There has been a recent resurgence of interest in regional growth theory. One strand of this has been the work on endogenous growth processes and the natural potential for regional economic convergence. On the other hand, the appearance of a seminal paper by Aschauer in the late 1980s linking productivity growth to infrastructure provision provided arguments for a rethinking of the role of public policy in stimulating regional development. In particular this latter work offered a case for enhanced public sector activity at a time when mainstream economists favored a greater role for the private sector, a lowering of the tax burden and a liberal stance on regulation. The empirical findings have subsequently been the subject of further analysis and the theories which could potentially underpin them have been reviewed. This paper examines the links between this work on the importance of public capital and that on the role of endogenous growth processes.
Legislation in 1977 and 1978 effectively deregulated the US domestic air cargo and air passenger transportation industries. International air transportation, largely as the result of the 'Open Skies' initiative from 1979 has also gradually been liberalized but progress has been geographically and temporally uneven. This study is concerned with extending the Open Skies concept and in accessing the benefits to the US economy of removing the remaining impediments to the provision of free market services involving, in particular, the full transatlantic market. It initially reviews some of the previous work that has looked at links between industrial location and the quality of international air transportation. It develops a modeling framework to examine the implications of further liberalization on the economies of US regions that currently have limited international services. The work involves both a macro analysis of the impact of European international services for 41 Metropolitan Standard Areas and a micro-analysis looking at the developments over time at a smaller number of airports and their surrounding regions.
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