Papers of the Regional Science Association

, Volume 14, Issue 1, pp 107–136 | Cite as

Sub-national and national planning: Decision criteria

  • Thomas A. Reiner


Decision Criterion National Planning 
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  1. 1.
    Economic development has recently been the subject of a vast literary outpouring. For what might be the best single source, see: Benjamin H. Higgins,Economic Development, New York, Norton, 1959. See also a recent edited book of readings: Gerald M. Meier,Leading Issues in Development Economics, New York, Oxford, 1964. The references here and in subsequent footnotes are largely restricted to items published in the U. S. A. or by international agencies. Similar problems—and proposed solutions— are reported in other parts of the world and under other socio-economic systems.Google Scholar
  2. 2.
    For some of the parallels, see: H. S. Perloff and L. Wingo, “Planning and Development in Metropolitan Areas,”Journal of the American Institute of Planners, vol. 28 no. 2, May 1962, pp. 67–90.Google Scholar
  3. 3.
    We shall proceed without involvement in the complex issue: What is a region?—except to note that this can be an important consideration. We believe it is possible and desirable to proceed with regional analysis developing “a concept of region [that] is a very generalized and flexible one ... [where], with different problems are associated different sets ... of regions” (W. Isard, “Regional Science and the Concept of Region,”Papers and Proceedings of the Regional Science Association, vol. 2, 1956, pp. 1–9). For some recent writings on the problem of defining region, see: J. Meyer, “Regional Economics: A Survey,”American Economic Review, vol. 53 no. 1, pt. 1, March 1963, pp. 19–54, esp. sect. 1 and citations therein; A. Wrobel, “Regional Analysis and the Geographic Concept of Region,”Papers, Regional Science Association, vol. 8, 1962, pp. 37–41; and some mathematical considerations of regionalization as a problem in set theory, M. B. Teitz, “Regional Theory and Regional Models,”Papers, Regional Science Association, vol. 9, 1962, pp. 35–50. Also, for a discussion of the manner in which factor analysis might be used to define a set of regions, see: Walter Isard,Methods of Regional Analysis, New York, Wiley, 1960, pp. 293–305.Google Scholar
  4. 4.
    A third factor remains: Time. Ideally, the decision maker will see his study yield the proper time sequence of the allocations to sectors or programs in a spatial setting. Particular time sequences will be associated with each of the criteria selected. Eventually, it should be possible to build models which give allocation directives in terms of sector, space, and time as well.Google Scholar
  5. 5.
    Such a set of items might be that category of goods and services which compose Gross National Product, as these are related by a set of commodity prices. The summing of disparate objectives (at least in the absence of an evident price system) is a much harder endeavor. (We refer to a set of objectives such as: maximize GNP, equalize regional per capita incomes, and so forth.)Google Scholar
  6. 6.
    The analysis draws heavily on an earlier article: P. Davidoff and T. A. Reiner, “A Choice Theory of Planning,”Journal of the American Institute of Planners, vol. 28 no.2, May 1962, pp. 103–115, and sources cited therein.Google Scholar
  7. 7.
    Traditional texts and studies of economic development give scant heed to subnational analysis, decisions, or aspirations. These works give even less attention to urban planning problems. The present writer's experience with planning organizations in Puerto Rico confirms the existence of a schism. So, too, did the tenor of the papers and of much of the discussion at the First Latin American Regional Science Congress, Caracas, Venezuela, November 1962 (English edition published as a Special Issue:Cuadernos de la Sociedad Venezolana de Planificacion, September 1963).Google Scholar
  8. 8.
    The most significant work in the first group is: Gunnar Myrdal,Economic Theory and Underdeveloped Regions, London, Duckworth, 1957. Myrdal, on the basis of U. N. documentation, shows that the spread in welfare between regions in European nations was the greatest, and was growing, in the poorest nations (United Nations, E. C. E.,Economic Survey of Europe in 1954, Geneva, United Nations, 1955, ch. 6). Hirschman, from a somewhat different perspective, has written that differential regional rates of development reflect the tendency of growth to be polarized (Albert O. Hirschman,The Strategy of Economic Development, New Haven, Yale University Press, 1958, esp. ch. 10). The extent of urbanization as a datum and as a social issue has been repeatedly discussed, most notably in the pages ofEconomic Development and Cultural Change; see, for example, the series of papers culminating in the article: B.F. Hoselitz, “Generative and Parasitic Cities,” vol. 3 no. 2, January 1955, pp. 278–94. It should be emphasized that the stress is not on urbanization as a planning vehicle. At most these, and similar writings, urge the acceptance of policies designed to reduce migration and to diminish the rate of urbanization. Underlying this literature would appear to be the fear of social disequilibrium and, to a lesser degree, concern over the higher cost of social overhead. (In one of the few analyses of the latter, Rosenstein-Rodan has written that a large share of all overhead investments come to be channeled into urban areas. It is not clear, however, to what extent he believes this to be a matter of more effective political pressures, differential standards of service, or some “objective” difference in need and higher return on investments in urban areas; see: P. N. Rosenstein-Rodan, “Les Besoins de Capitaux dans les Pays Sous-Developpés,”Economie Appliquée, vol. 7 no. 1-2, January-June 1954, pp. 77–87.)Google Scholar
  9. 9.
    See, for example: J. Black, “Investment Criteria Under Capitalism and Socialism,”Oxford Economic Papers, vol. 14, no. 2, June 1962, pp. 154–7; H. B. Chenery, “The Application of Investment Criteria,”Quarterly Journal of Economics, vol. 67 no. 1, February 1953, pp. 76–96; H. B. Chenery, “Comparative Advantage and Development Policy,”American Economic Review, vol. 51 no. 1, March 1961, pp. 18–51; O. Eckstein, “Investment Criteria for Economic Development,”Quarterly Jounral of Economics, vol. 71 no. 1, February 1957, pp. 56–85; W. Galenson and H. Leibenstein, “Investment Criteria, Productivity and Economic Development,”Quarterly Journal of Economics, vol. 69 no. 3, August 1955, pp. 343–70; B. Horvat, “The Optimum Rate of Investment,”Economic Journal, vol. 68 no. 272, December 1958, pp. 747–67; Jan Tinbergen,Design of Development, Baltimore, Johns Hopkins Press, 1958; United Nations,Manual of Economic Development Projects, New York, United Nationals, 1959; and several of the papers in: “Organization, Planning and Programming for Economic Development,”United States Papers... U. N. Conference on the Application of Science and Technology for the Benefit of the Less Developed Areas, vol. VIII, Washington, G. P. O., 1962.Google Scholar
  10. 10.
    In a similar vein, the objective function in the Stevens interregional linear programming model expresses a form of GNP as the criterion (in the primal) for optimal allocation of the nation's resources. See: B. H. Stevens, “An Interregional Linear Programming Model,”Journal of Regional Science, vol. 1 no. 1, Summer 1958, pp. 60–98.Google Scholar
  11. 11.
    Justification for such an imbalance approach is given, for example, in: E. E. Hagen, “The Process of Economic Development,”Economic Development and Cultural Change, vol. 5 no. 3, April 1957, pp. 193–215; and in Hirschman,op. cit. Also, assuming disparate regional saving and productivity patterns, Rahman has shown, in a model with maximum national growth as the objective, that imbalance may best serve this end; see M. A. Rahman, “Regional Allocation of Investment,”Quarterly Journal of Economics, vol. 77 no. 1, February 1963, pp. 26–39. Resource constraints are introduced in the Stevens model (op. cit., p. 74) and, of course, underlie any realistic development effort.CrossRefGoogle Scholar
  12. 12.
    The self-fulfillment notion (with certain inevitable vagueness0 is expresed, e. g., in: India; Planning Commission,Thir Five Year Plan, [Delhi, Planning Commission, 1961], pp. 142–4; and J. G. Saushkin, “Large Areal Complexes of Productive Forces of the Soviet Union,”Papers, Regional Science Association, vol. 8, 1962, pp. 93–104. The balance objectives are cited, for example, in: “National and Regional Economic Planning in Italy,” in Walter Isard and John. H. Cumberland, eds.,Regional Economic Planning, Paris, OEEC-EPA, 1961.Google Scholar
  13. 13.
    See, for example: Lloyd Rodwin, “Metropolitan Policy for Developing Areas,” in Isard and Cumberland, eds.op. cit.. The distribution of urban places can be evaluated as an objective in itself, or as an instrumentality to optimum growth of the system of regions which constitute the nation. Here we are largely beyond the realm of analytic models, though the scale, external economy, and agglomeration considerations (which underlie, among others, the “development poles” approach) are susceptible to mathematic formulation.Google Scholar
  14. 14.
    See, for example, the papers of several of the Delegations reporting to the European Productivity Agency Conference on Problems of Economic Development (1960) in: Isard and Cumberland, eds.,op. cit.. One of the rare but significant attempts to apply intensively economic techniques in such a regional planning context is discussed in: Hollis B. Chenerry, “Regional Analysis,” inThe Structure and Growth of the Italian Economy, Rome, U. S. A. Mutual Security Agency, 1953.Google Scholar
  15. 15.
    See, for further discussion of some of these regional objectives: J. L. Fisher, “Concepts in Regional Development,”Papers and Proceedings, Regional Science Association, vol. 1, 1955, pp. W1-W20; David F. Bramhall, “Integrated Techniques for Regional Projection and Policy Formulation,” unpublished doctoral dissertation in Regional Science, University of Pennsylvania, 1961; and C. L. Leven, “Establishing Goals for Regional Economic Development,”Journal of the American Institute of Planners, vol. 30 no. 2, May 1964, pp. 100–10.Google Scholar
  16. 16.
    Perhaps the bulk of regional planning analyses fall in this category. See, for example: A. Ganz, “Regional Planning as a Key to the Present Stage of Economic Development of Latin America: The Case of the Guayana Region, a Frontier Region,” inCuadernos, op. cit.Google Scholar
  17. 17.
    Considered from a different viewpoint, subnational planning studies can be grouped in two classes: regional and interregional; 1) those which are built up from the perspective of a regional element in a larger system, and 2) those which are prepared from the point of view of the nation and are to apply to a set of interacting regions constituting the nation. A fine description of planning of the first category is found in: Alvin Mayne, “Designing and Administering a Regional Economic Development Plan with Specific Reference to Puerto Rico,” in Isard and Cumberland, eds.,op. cit. Chenery's study for the Mutual Security Agency is an example of the small group of studies in the second group (“Regional Analysis,”op. cit.).Google Scholar
  18. 18.
    See: e. g., Ganz,op. cit. Perhaps the bulk of regional planning analyses fall in this category. See, for example; A. Ganz, “Regional Planning as a Key to the Present State of Economic Development of Latin America: The Case of the Guayana Region, a Frontier Region,” inCuadernos, op. cit.Google Scholar
  19. 19.
    Thus, it is evident that East and West Pakistan are entitled, in many, sectors, to virtually equal allocations under the national plan. See: Pakistan Planning Commission,The Second Five Year Plan, [Karachi, the Commission] 1960, ch. 19.Google Scholar
  20. 20.
    This point is further discussed below, page 000, and Appendix A.Google Scholar
  21. 21.
    Some of the alternate equity notions regarding regional development have been presented in: L. Rodwin, “National Urban Planning and Regional Capital Budgets,”Papers and Proceedings of the Regional Science Association, vol. 3, 1957, pp. 223–232; and S. H. Robock, “Regional and National Economic Development in India,”Papers and Proceedings of the Regional Science Association, vol. 6, 1960, pp. 65–82.Google Scholar
  22. 22.
    Clashing attitudes toward migration reflect the worldwide conflict between the many vested interests favoring immobility and the very evident volitional population shifts to urban areas. Where migration is restrained-in the face of evidence that it is associated with beneficient shifts in productivity, education, birth rates, etc.—equalization of per capita incomes on a regional basis becomes a more difficult undertaking. This conflict is a facet of the following question, one which has been insufficiently probed in planning circles: “What condition represents ‘stability’: can stability be consistent with lack of change in the rate of change? In more homely terms, is a region or community ‘stable’ when a given population remains resident there, though with changing economic features, changing family size, new travel and consumption patterns and other behavior shifts as the cohort ages or becomes wealthier? Or should one speak of stability in terms of groups exhibiting similar patterns of behavior even though individuals composing the region have changed: new faces having come to assme old roles?”Google Scholar
  23. 23.
    A simple representation of the effects of different regionalization patterns on intraregional measures of welfare is given in: T. A. Reiner, “Organizing Regional Investment Criteria,”Papers, Regional Science Association, vol. 11, 1964, pp. 63–72.Google Scholar
  24. 24.
    See, e. g.: India, Planning Comission,Second Five Year Plan; A Draft Outline, [New Delhi, the Commission] 1956, p. 20. Such a framework, where minimum regional consumption levels appear as constrains, can be stated as a linear program.Google Scholar
  25. 25.
    Obviously, there are other forms which could be given to such a compensation criteria: for example, allocate in proportion to deviation from some standard per capita income level.Google Scholar
  26. 26.
    See, e. g., the various formulae for distribution of federal funds to spatially distributed claimants under various U. S. grant-in-aid programs as summarized in; Virginia Commission on Constitutional Government,Federal Grants-in-Aid, Richmond, Va., the Commission, 1961,passim. A detailed study of spatial aspects of grant-in-aid instruments is being conducted by the present author with the assistance of M. L. Smith.Google Scholar
  27. 27.
    See e. g.: Puerto Rico Industrial Development Corporation,Master Plan for Industrialization, San Juan, The Corporation, 1956.Google Scholar
  28. 28.
    Rahman,op. cit., offers a dynamic allocation model assuming that a single national growth objective determines allocation.Google Scholar
  29. 29.
    See, e. g.: Pakistan,The Second Five Year Plan,op. cit.,., pp. 397–8; and India,Third Five year Plan, op. cit., pp. 142 ffGoogle Scholar
  30. 30.
    A recent 5-Year Philippine Plan does explicitly weight objectives; see:op. cit., pp. 654–63, 682–86 for this rare exampleGoogle Scholar
  31. 31.
    Strictly speaking, ify A is calculated,y A is known in a two-region model.Google Scholar
  32. 32.
    The investment multiplier, as a measure of the relationship between exogenous investment and resulting increase in system equilibrium income, is here used in its simplest form. Under this model, it plays itself out during the one “period” under consideration. Equivalently, this model reflects the assumption that income not spent on consumption is permanently lost to the income stream: repays bank debts, is spent on imports from abroad, etc. A regional multiplier measuring the impact on regional product, is introducced in the investment model in: L. E. Fouraker, “A Note on Regional Multipliers,”Papers and Proceedings, The regional Science Association, vol. 1, 1955, pp. H-2 snow—H-4. An interregional (international) multiplier which segregates the elements of a generlaized investment multiplier into components of local impact and foreign impact, is presented in: L. A. Metzler, “A Multiplier Theory of Income and Trade,”Econometrica, vol. 18 no. 4, Oct. 1950, pp. 329–354. Both Fouraker's and Metzler's models are more complex than the model presented in this chapter to the extent that these introduce interregional trade.Google Scholar
  33. 33.
    For simplicity's sake, the prescript “t” designating the first point in time has been omitted. In the more general case of criterion (1), narrowing (rather than eliminating) income differentials, only minor adjustments to the function are required. This is demonstrated in: T. A. Reiner,Regional Allocation Criteria, unpublished Ph. D. dissartation in Regional Science, University of Pennsylvania, 1963. pp. 117–119. Also, in order to further simplify the analysis and with no loss of generality, we have assumed that the weights applied in use of criterion (2) cancer out.Google Scholar
  34. 34.
    See the full presentation of this model in: Hollis B. Chenery and Paul G. Clark,Interindustry Economics, New York, John Wiley, 1959, chs. 3 and 12; and L. N. Moses “The Stabiliyty of Interregional Trading Patterns and Input-Output Analysis,”American Economic Review, vol. 45 no. 5, Dec. 1955, pp. 803–832. On interregional input-output models in general, see: Walter Isard,Methods of Regional Analysis, New York, Wiley, 1960, Ch. 8.Google Scholar
  35. 35.
    See, e. g.: Charles L. Leven, “Regional Income and Product Accounts; Construction and Application,” in Werner Hochwald, ed.,Design of Regional Accounts, Baltimore, Johns Hopkins Press, 1961; and Chenery and Clark,op. cit., pp. 14–21.Google Scholar
  36. 36.
    It should be noted that calculations are made asincrements to income, product, demand, and supply above and beyond lvels of ongoing operation of the economy. (It is this level of the economy which, in the first instance, was measured to yield the interindustry and interregional transaction coefficients.)Google Scholar
  37. 37.
    For a study of the increase across the board of final demand in one region (by ten percent in the case note), see: Moses,op. cit. In the second vase we have in mind, say, the direct direct demand for inputs generated by a steel mill, and the demand for inputs by related fabricators, as calculated in: W. Isard and R. E. Kuenne, “The Impact of Steel Upon the Greater New York—Philadelphia Insdustrial Region,”Review of Economics and Statistics, vol. 35 no. 4, Nov. 1953, pp. 289–301. Also, see: W. Isard and E. W. Schooler, “An Economic Analysis of Local and Regional Impacts of Reductio of Military Expenditures,”Papers, Peace Research Society (International), vol. 1, 1964, pp. 15–44.Google Scholar
  38. 38.
    An interregional programming model usedab initio of course allows the analyst to pinpoint both sector and location loevels simultaneously. see: W. Isard, “Interregional Linear Programming,”Journal of Regional Science, vol. 1 no. 1, Summer 1958, pp. 1–59; and Stevens,op. cit. Google Scholar
  39. 39.
    Given the existence of a correspondence between criterion and allocation, any partitioning of allocations can be thought of as arising from the use of one or another spatial criterion.Google Scholar
  40. 40.
    The figures for this two-region, three-sector economy are taken from the hypothetical data given by Chenery and Clark,op. cit., in ch. 4. In each region, sector 1 is “primary production”, sector 2 is “secondary production”, and sector 3 is “regional income” (house-holds). By definition,a ijST=s iST a ij, where thes and thea factors, the supply ratios and technological coefficients, are given.Google Scholar
  41. 41.
    This is not a necessary consequence: it depends strictly on the trade pattern built into the interregional I-O matrix.Google Scholar
  42. 42.
    An extreme value results from the linear properties of an I-O model. Another property of such I-O models is that only two points along they iA dimension need to be selected to portray the income responsiveness functions. If the initial allocations where made to a combination of sectors, then, too, the national and regional income generated would be a linear combination of the functions would be generated by allocation to each of the sectors exclusively.Google Scholar
  43. 43.
    One recent analysis of this type which partly undertook to answer some of the questions posed here has been reported by the Upper Midwest Economic Study. See: “The Geographic Impact of the Federal Budget,”Technical Paper no. 2, Minneapolis, Upper Midwest Economic Study, 1962. Underlying data are found in: I. M. Labovitz,Federal Revenues and Expenditures in the Several States...1959–61, Washington, U. S. Liabary of Congress Legislative Reference Service, 1962.Google Scholar

Copyright information

© The Regional Science Association 1964

Authors and Affiliations

  • Thomas A. Reiner
    • 1
  1. 1.Regional Science DepartmentUniversity of PennsylvaniaPhiladelphiaUSA

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