementations now available. The comparison uses the cross sectional US county data set provided by Drukker, Prucha, and Raciborski (2011c, pp. 6-7). The comparisons will be cast in the context of alternatives using the MATLAB Spatial Econometrics toolbox, Stata, Python with PySAL (GMM) and R packages including sped, sphet and McSpatial.
A Knowledge Base for the World”s Energy Rich Regions
Hodjat Ghadimi and Davina Bird
Working Paper 2012-07
View Paper ( 18 pp., 524 KB)
Energy rich regions (ERRs) play an important role in the world economy. A knowledge base of energy rich economies on a regional level provides a useful tool for comparative research of sustainable development in ERRs with an interdisciplinary perspective. The purpose of this knowledge base is to present a foundation for understanding the attributes and development processes of various ERRs and the collective role they play in the world’s energy, environment, and development debate. The construction of the ERR knowledge base is described, including the steps and data sources, structure, and process. Using two databases on oil and gas giant fields and megaprojects, this article demonstrates preliminary observations and illustrations about the nature and characteristics of ERRs. This research will assist in formulating and addressing interesting questions for future qualitative and quantitative studies.
Computational Structure for Linking Life Cycle Assessment and Input-Output Modeling: A Case Study on Urban Recycling and Remanufacturing
J Cooper, RW Jackson, NG Leigh
Published in Giarattani F, G Hewings and P McCann. (eds.) Handbook of Economic Geography and Industry Studies, Edward Elgar: Cheltenham. 2013.
Recent models of sustainable industrial system growth show an increased interest in changing materials flows in urban and rural landscapes and populations. Within this context, “changing materials flows” means introducing new commodity uses and sources or ending existing ones and introducing new waste treatments into the environment or placing a moratorium on them. There are many exaples that illustrate this trend, such as using field crops for biofuels production instead of food production and recycling waste materials to retain their value. A framework for modeling and assessing the impact of materials flows to advance the mutual goals of sustainable industrial, urban, and rural systems is explored here through an urban setting case study. The environmental impact and economic benefits of these flows occur at different spatial levels and scales, from the individual urban tact to international trade and the global environment. This requires developing and using models that can capture, quantify and qualify materials and flows across these different scales to comprehensively assess their impacts. Our case study investigates extracting or “mining” specific products and their associated materials from metropolitan regions through new recycling and remanufacturing networks and facilities in an urban region. It then examines formalizing methods for modeling the economic development and environmental effects of different material flow scenarios on these regions. The concepts presented are intended to be generally applicable to a wide range of emerging and existing economic systems and situations.
An Analysis of Administrative “Best Practices” in the Administration of Business Incubators
M Middleton, PV Schaeffer, RW Jackson
Working Paper 2012-05
View Paper 2012-05 (pp.20, 759KB)
A large body of scholarly work has been published on “best practices” in the administration of business incubators. These strategies for the operation of the facilities outline ideal administrative policies and procedures that are not always practical for the operation of all business incubators. Using data acquired from a nationwide survey of business incubators this paper investigates the use of “best practices” identified by scholars in the management of operating business incubators. This research uses frequency analysis and cross tabulation to analyze the “best practices” variables of the survey. The analysis illustrates compliance and use of these “best practices is not uniform in the administration of business incubators. Compliance with these administrative “best practices” is selective. There are variances in the utilization of each of the policies and procedures set forth by “best practices” for administration of business incubators. These variances are reflected in not only practices of each incubator but there are also variances in compliance by size of the community.
Regional Science Reconsidered
PV Schaeffer, RW Jackson and JO Bukenya
Printed in The Review of Regional Studies, 41:161-177, 2012.
Members of a discipline share common research questions, values they use to address normative issues, and a set of research methods. Collectively, the features of a discipline that are common to all of its members constitute its core. Disciplines – and their specializations – can also be defined by their boundaries. However, in the case of regional science, the boundaries are fuzzy. Because regional science has been influenced by economics, geography, urban and regional planning, sociology, political science, public administration, and transportation engineering, it overlaps to a significant degree with these “parent disciplines” so that clear cut boundaries do not exist. This article explores the core and, to a lesser degree, boundaries of regional science. No definition of a discipline should be considered final because its boundaries and core are subject to change. Because of this, it is necessary from time to time to re-examine our discipline. Just as disciplinary cores and boundaries are dynamic, so too are the pressing needs of the societies that research supports. Ideally, disciplinary shifts occur in response to societal needs, in ways that underscore rather than undermine disciplinary relevance. Therefore, the backdrop of societal relevance provides the context for our reconsideration of regional science’s core and boundaries.
Metro and Non-Metro business Incubators: Similarities and Critical Differences
RW Jackson, PV Schaeffer, M Middleton
Working Paper 2012-03
View Paper (pp. 20, 687KB)
Business incubators often figure prominently into regional economic development and innovation strategies. This paper reports on a recent survey aimed at identifying appropriate methods for the evaluation of nonmetropolitan, rural incubator performance. The results draw upon responses from 209 of 719 active U.S. Business incubators identified through our research. Roughly one quarter of the respondents were located outside of areas classified as metropolitan. This paper focuses on critical similarities and differences between metropolitan and non-metropolitan business incubators along the dimensions of economic role, function, and effectiveness. The survey and preliminary synthesis of follow-up interviews suggests that an explicit awareness of the functional differences between business incubators in nonmetropolitan regions might enhance their potential for success.
Economic Base Multipliers: A Comparison of ACDS and IMPLAN
GF Mulligan, University of Arizona; RW Jackson, RRI Director, West Virginia University; and A Krugh, USDA Rural Development
Printed in Regional Science Policy & Practice, 5, 289-303.
Local and regional practitioners commonly use the economic (export) base multiplier in project assessments. However, dependable estimates of the regional multiplier require that the division of total activity into its export (basic) and local (nonbasic) components be accurate across all industries – especially in the dominant ones. This paper compares the activity divisions that are generated by a shortcut approach, calibrated by the Arizona Community Data Set, with those generated by the widely used IMPLAN input-output model. the comparison is made over 577 micropolitan U.S. countries (all are nonmetropolitan) in the year 2000. Although the two approaches are methodologically dissimilar they generate comparable estimates of economic base multipliers. Moreover, other important regional attributes, like human capital and specialization, affect the alternative multiplier estimates in a similar way.
Input-Output Analysis: New Technologies and Extended Time Horizons
Randall W. Jackson and Christa D. Jensen
Working Paper 2012-01 (Revised from working paper 2011-10)
Input-output analysts are often confronted with requests for impacts assessments for economic shocks that stretch uncomfortably the assumptions of standard input-output modeling. this paper presents an approach to confronting a subset of these challenges straightforwardly in a way that ameliorates some of the more restrictive input-output assumptions, maintains the inter-industry detail of the input-output model, and enhances the representation of certain economic behaviors without the additional complexities of moving the more complex CGE or conjoined econometric input-output models. We conclude with the observation that direct changes to the IO framework most often necessitate further modifications requiring additional behavioral assumptions and decisions on the part of the modeler.
Knowns, Unknowns, and Impacts
Published in Review of Regional Studies. Volume 41, pages 5-11.
Jouke van Dijk opened the most recent issue of Papers in Regional Science with “Long lasting knowledge in Regional Science,” an editorial highlighting the role that the Association”s journal has played in documenting much of the key regional science research since its inception. Publications obviously provide a long lasting chronicle of research in regional science, but I had rather hoped to find in his editorial an actual identification and enumeration of examples of specific long lasting knowledge gleaned from the regional science record. My hopes stemmed from having spent the past year contemplating appropriate content for this Presidential Address on the occasion of our own 50th Anniversary of the Southern Regional Science Association, which itself seemed to be a appropriate time for reflection and contemplation. The choice had narrowed to three related questions. 1. What do we know? 2. What do we want to know? 3. Do we make a difference? I will offer a set of axioms that I believe underlie a wide range of regional science knowledge, identify a set of unknowns that flow from them, and content that for any of what we know to have an impact, to be meaningfully long lasting, its relevance must be actively extended beyond the boundaries of the regional science community. Only then will our knowledge have made a difference. Citing a prominent example of recent national policy directions, I contend that the opportunity to demonstrate regional science relevance has never been greater, and conclude by calling for us to do so.
A Note on Partitioning Effects Estimates Over Space
Christa D. Jensen and Donald J. Lacombe
Printed in Letters in Spatial and Resource Sciences. 5(1), pages 47-53. 2012
In this paper we provide an applied example for calculating the so-called effects estimates of LeSage and Pace (2009) for partitions of the impacts over space. While the partitioning of the impacts by orders of neighbors over space for the spatial autoregressive (SAR) model is a relatively straightforward procedure, care must be taken in the case of the spatial Durbin model (SDM). We provide an illustration of these calculations for both models using a widely available data set on voter turnout for the 1980 United States presidential election.
Minimum Wages and Teen Employment: A Spatial Panel Approach
Charlene M. Kalenkoski and Donald J. Lacombe
Research Paper 2011-08
View Paper (pp. 19, 514 KB)
The authors employ spatial econometric techniques and Annual Averages data from the U.S. Bureau of Labor Statistics for 1990-2004 to examine how changes in the minimum wage affect teen employment. Spatial econometric techniques account for the fact that employment is correlated across states. Such correlation may exist if a change in the minimum wage in a state affects employment not only in its own state but also in other, neighboring states. The authors show that state minimum wages negatively affect teen employment to a larger degree than is found in studies that do not account for this correlation. Their results show a combined direct and indirect effect of minimum wages on teen employment to be -2.1% for a 10% increase in the real effective minimum wage. Ignoring spatial correlation underestimates the magnitude of the effect of minimum wages on teen employment.
Simulating Impacts on Regional Economies: A Modelling Alternative
Guy R. West and Randall W. Jackson
Published in IGI Global. (http://www.igi-global.com/chapter/simulating-impacts-on-regional-economies/79697)
Practitioners and academics apply a range of regional economic models for impacts assessment, each of which has its own strengths and weaknesses. This paper presents a model for simulating impacts on regional economies (SIRE) that occupies an intermediate position between input-output (IO) and computable general equilibrium (CGE) models. With greater behavioural detail than the typical regional IO model, the SIRE model incorporates many features of CGE models without enforcing the strictly linear behavioural relationships of IO. Like most CGE models, the simulation framework presented here borrows a subset of parameters from an existing econometric model for the same region.
Regional CGE models are often criticised for lack of industry detail, lack of hard data, and relatively high model construction costs, while conventional input-output models are criticised for limiting assumptions. Since the household sector dominates multiplier effects in an input-output model, capturing marginal income and expenditure relationships for the household sector can provide a more realistic representation of the economic system and a departure from the strict linearity assumption. Further, since marginal income changes alter value added relationships, effects on regional output prices as well as import propotions also can be simulated. Unlike either the CGE or the conventional input-output model in which multiplier values are the same for all multiples of the initial shock, the multiplier values from the SIRE model vary with the size and distribution of the initial impact. Larger changes in final demand tend to be associated with smaller multipliers than small changes in final demand.
Social Benefits of Niche Agricultural Products: The Case of Pasture-Based Beef in Appalachia Part 1: The Conceptual Framework
Inocencio Rodriguez, Gerard D”Sousa, Alan Collins, and Tim Phipps
Research Paper 2011-06
View Paper (pp. 30, 624 KB)
Niche agricultural products are growing in economic importance. This growth is driven mainly by the increased demand for more healthy, nutritious, fresh and locally grown food products. There is obviously a potential increase in private benefits to producers/landowners as a result of increased production of the underlying crops to satisfy this demand. What is less obvious is the potential to also generate increased social benefits, particularly as they relate to energy conservation, alternative energy or biogas development and carbon sequestration. In other words, calories and kilo-calories are becoming more linked. The objective of this analysis is to develop a conceptual framework to illustrate the linkages among production at the local level, farm-level profitability and regional economic and environmental benefits. Using an optimal control approach, we apply this framework to the case of pasture-basedd beef (PBB) in Appalachia. PBB is an alternative to conventional, grain-based beef production. The idea is to determine to what extent a transition to PBB would enhance farm-level profitability while enabling surrounding communities to benefit from higher quality food products, environmental improvement, economic development and, ultimately, quality of life. We expect the results to illustrate under what combination of market and policy outcomes it is optimal – from both private and social perspectives – for a given PBB farmer to switch between cattle farming, energy farming and carbon farming. This paper is the first in a three-part series, with subsequent papers devoted to: (a) integrating spatial effects into the model, and (b) model estimation and use in policy formulation. The overall effort is part of a larger, interdisciplinary multi-institutional research project funded by USDA, ARA, focusing on the development of sustainable PBB operations for Appalachia.
An Analysis of the Role of Self-employment in the Economic Development of the Rural Northeastern United States
Saima Bashir, Tesfa Gebremedhin and Jerald J. Fletcher
Research Paper 2011-05
View Paper (pp. 24, 448 KB)
Generating employment and alleviating poverty are the biggest challenges for regional economic growth in rural areas of the Northeastern United States. Despite the revival of the economy in much of the nation”s heartland, rural areas are still suffering from high poverty and unemployment rates. Self-employment, a measure of entrepreneurship, indicates an opportunity for rural communities to improve quality of life and accelerate regional economic development. Taking into consideration the problem of unemployment in rural communities, there is a need to focus on generating self-employment opportunities at micro level to enhance economic growth and reduce the per capita income ”gap” between rural and urban areas. The overall objective of the study is to identify and estimate the impacts of self-employment in the economic development of the Northeastern United States. The empirical model of this study is derived from the three-equation simultaneous model of Deller et al., (2011). The study estimated the relationship of employment, population and per capita income to self-employment. Research findings show that employment and population have a positive relationship to self-employment indicating positive contribution of self-employment to regional economic development.
Telecommunications Investment and Economic Development: Evidence from a Panel of Sub-Saharan Africa (SSA)
Chali Nondo and Mulugeta Kahsai
Research Paper 2011-04
view paper (pp. 17, 477 KB)
The objective of this paper is to study the role of government effectiveness, institutional and political factors in aggregate output and telecommunications penetration in SSA countries. The contribution of these factors in aggregate output and telecommunications evolution is examined using a framework that accounts for the endogeneity and interactions between aggregate output and telephone penetration rates. Results from the study indicate that government effectiveness is an important determinant for aggregate output. Another supplemental finding is that the incessant political upheavals in SSA countries have a detrimental effect on aggregate output. From this, we endorse that SSA countries should design and implement efficient institutional frameworks and mechanisms that will expand telecommunications network infrastructure in both rural and urban areas and thus spur growth and development.
The Role of Institutional Quality in FDI Inflows in Sub-Saharan Africa
Mulugeta S. Kahsai, Yohannes G. Hailu, Chali Nondo, and Peter V. Schaeffer
Research Paper 2011-03
View Paper 2011-03 (pp. 22, 334 KB)
During the period 2000 to 2008, Africa’s collective GDP grew at an annual rate of 4.9 percent. Even though previous studies argue that strengthened and improved institutional quality is key determinant for attracting foreign direct investment to Africa, we find no evidence to that effect. Using a panel data for 45 Sub-Saharan African countries (SSH), we estimate the role of institutional quality (governance) in attracting FDI inflow during the 1996-2007 period. After controlling for country and time specific effects and the economic environment of the host country, we find no significant evidence of the impact of institutional quality on FDI inflow in our analysis. This finding may suggest that FDI inflow to SSH is potentially motivated by the abundance of raw materials and natural resources than good governance.
An Analysis of the Relationship between New Firm Formation and Economic Development in the Northeast Region of the United States
Saima Bashir and Tesfa Gebremedhin
Research Paper 2011-02
View Paper 2011-02 (pp. 29, 380 KB)
The overall objective of this study is to provide policy makers with information on the role of new firm formation in the economic development in the Northeast region of the United States. This study identifies and estimates the impacts of new firm formation in the economic development of the Northeast region. The empirical model of this study is derived from the three-equation simultaneous model of Deller et al. (2001). In this study, Three Stage Least Squares (3SLS) method is used to estimate the simultaneous equations model. The research findings indicate that population density and per capita income have a positive link with new firm formation. Higher population density and per capita income encourage entrepreneurs to start new firms in the region. This leads to an increase of new jobs, which is a positive contribution to economic development in the Northeast region.
Accounting foundations for interregional commodity-by-industry input-output models
Randall W. Jackson and Walter R. Schwarm
Published in Letters in Spatial and Resource Sciences. 4:3:187-196.
Several procedures for generating interregional commodity flow matrices have been developed in the U.S. in recent years (see, e.g., Canning and Wang 2005, Jackson et al. 2006, Lindall, Olsen and Alward 2006). Despite the fact that these methods derive from the commodity-by-industry framework, very little attention has been given recently to the fundamental conceptual issues that must be confronted to generate a consistently defined interregional model or to conduct an interregional impacts assessment using an appropriate interregional framework. This paper revives the focus on interregional modeling issues initiated by Oosterhaven (1984), identifies and elaborates on these and additional issues, and traces the development of the accounting foundations from single-region inter-industry through interregional commodity-by-industry accounts. Its contribution lies in the provision of a high-level perspective on these frameworks that in the process both clarifies and simplifies key conceptual issues and operational decisions.