Technological progress and the growth of a region

The purpose of this study is to address the role and function of technological progress in influencing factor movements which are directly or indirectly related to the economic growth of regions. From a review of the literature in regional economics it is concluded that there is a need to emphasize the role and function of technological progress in conjunction with regional economic growth.;It is concluded from this study that when there are no differences in technology between two regions, capital would move from the high-wage region to the low-wage region while labor would move from the low-wage region to the high-wage region. Thus, capital and labor move in opposite direction. However, if there are differences in technology between two regions, depending upon the types of technological progress, capital and/or labor would move from the region without technological progress to the region with technological progress. Therefore, it is possible that both capital and labor move in the same direction. As a result, the capital-labor ratio in both regions would be affected in the long-run as factor movements proceed. The new capital-labor ratio in each region solely depends upon the relative size of outgoing capital-labor ratio from the region without technological progress to the region with technological progress.;This study also tries to shed some light on the long-run stability of the real wage differential between the North and South in the U.S. by focusing on Hicks neutral technical change. Historically there has been a long and relatively substantial wage differential between the North and the South in the U.S. This wage differential between the two regions has persistently intrigued economists, as is appears to contradict neoclassical economic theory. The results for the annual growth rates of capital per man hour and technical change indicate that the sources of output growth between the two regions are different in the period 1965 to 1985. In addition, regression results show that the growth rate of the real wage differential between the North and South is positively related to the growth rates of technical change and the capital-labor ratio in the North, while the growth rate of the real wage differential is negatively related to the growth rates of technical change and the capital-labor ratio in the South. (Abstract shortened with permission of author.).