Portland State University. Department of Economics
Richard B. Halley
Date of Publication
Master of Arts (MA)
Subsidies -- Oregon, Industrial location--Oregon, Economic history, Oregon--Economic conditions
1 online resource (97 p.)
The subject of this thesis was chosen from both a professional and an academic interest in the economic development of Oregon. Prompted by proposals made to the Oregon Legislature to initiate various forms of industrial subsidy programs to disperse economic growth and population away from congested areas, this research effort seeks to provide an evaluative analysis of the effectiveness of subsidy techniques in influencing industrial location and stimulating a sustained growth process in less developed areas.
Research was undertaken in two primary subjects: 1) theory of regional economic development and the effects of subsidies on the growth process; and 2) empirical evidence of the effectiveness of industrial subsidy programs on regional development in other areas. Information was obtained from the following resources:
- The author’s library of reference literature on economic development and the bibliographies contained therein;
- Professional organizations, particularly the library of the American Industrial Development Council, as well as requests for literature from various members of those organizations;
- University library resources, including:
- Bureaus of Business Research, Bibliography, 1968-1970;
- Public Affairs Information Service, 1965-Jan. 3, 1973;
- Business Periodicals Index, 1965-1972;
- Journal of Economic Articles, 1967-Dec., 1972;
- Index to Economic Literature, 1966-1970;
- U.S. Library of Congress, National Union Catalog, 1960-1972;
- Council of Planning Librarians, Bibliographies;
- Colorado University, Public Catalog of Norlin Library holdings;
- Colorado Technical Reference Center.
Using information obtained from these and other sources, a method was obtained for defining and measuring the economic and social welfare objectives of a regional development program in Oregon. Geographical patterns of economic health indicators were mapped for the state
This is followed by an analysis of various types of subsidies and their effects on resource allocation and gross output. It was found that wage subsidies offer optimum benefits for labor-surplus areas with less distortion of capital efficiency than do capital or price subsidies. Justification for subsidies was found to be greatest using social benefits as criteria rather than maximization of economic output.
The influence of industrial subsidies on location decisions is then examined. Following an analysis of effects of subsidies on the cost structure and profit potential for the firm, financial and tax incentives are separately reviewed in case histories of subsidy programs. It was found that capital investment subsidies have had considerably more location influence than tax subsidies. In any case, however, subsidies were determined to be marginal, rather than decisive, locational factors with more basic economic criteria, such as labor availability and market access, being more influential.
Finally, cost/benefit considerations for subsidy programs in Oregon are reviewed. External effects of industrialization on rural economies are considered, and the growth center concept for maximization of economic gain is examined. Fiscal costs for state and local governments are explored for different types of subsidy programs. The conclusion is reached that programs can be devised which minimize fiscal costs while offering maximum potential economic and social benefits.
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Smith, Leland F., "The effectiveness of induced location of manufacturing industry as a means of fostering sustained economic growth in less developed regions of Oregon" (1974). Dissertations and Theses. Paper 2032.