Defense Spending and the System of Regional Economies
Esparza, Adrian S.
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https://hdl.handle.net/2142/70653
Description
Title
Defense Spending and the System of Regional Economies
Author(s)
Esparza, Adrian S.
Issue Date
1987
Department of Study
Geography
Discipline
Geography
Degree Granting Institution
University of Illinois at Urbana-Champaign
Degree Name
Ph.D.
Degree Level
Dissertation
Keyword(s)
Geography
Abstract
The federal government is frequently identified as one of the principal agents inducing change within and between the system of regional economies. This influence, and associated impacts, stem from the enormity of the federal budget, the relative instability of expenditure patterns over time, and government purchases of many goods and services from the private sector. Perhaps the most dramatic and apparent of these influences has been the regionalization and extensive geographic concentration of defense production emerging during the post World War Two era. The evaluation and impact of the regionalization of the defense industry, and the potential impacts on the system of regional economies stemming from defense production, serve as the basis of this dissertation.
Two simulation models are implemented to examine the regional economic impacts of defense spending. First, a multiregional input-output model is constructed to determine the extent to which converting federal defense expenditures to non-defense programs influences industrial activity at the regional and interregional level. The model determines the amount of regional industrial production and consumption induced by defense and non-defense final demand, and simulates the net effects of conversion for industries and regions. The interregional component of the model links industrial production and consumption over space, thereby identifying spatial trade patterns. The model specifies 20 regions consisting of the 48 contiguous states and the District of Columbia, and 24 industrial sectors.
Second, a social accounting matrix (SAM) is developed for the state of California to simulate the impacts of defense spending within a macro-regional economy. From the SAM, a set of multipliers are estimated to identify the extent of interdependence between three sectors of the economy: government and household institutions, labor and capital serving as factors of production, and industries providing productive activities. Multipliers indicate how internalization of exogenous change within sectors of the macro-economy potentially influence activity in other sectors. The model specifies four types of labor, three institutional categories, and 24 industrial sectors.
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