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.
Manufacturing Productivity and Snowbelt-Sunbelt Shifts
Historically, population and jobs tended to concentrate in the old industrial core regions of the United States. A reversal of this trend materialized in the mid-sixties, when some portions of the Sunbelt emerged as the major growth areas in this country. According to the Verdoorn law, productivity grows faster in economic sectors that are in the process of expanding. This paper investigates the spatial validity of the Verdoorn law and its relation to the Snowbelt-Sunbelt shifts.