Empirical aspects of regional growth in the United States

Abstract

This study reports some results on the determinants of regional growth at the state level, using gross state product estimates for 1955–64 and drawing upon 28 independent variables. Theoretical hypotheses relating to the influences of demographic variables, amenities, agglomeration economies, business behaviour, labour market and policy variables are tested as well as a descriptive equation. Also, ‘good fit’ equations were derived by stepwise regression procedures. The equations had a high explanatory value. Several variables showed that the more backward states grew faster, supporting the convergence hypothesis. Differences in thespatial distribution of population and economic activity within states were closely associated with variations in growth rates, suggesting that the non-spatial models that have dominated regional growth analysis are deficient. Two instrumental variables, tourist expenditures and federal government spending, were highly significant. It is important, therefore, to incorporate the government sector in regional growth theory. On the other hand, several plausible independent variables either were insignificant or had the wrong sign: education, scientific and technical personnel, the profit rate, gross savings, income potential, unemployment and air pollution. Monocausal explanations were not supported; the regional growth process appears a much more complex and interrelated phenomenon than implied by the simple growth models. Finally, current state growth performance was not independent of past conditions, indicating that the regional growth process is to some extent historically determined.