Can Government Change a Region’s Growth Path?
In this chapter, the authors review the efficiency aspects of policies that stem from the theories. They investigate the government's role in altering the growth path for a regional economy. Investment in K-12 education has a solid impact on regional growth, not only in the parental migration effect, but also by increasing the productivity of future generations. Some regional governments invest in tourism, the arts, sports stadiums, casinos, or wilderness recreation areas. Governmental research and development and private research and development are complementary goods. Governmental research and development facilitates knowledge distribution outside the laboratory. Tourism requires that local governments expand budgets for the administration of investments, public transportation, police and fire protection, corrections, and parks and recreation. Public investment could play a positive role in economic development. Government subsidies helped build railroads to the Pacific Northwest; Seattle was able to create a comparative advantage in national and international trade.