Local and Regional Economic Impacts of Biofuel Development
Expanded processing of agricultural products in rural areas has been widely pursued as a strategy for rural economic development. By adding value to farm products before they leave the area, new processing plants can create new employment opportunities and generate economic spinoffs in rural areas that have experienced economic stagnation or decline as a result of long term trends of farm consolidation. In addition, farmer owned processing facilities provide a way for producers to integrate forward and capture potential profits from processing and marketing their products. Consequently, the expansion of agricultural processing in rural areas usually receives broad-based support from commodity groups, rural development interests, and state political leaders. In recent years, the most prevalent type of new agricultural processing ventures in the Midwest and Great Plains states has been corn ethanol plants. Like other types of agricultural processing, these biofuel ventures have generally received widespread support, and numerous studies have addressed their contributions to local or regional economies. However, while the methods employed have seemingly been quite similar, the findings have varied widely with the impacts attributed to ethanol development differing as much as ten-fold. The purpose of this paper is to (1) examine reasons why estimates of local or regional economic impacts of biofuel development may vary and (2) compare the economic impacts of corn-based ethanol production with those expected to be associated with cellulosic ethanol production.
CONTRIBUTION OF THE NORTH DAKOTA AGRICULTURAL PRODUCTS UTILIZATION COMMISSION PROGRAMS TO THE STATE ECONOMY
The North Dakota Agricultural Products Utilization Commission (APUC) has the mission of creating new wealth and jobs through the development of new and expanded uses for North Dakota agricultural products. The Commission administers four grant programs encompassing basic and applied research, farm diversification, marketing and utilization, and prototype development. The aim of this study was to evaluate the Commission's success in attaining its goals. The project team examined the outcomes of a sample of grant recipients from each program type to evaluate the overall effectiveness of the program in meeting its stated objectives. The time frame for the evaluation was 1995-2004. During the study period, a total of $9.3 million was awarded to 396 projects. Marketing and utilization grants accounted for 54 percent of awards and 70 percent of total funds awarded. The review of the four APUC grant programs indicates that each program appears to be quite successful in meeting its objectives. The farm diversification grantees who were contacted generally indicated that their projects had been implemented as planned, and most had plans to continue or expand their new enterprises. Prototype development by its very nature is a high risk venture, but of seven grant recipients contacted, two had commercialized their products, reporting annual gross revenues of $100,000 and $750,000, respectively. Two others reported that their products were nearing commercialization and were planning to begin marketing in 2007. Basic and applied research grants typically represent front-end efforts to develop and commercialize new products, crops, or value-added opportunities. Several of the basic and applied research grant recipients contacted were able to report very concrete outcomes with substantial economic impacts. Finally, the marketing and utilization grants program supports a diversity of projects directed at market analysis, feasibility studies, business plan development, and related services to support the launch and/or expansion of value-added enterprises. This program has supported the launch of a number of major processing ventures, as well as a number of smaller projects. The larger and more successful projects assisted by this program have made very substantial economic contributions. For example, nine agricultural processing projects supported by APUC during the 1995-2004 period are estimated (when fully operational) to contribute more than $157 million annually to the state economy, to support almost 2,300 new jobs, and to result in $2.4 million in added state sales and use and personal income tax revenues annually. In addition, APUC support has assisted the launch of a number of smaller enterprises which are important to the livelihood of the individual, may provide employment opportunities that would not otherwise exist, and may have potential for future growth.
Speci fi cation Test for Panel Data Models with Interactive Fixed E ff ects ∗
In this paper, we propose a consistent nonparametric test for linearity in a large dimensional panel data model with interactive fixed effects. Both lagged dependent variables and conditional heteroskedasticity of unknown form are allowed in the model. We estimate the model under the null hypothesis of linearity to obtain the restricted residuals which are then used to construct the test statistic. We show that after being appropriately centered and standardized, the test statistic is asymptotically normally distributed under both the null hypothesis and a sequence of Pitman local alternatives by using the concept of conditional strong mixing that was recently introduced by Prakasa Rao (2009). To improve the finite sample performance, we propose a bootstrap procedure to obtain the bootstrap -value. A small set of Monte Carlo simulations illustrates that our test performs well in finite samples. An application to an economic growth panel dataset indicates significant nonlinear relationships between economic growth, initial income level and capital accumulation.