Regional Analysis Methods

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Regional Analysis Methods

• Week 2

2
National vs. Regional Economies

• Methods of aggregate regional analysis are based
  on theories and tools developed for national
  economies because national and regional
  economies can be viewed as being made up of the
  same fundamental components and the same sorts of
  relationships among those components
• Examples
• International trade specialization of nations
• Interregional trade specialization of regions

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Comparisons of National and Regional Economies
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So what does these differences mean?

• Realistic regional planning requires an
  understanding of the relationship of the region
  to the national environment.
• What kind of linkages between them?
• How that linkage affects the region, and vice
  versa?
• What appears to be good for the national may not
  necessarily be good for the region and vice
  versa.
• The institutional tools available for regional
  development are generally quite different at the
  regional level from those available at the
  national level. Ex. Printing money

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Different Approaches in Regional Analysis

• Quantitative Approach
• Statistical Compendium, Econometric Models,
  Quantitative Indexes
• Qualitative Approach
• Interviews, Questionnaire, Participant
  Observation (Detailed Discussion later Theme
  Four)
• Case Studies
• Theoretical Logics and Empirical Realities

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Quantitative Approach Statistical Compendium 1

• Statistical Compendium Regional Profile
• A document made up of statistical tables, often
  accompanied by diagrams, charts, maps, and
  explanatory text, and covering a wide range of
  subjects important to a preliminary understanding
  of the regions unique nature
• Function of compendium
• Presentation of the regions case to potential
  funding agencies
• Handbook of information on characteristics of the
  region

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Quantitative Approach Statistical Compendium 2
HINCO approach
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Quantitative Approach Econometrical Approach 1

• Lange (1978)
• Econometrics is the science which deals with the
  determination by statistical methods of concrete
  quantitative laws occurring in economic life

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Quantitative Approach Econometrical Approach 2

• Economic theory vs. econometrics
• Ex the impact of changes in the price of French
  wine on the demand of Japanese wine
• Economic theory by introducing the concept of
  elasticity of demand with respect to the price of
  the given commodity economic theory determines
  general relations between the quantities under
  study (e.g. a general rule on the substitution
  commodity and the elasticity of demand)
• Econometrics tries to establish the relations
  between the quantities quantitatively and
  concretely in the given economic situation

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Quantitative Approach Econometrical Approach 3

• The Genesis and development of econometrics in
  Western countries was during the period of the
  growing power of monopoly and state capitalism
• Econometrics studies served the needs of the
  economic policy both of the capitalist state and
  big private corporations
• Three big questions in econometrics
• Forecast business cycles in the capitalist
  economy
• Market research elasticity of demand and supply
• Programming coordinating interdependent
  activities

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Quantitative Approach Indexes

• Characterize certain aspects of regional
  economies
• Location Quotient Relative Specialization of the
  Region in selected industrial sectors
• Ex. LQ of French Restaurant in Kunitachi
• XK as a fraction of XJ
• LQ ------------------------------
• RVK as a fraction of RVJ
• XK the number of French Restaurant in Kunitachi
• XJ the number of French Restaurant in Japan
• RVK Total Population of Kunitachi
• RVJ Total Population of Japan

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Critiques on the Quantitative Methods in Social
Sciences 1

• When you cannot measure it, when you cannot
  express it in numbers, your knowledge is of a
  meager and unsatisfactory kind (Lord Kelvin)
• When you can measure it, when you can express it
  in numbers, your knowledge is still of a meager
  and unsatisfactory kind (Jacob Viner)

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Critiques on the Quantitative Methods in Social
Sciences 2

• Advocates of quantitative methods
• Mathematics as a precise, unambiguous language
  which can extend our powers of deductive
  reasoning far beyond that of purely verbal
  methods the validity of mathematical reasoning
  is a black-and-white affair.
• Only if objects are qualitatively invariant, we
  can analyze with quantitative methods
• Asocial approaches
• No economic theory can avoid the issue of what
  quantitative measures are measures of

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Critiques on the Quantitative Methods in Social
Sciences 3

• A valid argument does not have to be true or
  practically adequate and indeed may be quite
  nonsensical.
• A model is free from mathematical errors say
  nothing about whether it is applicable to the
  world. (Sayer 1984 Ch 6 p. 158)