Regional Industrial Analysis and Development

Geoffrey J. D. Hewings

• Publisher: Routledge
• Year: 2017
• ISBN:
  9781351594523
• Edition: 1
• Topic: Business
• Subtopic: Business General
• Index: Business

Originally published in 1977. This book provides an introduction to some of the more important techniques of regional analysis – techniques derived from geographical, regional economic and regional science theory – and describes the way some of these techniques have been applied in the identification of problems, development of strategy and evaluation of regional programmes. The theory and applications of methods of regional analysis are integrated with the use of examples taken from the USA, the UK and Canada.

The author introduces the problems which are encountered in the field of regional analysis, describes some of the analytical tools, beginning with the fundamental model of the economic base approach, and then examines regional flows and the applicability of international trade theory to interregional trade. Considering the shortcomings of the aggregated base approach, input-output analysis is also examined.

1 Underlying need for regional analysis and development

Introduction

Assume that one was asked to speculate on the nature of the relationships between the following two sets of variables: (1) real income per capita for a nation for each year for the last several hundred years and time itself and (2) some measure of regional disparity (for example, the weighted standard deviation of regional incomes per capita or unemployment rates) and time for the same nation. From our own personal experience and observations of the last several decades (and extrapolating backwards through time), we would probably suggest a relationship for the first set of data similar to the one shown in fig. 1.1. Of course, the straight line is indicative only of the trend rather than the exact form of the mathematical relationship between the two variables. The second relationship, between regional disparity and time, is by no means as obvious. It will, in part, depend upon the surrogate measure used for regional disparity since we cannot observe the disparity directly. For example, we should not expect the relationship to look exactly the same in one case in which the disparity was measured using money or current income per capita as opposed to another case in which real income per capita was used.¹ Similarly, disparity measures using absolute rather than relative deviations from national income per capita data might form very different relationships with time. The graph drawn in fig. 1.2. was suggested by Williamson (1965) in an article in which he brought together a large body of diverse literature on this subject and attempted to generalize about regional disparities over time for a large number of countries. His work and previous studies by Myrdal (1957), Hirschman (1958) and Kuznets (1959) among others served to focus attention upon a very important element or dimension in the national growth and development process – namely, that growth in indicators of national prosperity may be only a necessary but not a sufficient condition for ensuring dispersion of this prosperity to all parts of the nation. Regional disparities in levels of welfare, broadly defined, still exist in most countries: whether they have diminished or increased over time remains a major point of debate (see chapter 4).

1.1 Hypothetical trend relationship between real income per capita in a nation and time.

1.2 A possible relationship between an index of regional disparity and time.

Fifty years ago, geographers would have regarded the ‘regional problem’ as an issue related to the core of the discipline. The polemics about regional methodology centred on problems of indentification of regions, regional personality, the ‘regional method’ in geography and geography’s prime concern with regional qua areal differentiation. There was little explicit concern with the issues raised in this volume, and while the concerns recounted above are not quite so prominent today in the geographical literature, there is considerable evidence of new initiatives towards fusing once again the theoretical and methodological excursions into partial aspects of regional studies within a more holistic and rigorous framework.

Part of the impetus for this development of a new interest in regional studies can be traced to the development of regional science, a relatively new field of inquiry which first appeared in the United States in the late 1950s. Since its inception, geographers’ participation in this field has vacillated from one extreme to the other. This book was written in an attempt to encourage undergraduate geographers to explore the rich offerings of regional science. With current interest in all manner of environmental problems, the concept of Spaceship Earth, the current (1975) energy crises, issues are no longer the sole prerogative of any one individual discipline to solve. While no one is quite ready to proclaim that unanimity exists among practitioners of regional science theory, there is considerable evidence to suggest that there is a move towards looking at regions holistically once again. The interface between the economic and the ecologic system requires understanding of not only the separate components of each system but the way they interact with each other. As an undergraduate, one was told that this was what geographers did in fact, although it was never quite clear how this was to be accomplished since very few usable tools of analysis seemed available. Walter Isard’s recent statement of the art of regional science abounds with pleas and suggestions for integrating what has been, to this point, a diverse set of theories in social science into a more general and useful single theory (Isard 1969). The integration with the natural science system still awaits further general development, although there have been some recent pioneering attempts (see Isard et al. 1972; Cumberland and Korbach 1973; Laurent and Hite 1972; Miernyk and Seers 1974; Victor 1972).

In this volume only some of the more important techniques of regional analysis are presented as a prelude to a discussion of some of the more important issues in regional development. This book then is in no sense a complete guide: many other excellent volumes are now available which will take the reader into newer and more complicated realms of regional analysis.

This book was written with a clientele of undergraduates in mind, the undergraduates who have already taken a basic course in economic geography, some statistics and simple linear models and intermediate economic theory. As a result, some facility with economic theory is assumed and a knowledge of simple matrix algebra will assist the later discussions.

Approaches to regional industrial analysis

There does not exist one approach to regional industrial analysis which can necessarily claim to be more valuable or more instructive than any other. One could proceed on the basis of detailed case studies of individual industries, an examination in depth of one or two regions, or even at a more macroregional level, emphasizing linkages and interdependence in an interregional system within a country. The approach chosen here is to pursue the interests through discussion and exposition of several sets of methodology and theory. In the final chapter some attempt will be made to tie the theory to some selected case studies.

The scale at which one examines these phenomena is obviously critical. For example, at the county level, one may be able to identify a large number of counties whose unemployment rate has persisted at levels above the national average. If these counties are then grouped into a set of regions, the number of ‘problem areas’ may fall and, if aggregation proceeds further, one may be able to eliminate all problem areas! Thus, the choice of scale is not one that can comfortably be ignored. However, certain pragmatic considerations relate to any form of analysis, even those forms (of which this volume is not one) claiming to be entirely objective and value-free. Data requirements for any form of empirical analysis set limits on the implementation and testing of models and theories. Thus, regions defined a priori will be used without any claim that they represent the optimal division of space.

It is only recently that regional analysis has come to be concerned with not only the more traditional concerns of regional science – what Isard (1969) refers to as situations in which planning and decision-making structures are given and the objective is then one of providing the most efficient operational technique – but also the need to consider whom the recipients of this planning process are liable to be and what input they should make in reaching decisions. For example, Isard (1969) recognizes the linkage between (1) the proper degree of spatial decentralization of decision-making and (2) the efficient allocation of industry and other economic activity among regions. In this sense, there are no ‘givens’, no fixed institutional or political and administrative structure: the optimal allocation of any industrial capacity is thus a function of the degree of spatial decentralization of decision-making which is, itself, a function of the allocation of industrial capacity. These are issues which require a good deal of systematic understanding of a wide variety of knowledge, and certainly constitute a spectrum of inquiry far broader than the scope of this volume.

Regional issues: a general statement

The renaissance of interest in quality of life indicators, such as pollution and congestion in urban areas, has added a new dimension to the development objectives that have been articulated by a number of national economies. In addition to more traditional concerns with faster rates of growth of GNP, a slow rate of increase of prices and so forth, the environmental issues have created a situation in which unfettered devotion on the part of national governments to the ‘growth ethic’ is no longer desired by an increasingly vocal minority in many countries.

Concern with regional development has been recast to link it more closely with quality and equity issues: thus, locating new industry, for example, in a less prosperous region is now subject to new air quality constraints such as limitations on air-borne particulate matter emitted and varying standards of water quality control. Very few issues are purely ‘regional’ in origin – the semantic issues associated with defining regions make it very difficult to assert that there are regional problems per se – yet very few issues in contemporary society do not bear directly or indirectly on regional problems.

Regional inequalities (measured in terms of income, employment, growth, outmigration, etc.) in some or all of their various guises have persisted in developed societies even though these societies, considered as nations in toto, have experienced long periods of rapid national growth in the last several decades. Paradoxically, to some analysts, these strong periods of national growth have seen some regions become worse rather than better off. The general feeling that convergence of regional differences will result from long periods of national growth is now seriously doubted: the reasons for this are not clear, neither is the theoretical construct suggesting that increasing convergence will be observed over time.

Recent work by King et al. (1969, 1972) and Bassett and Haggett (1971) has served to focus attention on regions as sub-systems operating within the larger national economic system. The diffusion of innovations, recessions, booms, leads and lags in business cycles all tend to affect regions in a different fashion: attempts to explore regional problems without reference to interregional and regional-national linkages deny insights into the fundamental structure of the interregional system. As a general statement regions are not capable of truly endogenous growth: neither are they able to shield themselves effectively from expansionary and contractionary trends in other regions, although the degree of interaction among particular regions is uneven over space and time.

Thus by regional issues one really implies interregional issues, by regional growth one imples interregional growth. The frameworks that are to be discussed in this book essentially imply the correct nature of the interregional system but their design usually focuses on only a small subset of that system. The interregional models introduced in chapters 2 and 3 and the discussion of growth and equity issues in the final chapter serve to focus attention once more on the holistic nature of the regional system.

In North America and most western European countries one of the major problems associated with regional development is the issue of unemployment, with its varying spatial and sectoral components. It has received attention, though not always continuous or convincing, since the 1930s because, as Hall (1970) has pointed out, ‘It became clear [then] that unemployment was the single most important indicator of economic stress in an industrial economy.’ It would be prudent to point out that unemployment statistics are treated somewhat less than reverently by some authors who claim that they either under- or overestimate the ‘true’ numbers of persons unemployed. But, nevertheless, the statistics do provide some guidance for identifying areas of persistently high unemployment and thereby provide some insights into the workings of these less prosperous areas. Associated with unemployment problems in a region, one may find a declining dominant industry, a narrow economic base, regional growth performance (measured by industry output, labour force, per capita productivity, etc.) which is less than that observed nationally and, perhaps, problems associated with outmigration leaving a labour force which is less ‘attractive’ to entrepreneurs interested in new locations for their plant.

To talk as though there was just one ‘regional problem’ would understate the complexity of the issues and would furth...

Table of contents

• Cover
• Half Title
• Title Page
• Copyright Page
• Table of Contents
• General Editors’ Preface
• Acknowledgements
• 1 Underlying need for regional analysis and development
• 2 Economic base and trade flows analysis
• 3 Regional and interregional structure: interindustry models
• 4 Theories of regional economic growth and development
• 5 Implementation of development: public policy issues
• References
• Appendix: Guide to major journals publishing articles in the area of regional industrial analysis
• Author Index
• Subject Index