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1、JOURNALOFURBANECONOMICS31,25-58(1992)SectoralGrowthPatternsattheMetropolitanLevel:AnEvaluationofEconomicDevelopmentIncentivesBREANDLN~HUALLACHAINDepartmentofGeography,ArizonaStateUniversity.Tempe,Arizona85287;ANDMARKA.SATTERTHWAITEKelloggGraduateSchoolofManagement
2、,NorthwesternUniversity,ELlanston,Illinois60208ReceivedAugust29,1989;revisedApril30,1990Economicdevelopmentincentivesaremuchusedandexpensive,yetinformationontheireffectivenessisscarce.Thispaperreportsaregressionanalysisofemploy-mentgrowthin37disaggregatedsectorsac
3、rossU.S.metropolitanareasinthetimeperiod1977-1984.Theresultsindicatethatvariationintaxesandsubsidiesarenotrelatedsignificantlytothelocationofeitherhigh-technologymanufacturingormostservices.Ourresultssuggest,however,thatenterprisezonesanduniversityresearchparks,wh
4、ichmaybeproxiesforfocusedeconomicdevelopmentpro-grams,areassociatedwithincreasedjobgrowth.Neverthelessthestrongestdeter-minantsofgrowtharelocalizationandurbanizationexternalities,alongwithlaborcostsandskillfactors.Wehypothesizethatlocalizationeconomiesoperatethrou
5、ghthereductionofinformationcosts,especiallythoseassociatedwithfirms’searchbehaviorsforskilledlaborforces.o1992AcademicPKSS,fnc.INTRODUCTIONDevelopmentincentiveprogramsatthestateandlocallevelconsumebillionsofdollarsperyearinexpendituresandforegonetaxrevenues.Inadeq
6、uateinformationontheeffectivenessofincentivesmayleadtowastedresources.Dostatesandlocalitiesgetafairreturnfortheirinvestmentintheformofjobsthatwouldhavelocatedelsewherewithouttheexpenditure,ordootherfactorsoverwhelmtheeffectsoftheincen-tivestotheextentthatthereturn
7、sareundetectable?Dosomeincentivessucceedingeneratingjobswhileothersareuseless?Thisempiricalstudyinvestigatesthedeterminantsofmetropolitanem-ploymentgrowth,withspecialattentiontotheeffectivenessofdevelop-mentincentives.Foreachof37serviceandmanufacturingindustriescx
8、pcriencingstronggrowthweestimatedanequationthatexplainsthechangesintheindustry’semploymentacrossUnitedStates’MetropolitanStatisticalAreas(MSAs)forthe197
