Issue 2

The fount of regional economic growth continues to challenge the minds of economists, policy makers and industry leaders, although the centrality of technological change remains the focal point. Whilst much headway has been made, contemporary theoretical approaches, involving both neoclassical and new growth perspectives, appear to relate to economies able to boast large populations and a rich variety of medium to large scale organisations operating across a diverse industrial landscape. This paper uses the Western Australian minerals and energy sector as an empirical basis to challenge the utility of orthodox theories for economic growth in small, resource-abundant economies. This paper outlines a theoretical platform based on a natural resource-dependent path for regional economic growth as being more suitable for Western Australia and similar small, low population, resource-abundant economies.

MARC G. SAUPIN

Page Number - 105

Within most federal systems of government, competition and rivalry exists between the states for central government funds for science and technology (S&T). This paper questions the Western Australian Government's argument that its allocation of Commonwealth Government funds for S&T should be based on population size. It shows that Western Australia' s minerals and energy sector has produced a rich network of world-class research performers with dynamic links to local manufacturers. It is argued that an approach based on a resource-dependent path to economic growth is a more suitable basis for seeking increased funding. This approach, together with the underlying constructs of sophisticated buyers and contexted technologies is considered to provide a sound theoretic al basis for governments of small but resource-rich economies mounting claims for an increased allocation of central government funds for S&T.

MARC G. SAUPIN

Page Number - 121

The Multifunction Polis (MFP) Australia is a multidimensional project intended to be a showcase for economic, scientific and technological developments of international projection with core activities in Adelaide. In relation to MFP there appears to be two central (and awkward) questions: what would be achieved which could not be done without MFP, and how to give impetus to the MFP project? These are important questions that have received little attention from economists interested in Australia's industrial organization and economic growth. The present paper shows that the preceding questions are answerable within the conceptual framework emerging from the New Growth Theory (NGT) and the Path Dependence Approach (PDA) to the economy. The argument is developed in three steps. The first step lies in characterizing NGT along the l i ne of reasoning Romer (1990) - Grossman and Helpman (1991) - Aghion and Howitt (1992), and making contact with concepts present in the case made for the 'path­ dependence' aspects of technological change and the role of history in economics by Arthur (1994). The second step in the argument lies in reducing the vagueness of the MFP's goals and demarcating the economic dimension of the MFP project. The third step involves the central claim of the present paper, namely: there exists a nontrivial policy recommendation, based on NGT and buttressed by the PDA, able to act as MFP's catalyst. Specifically, at this stage of the project a catalytic subsidy to R&D may be an appropriate policy instrument to drive the process towards the ultimate economic goal of MFP Australia.

EDUARDO POL

Page Number - 135

In the period 1993-1995 an EC/INTERREG-funded research project was carried out to identify the industrial development potential of the Ems Dollart region (the northernmost Dutch-German border region). More specifically this concerned the five sea ports which are located in the region along the Ems estuary: Eemshaven, Delfzijl, Emden, Leer and Papenburg. The major part of the project consisted of the development of a dynamic location choice system, the so-called AEGIS system. The core of AEGIS is a matching system which compares locational demands of firms (categorized as two digit ISIC sectors) with locational conditions of the five ports (specified for fifty different location factors, described with approximately 100 indicators). The comparison leads to policy recommendations regarding preferable acquisition strategies and priorities for strengthening location conditions in the region and its ports. Besides that, the supply-side of the AEGIS matching model can be used as a manager information system. The demand­ s ide of the matching system is filled with survey data from firms throughout the Nether­ lands and Northern Germany. The AEGIS system has the potential of being applied more widely, by using supply side data for other ports, cities or regions. It is also possible to use the system for impact analysis, by using the "what if" options of the model structure. Moreover, location choices for individual companies can be simulated, and different future scenarios have been built in.

PIETER H. PELLENBARG

Page Number - 153

The purpose of this study is to measure the impact of final demand aggregates on the sectoral value added in the Iranian economy by employing input-output analysis and econometric modelling. This paper presents a model in which the sectoral value added for major aggregate sectors is linked with final demand deliveries. The policy implications of this study highlight the outcome of a sustained percentage shock in each component of aggregate demand, other components remaining unchanged, on the growth of the sectoral value added in four counterfactual simulation experiments. These policy implications can provide insights for decision makers and planners in Iran.

ABBAS VALADKHANI

Page Number - 177

First, a small open economy is analysed to show that even a complete and competitive market may fail to produce Pareto-efficient outcomes under conditions of changing technology. It is mainly because price-taking agents can make the prices they face by changing their technology or technique of production. It is then shown that this result holds equally true for the regional sub-economies of this economy. A legal provision of R&D tax/subsidy based on payroll changes is shown to be a second best policy that corrects the market failure with a small dead-weight loss. This policy does not require actual tax collection or subsidy payment and may be used by regional governments to correct technological market failure at regional levels. The provision improves the functioning of the market by eliminating the mismatch between the type of production sector and the type of technological/technical change they introduce.

HOM M. PANT

Page Number - 201