The Winners' Choice: Sustainable Economic Strategies for Successful 21st Century Regions

Throughout the second half of the 20th Century, urbanization, new technologies, rapid labor-saving productivity growth in primary industries, and improved highways combined to create large-scale rural-urban functionally integrated regions. These forces have raised the stakes for regions in their pursuit of economic development and growth, making successful regional policy even more important. Changes to the governance structures consistent with the increased interdependence within broad rural-urban regions will improve the region's competitiveness; adopting fad-based approaches and policies aimed at “picking winners†will be less fruitful. Going forward, continuing globalization and environmental sustainability have the potential to fundamentally reshape relative regional attractiveness.

Natural Resource Curse and Poverty in Appalachian America

The Appalachian mountain region has long been characterized by deep poverty which led to the formation of the Appalachian Regional Commission (ARC) in 1965. The ARC region covers West Virginia and parts of 12 other states, running from New York to Mississippi (Ziliak 2012). The ARC region had an average county poverty rate of over 40 percent in 1960, about double the national average (Deaton and Niman 2012; Ziliak 2012). While the poverty gap between the ARC region and the rest of the nation closed significantly by 1990, it remained nearly twice as large in Central Appalachia. There are many reasons for higher poverty in Appalachia in general and Central Appalachia in particular. Possible causes include a low-paying industry structure, below average education, low household mobility, and remoteness from to cities (Weber et al. 2005; Partridge and Rickman 2005; Lobao 2004). A key distinction between Central Appalachia and the rest of the ARC region is its historic dependence on coal mining. There is long literature arguing that the area’s dependence on coal mining has contributed to its deep poverty through weaker local governance, entrepreneurship, and educational attainment, as well as degrading the environment, poor health outcomes, and limitations on other economic opportunities (Deaton and Niman 2012; James and Aadland 2011). These factors are broadly associated with the natural resources curse in the international development literature. More recently, the process of mountain top mining (MTM) has expanded coal mining’s environmental footprint in the region, possibly increasing health risks and further reducing the chances for long-term amenity-led growth that can alleviate poverty (Deller 2010; Woods and Gordon 2011). This study reinvestigates the causes of county poverty rates in Appalachia with a special focus on coal mining’s role. Using data over the 1990-2010 period we assess whether coal mining continues to have a positive association with poverty rates, even as the industry’s relative size has declined. We also appraise whether MTM is associated with higher poverty. We do this by comparing the ARC region to the rest of the U.S. and by using more disaggregated employment data that allows us to differentiate the effects of coal mining from other mining (versus aggregating all mining together as in past research). The results suggest that any potential adverse effects of coal mining on poverty have declined over time. Below, we first develop an empirical model followed by the empirical results. The final section provides our concluding thoughts

Impact of Economic Growth on Income Inequality: A Regional Perspective

Impact of Economic Growth on Income Inequality: A Regional Perspective Shibalee Majumdar and Mark Partridge Egalitarianism refers to the doctrine of the equality of mankind and the desirability of political, economic and social equality. In this paper, we are going to refer to the concept of economic equality. Theory shows that income inequality is a condition that prevails along with economic growth. According to the utilitarian view, income inequality must exist along with economic growth in order to maximize social welfare. This is in sharp contrast to the egalitarian view according to which, all members of the society should have equal access to all economic resources in terms of economic power, wealth and contribution. Kuznets (1955) introduced the inverted U-shaped Kuznets curve that showed that in an economic system, at the initial level of low economic growth, income inequality is low and as growth occurs, income inequality increases till a threshold, after which, income inequality decreases with increased economic growth. In the United States, income inequality remained stable till the 1970s but then began to increase as earnings increased. This has been called the great U-turn by Harris, et. al (1986). Partridge et. al (1996) notes that while Kuznets held the manufacturing sector as the main driver of the economic growth, the current economic growth is being spearheaded by the services sector. While one school of research shows how income inequality might harm economic growth, empirical studies show that in the United States, a positive linkage between economic growth and income inequality has existed since the 1970s. The causality between economic growth and income inequality is an important one. The relationship may differ depending on regions or size of an economy. Fallah and Partridge (2007) show that the impact of inequality on economic growth is opposite in rural and urban settings. Most of the research dealing with the inequality-growth relationship has either looked at the impact of inequality on economic growth (Fallah and Partridge, 2007) or the impact of various socio-economic variables on inequality. Though there has been some research on finding out the causality between economic growth and wage inequality, research assessing whether economic growth affects income inequality, and that too whether the degree of the impact varies between rural and urban regions, are few. The aim of this paper is to see how economic growth affects income inequality. Does improved economic growth lead to a more redistributive system of social welfare or does the polarization become more acute? Does the impact of economic growth on income inequality differ between metropolitan and non-metropolitan areas? Does inequality vary depending on the nature of the agglomeration or the demographic composition of a region? The empirical equation is: ginicsy = gcsy-1 + educsy + popcsy + lcsy + ethcsy + immigcsy + strcsy + σcs + σy + ε where, gini denotes the gini coefficient, g denotes per capita income, edu denotes educational attainment, pop denotes population density, l denotes labour market size, eth denotes ethnic diversity, immig denotes international immigration, str denotes the structural change index, σcs denotes state fixed effects and σy denotes time fixed effects. The subscripts c, s and y denotes county, state and year, respectively. A lagged value of the per capita income is used in order to avoid any endogeneity issues. The analysis for this paper will be done at the county-level. For the dependant variable and all explanatory variables except the per capita income, a panel will be constructed using county-level data for two decades, 1990 and 2000. The gini coefficient will be calculated using the income data from the U.S. Census Bureau. Data on per capita income, educational attainment, population density and international migration can be obtained from the U.S. Census Bureau. The ethnic diversity measure will be calculated using the population data from the U.S. Census Bureau. The structural change index will be calculated by using data from the Bureau of Economic Analysis, Regional Economic Information System. The aim of the paper is to find out whether per capita income (representing economic growth) has an impact on the gini coefficient (representing income inequality), and to show whether this impact varies between rural and urban areas. The expected results are as follows. Economic growth may have a negative impact on income inequality since economic growth is often positively associated with higher investments, higher employment-generating processes and higher employment, hence giving greater access to jobs and income to a larger number of people. The degree of the impact may vary between rural and urban areas because of the following reasons. A higher population density in the urban area may lead to greater job competition and hence lead to lower access to jobs than in rural areas. International immigration is usually higher in urban areas than in rural areas. The greater influx of immigrants, as well as often seen, the willingness of the immigrants to work at lower wages may lead to lower access to jobs for the locals. This should hold true for the low-skilled jobs. For the high-skilled jobs on the other hand, educational attainment of the people will play a more important role on their ability to get jobs in the urban areas than in the rural areas. However, growth may reduce income inequality in the urban areas because higher population density results in more personal contacts, better networking and access to information, and hence more opportunities to access more and better jobs. If the results show that economic growth has a negative impact on income inequality, it will be possible to comment on the causality of the inequality-growth relationship. More so, if it is seen that economic growth has a stronger impact in decreasing income inequality in the urban areas than in the rural areas, it will show that the higher wages and more diverse job opportunities in the urban areas have a greater spillover effect than in the rural areas. The policy implication such a result may have is that higher investments will have to be made in educational and vocational training in order to generate a stream of skilled labourers, which in turn will add to economic growth and thus will lead to lower income inequality and better social cohesion.Regional development, income inequality, spatial relation, Community/Rural/Urban Development,

Rural-Urban Migration and the Intergenerational Transmission of Wealth

Replaced with revised version of paper 07/24/08.Overlapping Generations Model, Rural-Urban Migration, Poverty Traps, Agglomeration Economies, Place-based Policies, Person-based Policies, Consumer/Household Economics, Labor and Human Capital, R13, R58, O15,

PERSISTENT POCKETS OF EXTREME AMERICAN POVERTY: PEOPLE OR PLACE BASED?

Over the past four decades almost 400 U.S. counties have persistently had poverty rates in excess of 20 percent. These counties are generally characterized by weak economies and disadvantaged populations. This raises the hotly debated question of whether poverty-reducing policies should be directed more at helping people or helping the places where they reside. Using a variety of regression approaches, including geographically weighted regression analysis, we consistently find that local job growth especially reduces poverty in persistent-poverty counties. We also find that persistent-poverty counties do not respond more sluggishly to exogenous shocks, nor do they experience more adverse spillover effects from their neighboring counties. Finally, we identify some key geographic differences in the poverty determining mechanism among persistent-poverty clusters. Taken together, these results indicate that place-based economic development has a potential role for reducing poverty in these counties.poverty, persistent poverty, economic development policies, place-based policies, Food Security and Poverty,

The Winner's Choice: Sustainable Economic Strategies for Successful 21st Century Regions

Throughout the second half of the 20th Century, urbanization, new technologies, rapid labor-saving productivity growth in primary industries, and improved highways combined to create large-scale rural-urban functionally integrated regions. These forces have raised the stakes for regions in their pursuit of economic development and growth, making successful regional policy even more important. Changes to the governance structures consistent with the increased interdependence within broad rural-urban regions will improve the region's competitiveness; adopting fad-based approaches and policies aimed at “picking winners” will be less fruitful. Going forward, continuing globalization and environmental sustainability have the potential to fundamentally reshape relative regional attractiveness.Regional Policy, Rural Development

Geographic Determinants of Hi-Tech Employment Growth in U.S. Counties

This paper examines the spatial pattern of U.S. county employment growth in high-tech industries. The spatial growth dimensions examined include industry cluster effects, urbanization effects, proximity to a college, and proximity in the urban hierarchy. Growth is examined for overall high-tech employment and for employment in various high-tech sectors. Econometric analyses are conducted for a sample of all counties and for metropolitan and non-metropolitan counties separately. Among our primary findings, we do not find evidence of positive localization or cluster growth effects, generally finding negative growth effects. We instead find some evidence of positive urbanization effects and growth penalties for greater distances from larger urban areas.

The Geography of Rural American Poverty

Testimony of Mark Partridge, Ph.D. Swank Chair in Rural-Urban Policy, The Ohio State University. Before the House Ways and Means Committee, Subcommittee on Human Resources: The Geography of Rural American PovertyMuch of rural America is struggling today due to a downturn in the commodity super cycle that has hampered mining, energy, and agriculture. This is exacerbated by the fierce foreign competition that has faced lower-wage rural manufacturers for the last 20 years