The Role of Capital Formation in Economic Disparities Among Canadian Regions: 1961-1990
Economie theory has long considered the notion of capital formation and investment as central to the analysis of capitalist economies (Marx, 1967; Kalecki, 1971; Keynes, 1936). But it was only recently that the dramatie regional changes in several countries have shown the importance of the sectoral and spatial distribution of investment in the creation of regional disparities. The conflicting theories of regional growth and development are based on opposing views of the investment process and the regional dynamies underlying its spatial distribution. Most of these paradigms, however, agree that regional capital accumulation constitutes a major component of the creation of jobs and economie growth in those regions (Romer, 1990; McHugh and Widdows, 1984; Kaldor, 1970). The equilibrium-based neoc1assieal theory of regional growth asserts that if the initial phase of industrialization is associated with concentration of population and economie activity in 'central' or 'core' regions, mature growth is associated with dispersion into other areas of the economy as entre­ preneurs re-deploy their capital to these locations. It argues that decreasing returns to scale might lower the marginal productivity of capital and, therefore, induce the redeployment of capital whieh lowers the rate of investment in areas aiready characterized by high capital-labour ratios (Borts and Stein (1964), Casetti (1981)). More recently, Barro and Sala-i-Martin
THE DYNAMICS OF REGIONAL CAPITAL ACCUMULATION
This paper addresses the issue of how regions grow and decline, focusing on actual productive capacity within a region (rather than population, income, or migration). Traditional theory has emphasized the role of industrial inertia and cumulative causation in imposing stability on the spatial distribution of capital stock over time, while recent theories emanating from the catastrophe paradigm attempt to demonstrate the capacity for rapid and dramatic reversal of relative growth trends within regional systems. This paper offers an empirical analysis of capital accumulation in U.S. regions over the period 1954-1976 for total manufacturing and four 2-digit industries. Its aim is to assess the degree of stability or volatility which characterized the actual regional patterns of capital over this period. To achieve this goal, the analysis first assesses capital growth rates in different regions over time as well as the changing distribution of capital stock across regions. Second, the issue of volatility is directly addressed through the time-series modelling of regional capital formation in individual regions. It is concluded that, while considerable volatility is apparent in individual regions and industries, these changes are far from catastrophic in character. An alternative conceptualization of the regional investment process is offered which explains long-run change as the accumulation of short-run adjustments to capital.
Fiscal Transparency in EU Accession Countries Progress and Future Challenges
This paper discusses the findings of fiscal transparency reports on standards and codes (ROSCs) for most EU accession candidate countries. Emphasis is given to the need to establish effective and accountable medium-term budget frameworks to establish policy credibility and anchor adjustment programs to meet EU fiscal goals. Adoption of budgeting and accounting standards consistent with the IMF Government Finance Statistics Manual 2001 framework will also help link budget decisions to EU standards of fiscal reporting. More consistent and comprehensive coverage of off-budget activities is needed for assessing fiscal risk and sustainability. Finally, local government issues need to be addressed by many of these countries since EU fiscal goals are set with reference to general government. Progress in all of these areas can be monitored by keeping fiscal ROSC assessments up to date.