1 INFRASTRUCTURE: In the Aschauer’s (1989a, 1989b) original work, a Cobb-Douglas production function was estimated with stocks of various infrastructure as capital and labour as the other input. He established that military capital had insignificant association with productivity. Nevertheless, the ‘core’ infrastructure such as streets, highways, airports, mass transit, sewers, water systems, etc., had the majority explanatory power for productivity. The relationship between public capital and economic activity at the State level in the US was examined by Munnell (1990a, 1990b). In the initial analysis, public capital was found to have a considerable and positive impact on output even though the output elasticity was roughly one-half the size of the national estimate. In the following analysis, public capital was found to enhance the productivity of private capital, boost its rate of return and promote more investment. Alternatively, from the investors’ standpoint, public capital was looked upon as an alternative for private capital which crowded out private investment. There are not many studies conducted at the regional level using cross-section data. Costa et. al. (1987) tested the relationship between public capital and regional output using translog production function for 48 States of the USA for the year 1972. Three sector wise aggregates were considered in the study viz., non-agricultural sectors, all economic sectors and manufacturing. Public capital and Labour were found to be complementary inputs with diminishing returns. Some of the later studies by Duffy-Deno and Eberts (1989), Eberts (1986, 1990), and Eisner (1991) were also conducted at the regional level. All these studies found a positive relationship betw... ... middle of paper ... ...egional Economic Growth", Working Paper No. 8610, Federal Reserve Bank of Cleveland, December. Eberts, R.W. (1990), "Public Infrastructure and Regional Economic Development", Economic Review, Federal Reserve Bank of Cleveland, 26, pp. 15-27. Eisner, R. (1991), "Infrastructure and Regional Economic Performance", New England Economic Review, Federal Reserve Bank of Boston, Sept.-Oct., pp. 47-48. Jha, Raghbendra and B.S. Sahani (1992), Industrial Efficiency: An Indian Perspective, Government of India (1996), India Infrastructure Report, Department of Economic Affairs, Ministry of Finance, Government of India. Sahoo, Satyananda, and K.K. Saxena (1999), "Infrastructure and Economic Development: Some Empirical Evidence", Indian Economic Journal, 47(2), October-December, pp.54-66. Sims, C. (1980), "Macroeconomics and Reality", Econometrica, 48, pp. 1-48.
Hendricks, David (2007). Toll roads will help local economy. San Antonio Express News, retrieved from http://www.mysanantonio.com/business/stories/MYSA092607.01E.Hendricks.2a01b15.html September 30, 2007.
Jaquish, J. (2013). Regional Leaders Take Step Toward Stronger Metro Atlanta Economy. Retrieved from www.atlantaregional.com: http://www.atlantaregional.com/about-us/news-press/press-releases/regional-leaders-take-step-toward-stronger-metro-atlanta-economy
Government has filled a spot in the American Society that once belonged to the churches. People regularly attended church throughout American history and use the church as a place of instruction, guidance, support, and charity. The government now fills a larger role in American’s lives and at the same time church attendance is diminishing. The government is growing at a rapid pace and the expanded social programs have more influence on Americans than the church. America is a nation of immigrants which most fled from large governments (sometime oppressive) and now the American government is poised to grow larger than ever. The ideas behind the growth of government can have noble intentions, but more often than not results in wasted money and harm to the peoples it intends to help, and is replacing the roles churches once filled as a guiding and supportive structure in peoples lives.
The truth is, the right kind of spending can fuel growth. No matter what we think or do, our future generation will be paying for our current dabbling in the world of deficits. The U.S. Government does not mind on spending upon spending now, for example the wars in Afghanistan and other middle-eastern countries because they know that our future generation will be paying back taxes. An advantage that the U.S. Government has and will continue to spend its money on is public transportation. In the short-term this huge expense seems to be at a negative, but if the U.S. Government can spend money on fixing transportation and it is a success, it will have been worth the spending in the
For instance, given a fixed level of capital and labour, output will only grow if there is technical progress, that is the value of technological change, A, changes. Because technology is introduced into the function as multiplying L, it is known as labour augmenting or Harrod neutral. This is distinct from capital augmenting: Y(t) = F[A(t)K(t),L(t)] and Hicks Neutral: AY(t) = F[K(t),L(t)]. Some assumptions are made concerning this function.
According to the World Economic Forum, a group of the top 1,000 businesses in the world and a leading source of world economic data, as well as economic theory, the United States ranks twelfth out of one hundred forty-four nations in infrastructure with a score of 5.8 out of 7 (Global Competitiveness). This shows that while the United States may not have a perfect infrastructure system, it still does very well when compared with other countries. In the first sub category of transport infrastructure the United States performs even better, placing ninth in the world with a score of 5.8 out of 7. This success mostly stems from our airport infrastructure. The United States ranks ninth in Quality of air transport infrastructure, with a score of 6.1 out of 7. In the category of available airline seat kilometers or how many seats per distance traveled by aircraft, America rank first in the world. The United States performs decently in the quality of roads, earning Sixteenth in the world, fifteenth in railroad infrastructure, and twelfth in port infrastructure. However, in the second category of electricity and telephony infrastructure the United States ranks twenty sixth with a score, again, of 5.8 (Global Competitiveness). This ranking largely stems from the United States’s ranking one hundred
Romer, P.M. (1990). Capital, Labour and productivity. Journal of political economy Vol. 98, No 5: university of Chicago. Pp 339341
...drains, and so on); plant, machinery, and equipment purchases; and the construction of roads, railways, including schools, offices, hospitals, private residential dwellings, commercial, industrial buildings and net acquisitions of valuables are also considered capital formation. (Carvalho 2010) claims the “Growth Acceleration Plan” (refer to Appendix C) has been Brazil’s key contributors to economic growth.
A famous Canadian geographer was once quoted saying, “ …any region which has a well developed transportation and communication network also enjoys a high degree of economic prosperity…”. This statement has sparked much controversy between geographers, as well as economists. The argument is, is there a direct link between a developed infrastructure and economic prosperity. Without a doubt, there is a direct link between economic prosperity and a well-developed system of transportation and communication. It is possible to understand this direct link by reviewing and comparing the infrastructure and economy of three different cities. Toronto has well-developed transportation and communication systems, North Bay has terrible communication and transportation systems, and Brampton has just recently developed their communication and transportation systems.
The endogenous growth theory primary concern the policy measures in economic which will bring impact on economic growth rate in a long run. At the same time, it will drive the active involvement of the public in stimulating the economic growth through direct investment or indirect investment for human capital. For instance, the government yearly budgeting policy that mandates a 20 percent of the budgeting must be allocated to the education. The allocation can be for facilitating the school enrolment or as a scholarship and subsidies for research and development. By doing so, there will be a knowledge which in the long term will lead to economic growth. In this case, the government contribution to economic growth can be seen through their influence in changing the consumption or spending for public investment. (Todaro,
This is inadequate when trying to sum up the state of supply of public goods in all the developed countries. Furthermore, this study only talks about the pure public good and there is not mention of how different types of public goods –quasi public goods and congested public goods – develop. The supply of various public goods differs with respect to their purpose. Another limitation of the study would be that it doesn’t factor in different economic problems that developed countries might be facing that directly affects the supply of public goods. For example, a country going through recession will have limited finances to supply the public goods due to reduced revenue. At the same time it is during recession that the demand for public goods rises. Also, government’s capital expenditure falls. In a situation like this, the quality of public goods like education and health service may decline, which this study has failed to mention. In situation like national spending cutoffs and increasing national debt, supply of public goods suffers severely while taxation rises. Another major issue that the study fails to incorporate is the level of taxation in these developed countries. Taxation varies from country to country, consequently public and welfare goods vary. The final fatal flaw of this research paper would be that a comparative analysis has not been made with the state of public goods in developing and under developed countries when specifying the different levels of development of process of public goods
Thanks to the fact that people are moving to capital and bigger centres (regions), there is also a bigger concentration of businesses in these regions. Therefore, for the local governments outside the capital and central governments who are interested in balanced economic development across the country, it is necessary to think how to promote economic development in those regions which do not have very good preconditions for attracting labour and capital. Otherwise, those regions lose the necessary finance to invest in infrastructure and human capital, hire the best specialists, develop businesses etc.
With the difference between capital spending and operating budgets, capital spending has made it difficult to control. Due to this it allows the temptation to the use of debt. Progressively, the state and local governments are funding comprehensive services through capital budget and debt finance. One major subject of a new way of capital budgeting is the temptation that politicians are facing and they are looking for a way to jump-start an economic growth. For example, the economic growth can stimulate private projects with public investment.
In any economy, there are two typical businesses, which are the public sector and the private sector.
It assumes that public and private investment in human capital generate external economies and productivity improvements that offsets the natural tendency for diminishing returns