Resource allocation across regions in an economy has
been analysed by many authors, both from the efficiency and
equity viewpoints. In general, these aspects are assumed to
be conflicting - the attainment of higher growth rates and
income levels in accordance with efficient resource
allocation normally discrimminates against the relatively
less well off sections of society. The literature
concentrates largely on the allocation of resources across
sectors, irrespective of geographic considerations, so that
the decision to invest in a region seldom incorporates the
area's absorptive capacity. The regional imbalance that
results is shown just as clearly by the lack of high
technology industry in some areas as it is by the (potential)
congestion and overcrowding that characterises other regions.
This study focuses on the relationship between the regional
allocation of income generating activities and the total
income generated for the nation.
The growth potential of any area is defined by the
availability of all essential facilities - service and repair
facilities, transport and energy supplies being only a part
of the picture. Factor supplies and the supply of credit,
alongwith the high degree of interaction between regions and
sectors also complement the picture. The low income potential of the peripheral areas of any nation is the result of a lack of these ancilliary facilities. However, once these
bottlenecks are removed, the outlying areas normally depict
higher growth rates than the core regions. In this study, a linear programming model is developed 1 in king the commodity, factor and asset markets of
a nation, both across sectors and across regions. Thus, the
commodity market of any region is related to the commodity,
asset and factor markets of all regions. National absorptive
capacity is now defined in terms of the potentials of all
areas of the nation. The application of this model to Canada
results in a set of optimal regional patterns of economic
activity. Growth in any area is now encouraged only if the
regional economy is not operating close to some capacity
limitation, and if a full complement of goods and services,
factors and assets is available.
The results obtained justify these expectations
because the model depicts a pattern of resource allocation
that stresses areas where all facilities for growth are
present. Thus, further investment in the traditional center Quebec
and Ontario - is restricted, some critical thresholds
regarding absorptive capacity having been hit. However, the
regions where a full complement of services and asset
supplies is not available - the Atlantic provinces - are not the alternatives. The relative ordering favours the modern
manufacturing and service sec tors in Alberta and British
Columbia.
The model does suggest the existence of a tradeoff
between national income and regional balance, since the
imposition of regional balance constraints reduces the value
of national consumption. However, even when regional equity
constraints are imposed, the model suggests that more
national income can be generated through reallocation of
economic activity than was generated by the historical
pattern of allocation. / Thesis / Doctor of Philosophy (PhD)
| Identifer | oai:union.ndltd.org:mcmaster.ca/oai:macsphere.mcmaster.ca:11375/15629 |
| Date | January 1980 |
| Creators | Aziz, Rashid |
| Contributors | Kubursi, A.A., Economics |
| Source Sets | McMaster University |
| Language | en_US |
| Detected Language | English |
| Type | Thesis |
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