John Swales

Thirlwall and balance of payments constrained growth

This paper outlines the theory which Thirlwall uses to determine the growth of domestic income and argues that crucial elements of this theory appear to be very weak. The empirical evidence presented by Thirlwall to support his argument for balance of payments constrained growth is considered.

Thirlwall law and balance of payments constrained growth - further comment on the debate

This paper reviews the debate that has occurred in Applied Economics over Thirlwalls Law (McCombie, 1989; McGregor and Swales, 1985; 1986; Thirlwall, 1986). The empired evidence concering the validity of the Law is re-assessed using a variety of tests including that suggested by McCombie (1989) and the new data set provided by Bairam (1988). The Law is overwhelmingly rejected by the evidence, contrary to the conclusions of McCombie and Bairam. The rationale for the assumption of constant relative prices which is required to derive Thirlwalls Law is reconsidered. The original ‘law of one price’ rationale renders the approach incoherent. The more recent rationale of sticky oligopolistic price improves the internal consistency of the model but necessitates consideration of non-price competition. However, neither the theory underlying Thirlwalls Law, nor empirical tests of the Law, property account for this. In principle, the Law cannot be employed to distinguish between demanding constrained and supply-co...

Balance of payments constrained growth - a rejoinder to Professor Thirlwall

Professor Thirlwall has argued that the growth rate of a country is constrained by the requirement that the external current account must broadly balance. He maintains that a countrys growth can be analysed using a dynamic Harrod trade multiplier, and that a countrys long-run growth rate (y) will approximate to the ratio of the rate of growth of exports (X) to the income elasticity of demand for imports (A): In a recent article in this journal (McGregor and Swales, 1985), doubts were expressed about the theoretical and empirical grounds on which Thirlwall makes these claims. In his reply, Thirlwall argues that such doubts are unfounded. He clarifies his theory on a number of points. He argues that his theory was subjected to inappropriate empirical tests. And whilst accepting that Equation 1 can be derived from a strict neoclassical model, he invites the reader to choose between the plausibility of the neoclassical story, as against the Keynesian alternative.

The formation of new manufacturing establishments in the Central Clydeside and West Midlands Conurbations 1963–1972: A comparative analysis

Firn J. R. and Swales J. K. (1978) The formation of new manufacturing establishments in the Central Clydeside and West Midlands Conurbations 1963–1972: a comparative analysis, Reg. Studies 12, 199–213. Little research has been undertaken on the birth rates of new manufacturing enterprises either at a national or a regional level. This paper focuses on the role of new firms in regional economic development by analysing the formation of new manufacturing establishments in the Central Clydeside and West Midlands Conurbations between 1963 and 1972. Marked differences are revealed in the organisational structure of new establishments in the two regions, with the West Midlands showing an unexpectedly poor performance in generating new firms. The results suggest that while regional policy has been effective in transferring employment to the development areas, the low rates of new enterprise formation shown in both conurbations pose substantial long-term problems for both regional economic development and small f...

Impact of alternative electricity generation technologies on the Scottish economy: An illustrative input—output analysis

Abstract UK energy policy is at a critical juncture, with major changes in the electricity generation mix in prospect. In Scotland, significant reductions in electricity-generating capacity are expected as coal- and nuclear-powered stations close, and renewable technologies provide a growing share of total electricity. Despite these radical changes, there has as yet been no assessment of the likely implications for the Scottish economy. This paper explores the likely systemwide impact of these changes on aggregate and sectoral outputs and employment levels using an input-output analysis that separately identifies eight generating technologies. The results suggest the need for careful disaggregation of the electricity generation sector and emphasize the economic distinctiveness of individual generation technologies.

The importance of the first round in the multiplier process: the impact of Civil Service dispersal

In this paper an extended Keynesian regional multiplier model is developed and used to estimate the local impact of two proposed (but subsequently cancelled) moves in the UK programme of Government office dispersal. These moves were to have been the relocation of the Property Services Agency to Cleveland and part of the Ministry of Defence to the county of South Glamorgan. The multiplier formulation explicitly takes into account an important feature of Government office dispersal; that is, that a large proportion of the employees move with the job. The importance of the first round in the multiplier process is stressed, and quantitative estimates of the effects of varying the nature of the initial injection are given.

Migration equilibria/disequilibria and the natural rate of unemployment in a regional context

Examines the theory of regional equilibria in the presence of endogenous migration, where net migration flows are determined by real consumption wage and unemployment‐rate differentials. Provides a theoretical analysis of market clearing and steady state concepts of equilibrium and examines the impact on local demand of government expenditure. Concludes that a natural rate input‐output model applies, but that the system takes a long time to return to the equilibrium.

The repeated application of shift-share: a structural explanation of regional growth?

The views put forward by Fothergill and Gudgin that structural factors account for variation in the growth rates of UK regions, and that such structural factors are identified by the repeated application of shift-share are examined. First, the conditions under which the growth rate of a region can be said to be structurally determined are considered. These conditions are not only restrictive, but are also at odds with the expressed views of those who support such a theory. Second, it is shown that, even if the identified conditions hold, the repeated application of the shift-share technique will lead, in general, to an incorrect measure of the importance of these structural factors. An accurate simple procedure is given as an alternative to shift-share in these circumstances. Last, analysis of variance is considered and it is shown that the assumptions required for this technique to be appropriate are essentially the same as those required for the regional growth rate to be structurally determined. Although the use of analysis of variance is not advocated, it is suggested that it is incorrect for shift-share to be portrayed as a superior alternative.

Migration Equilibria in Regional Economies: A Multi-Period CGE Analysis of an Improvement in Local Amenities

In this paper we investigate the possible system-wide impacts on the local economy of an improvement in amenities. The amenity improvement could take a variety of forms, such as upgrading the environment or enhancing local public service provision, and might involve public sector action.1 However, we here take the change to be entirely exogenous, and concentrate solely on the lasting economic consequences of the amenity improvement (relative to other regions). We are therefore not concerned with any transitory stimulus that expenditures associated with amenity improvement may bring, nor do we attempt to assess ‘non-economic’ effects on the quality of life in the locality.

Imperfect Competition in Regional Labour Markets: A Computable General Equilibrium Analysis

The system-wide impacts of imperfect competition in the regional labour market are examined by means of a macro-micro simulation model (AMOS) parameterised on Scottish data. A number of theories of the operation of the regional labour market are reviewed and it is indicated how these can be operationalised within AMOS through the adoption of different labour-market closures. Two sets of simulations are performed. The first involves nominal and real wage shocks to the regional economy. In the second, a demand disturbance is introduced under various labour-market closures. The sensitivity of the results to assumptions concerning the openness of the regional economy and the flexibility of the production technology is also discussed.