Three essays on applied methods of regional development analysis

This thesis consists of three self-contained essays devoted to the analysis of regional development and policy issues. The first two essays share a focus on the Italian region Valle d’Aosta and employ two alternative applied methods for the analysis of the regional historical development and the impact of alternative policy scenarios. The first essay uses the multipliers obtained from two regional social accounting matrices (SAM) for the years 1963 and 2002 to compare the current economic conditions with those observed in 1963. This analysis reveals the core characteristics and the changes occurred during the observed period with a focus on the level of integration and responsiveness to policy interventions of local sectors and institutions. The 2002 SAM is used to simulate several scenarios which stress the importance of the main regional resources and suggest interventions to foster the diffusion of advanced technologies and promote synergies within local enterprises. The second essay develops a regional dynamic general equilibrium model calibrated using the two regional SAMs above mentioned. A historical calibration procedure is performed over the 40 years period to obtain the sectorial total factor productivity growth rates so that the model outcomes reasonably match the actual value added by sector in 2002. A validation exercise ensures that the modelled tendencies closely approximate the actual observed growth patterns of the main regional macroeconomic variables. This dynamic general equilibrium model provides an original and powerful tool for historical counterfactual analysis not available using standard dynamic general equilibrium models. The model is used to compare the growth path followed by the region during the considered period with different scenarios intended to explore the effects of alternative behaviours of the regional administration. Finally, the third essay develops a multi-regional general equilibrium model (MEG-R) to compare policy effects across the three Italian macro-regions: North, Centre and South. The model focuses on the agricultural sector and is used to evaluate the impact of the Common Agricultural Policy (CAP) reform. In contrast with most of the general equilibrium models adopted, where the impact analysis is based on the assumption that all crops are produced in all regions, this model takes into account the territorial distribution of agricultural activities. Moreover, while it is common to model the representative farm using a unique aggregate production technology separated from the consumption decisions, this model incorporates the link between the production and the consumption side of the farm household allowing for heterogeneous household behaviour across regions. A further contribution is in the modelling of interregional trade flows of agricultural commodities which exploits the current available information and helps to assess the regional implications of the reform. The applied methods proposed in this thesis are highly transferable to local and regional authorities and can facilitate the process of capacity building of territorial institutions.