Issue 3

Economic development is a process of ongoing structural change in which structural linkages that connect core components (the fundamental economic structure or FES) provide a platform on which non-fundamental activities at the periphery of the core can develop. Previous research has concentrated on the spatial characteristics of the fundamental - non-fundamental dichotomy with little regard for temporal adjustments as the economy develops and evolves. This paper revisits previous FES developments and suggests an alternative or complementary view of a dynamic. evolving FES which has a coherent development path. Evidence to support this hypothesis is found by analysing the structural characteristics and changes that have occurred in the Australian economy over the period 1974/5 to 1992/3. This information is used to forecast the 1993/4 national input-output table.

GUY R. WEST

Page Number - 429

Regional diversity is a hot topic in Australia's policy agenda. The economic and social circumstances of Australians vary significantly by region. Analyses of income inequality in Australia have generally focused on national outcomes. In contrast, this paper uses regional modelling techniques to examine the incomes of households in regional Australia and how the distribution changed between 1991 and 1996. It considers the changes at three levels: regions, States and local government areas. The results suggest that there is a large and growing gap between the incomes of those Australians living in the capital cities and those living in the rezt of Australia. However, regional Australia is not uniformly disadvantaged and not uniformly declining with very different experiences in particular States and regions. The study also found that the proportion of households living in the middle income ranges has been declining across most regions

RACHEL LLOYD; OTTO HELLWIG; ANN HARDING

Page Number - 271

This paper attempts to find evidence of cointegration between regional and state employment series. The tests are conducted on Total and Manufacturing employment for Queensland and its labour force regions. A simple neoclassical model incorporating an equilibrium theory of cointegration is presented and the implications of this model are outlined. Contrary to the conclusions of the model. the tests presented here suggest that disturbances to shares are cumulative and permanent. This finding has implications for both the appropriate theoretical structure of regional models and for the efficacy of regional development policy. In particular. the results suggest that regional policy can have a permanent effect on the economic base of regional economies.

BERNARD TRENDLE

Page Number - 373

It is possible to characterise Australia’s unemployment problem over the last quarter of a century as one of excess labour supply. Demand for labour has been strong over this period outpacing population growth by almost half a percentage point annually. Despite this. however. growth in labour demand has been overshadowed by even greater growth in labour supply. creating a state of permanent labour market disequilibrium. This phenomenon is not unique to Australia. but is characteristic of most western economies around the world.

PETER HAGAN; JOHN MANGAN

Page Number - 393

Among developed economies, New Zealand shares with the United States and the United Kingdom a rapid increase in personal income inequality since the 1980s. This paper focuses on changes in the New Zealand regional income distributions by means of 1981, 1986, 1991 and 1996 census data. This time frame encompasses an era of major deregulation and reform. Real male average personal income declined in all regions except in Auckland. The dispersion of average regional income also grew sharply, but there is unconditional beta convergence in average income when Auckland and Wellington are excluded. There is also persistence in regional rankings with respect to income. A growth in intra-regional income inequality, as measured by Gini coefficients, is evident in all regions, but is particularly pronounced in the Auckland and Wellington metropolitan regions. Labour market trends have played an important role and have led to a disproportionate growth in the number of low and high income persons, i.e. a “vanishing middle class”. Nonetheless, because Auckland and Wellington had traditionally lower inequality, there is evidence of spatial convergence in intra-regional income inequality.

ÖZER KARAGEDIKLI; DAVE MARÉ; JACQUES POOT

Page Number - 323