Examining the distributional effect of economic structure within an extended endogenous growth framework: A spatial econometric perspective for regional economic development planning

The purpose of this research was to find linkages between economic structure and income distribution and to provide distributional implications of specific economic sectors for market-based economic development and planning practice. An extended endogenous growth framework was developed which included endogenous growth engines. The framework also contained several economic structure variables including manufacturing employment, retail+service employment, tourism employment and firms, and employment and firm diversity indices.; This research uniquely employed a spatial error model (SEM) to control for implicit spatial autocorrelation through the error term. The SEM provided more efficient estimation coefficients than conventional Ordinary Least Squares (OLS) models. This research also employed exploratory spatial data analysis (ESDA) to describe spatial patterns of the variables by using global Moran's I, local indicator of spatial association (LISA), and Moran scatterplots. The research region was the 242 counties of the Great Lakes states.; This research found no conclusive evidence on the relationship between economic structure and income distribution. A general conclusion was that the linkage between economic structure and income distribution might be dynamic. The dynamic nature of the linkage suggests that considerable caution is needed in efforts to affect income distribution through influence on specific economic sectors. This research showed that manufacturing employment had disequalizing income effects, while retail and service sector employment did not have clear effects on income distribution in the region. These findings suggest that planners should have a concrete understanding of the specific distributional consequences of manufacturing and service industries.; This research uniquely showed that some natural amenity attributes were associated with equalizing income distribution in the region. This work suggests that natural amenities exhibit different distributional effects. Thus, economic development planners first need to be aware of the distributional consequences of natural amenity-based development, set a clear distributional goal, and then identify region-specific natural amenities that can serve the goal.; Finally, this research demonstrated the advantage and usefulness of a spatial econometric approach to regional spatial data. Specifically, this research suggests that the descriptive tools for spatial patterns of the data and the SEM can help policy research and development planning arrive at proper policy implications.