Abstract
Despite the fact a rapid regional development often gives negative impacts upon regional residents and their governments, i.e. the decrease of the level of welfare and the imbalance of regional finance in a region during the development process, little attention has been paid to explaining these inverse effects of the development theoretically and to finding measures to minimize them.
Most of research efforts which deal with dynamic aspects of regional developments are concentrated on investigating resource allocation among regions and/or sectors aiming at maximization of welfare at the end of the planning period. Since these studies neither include regional finance mechanizm nor describe the changes of welfare during the development process, they contribute little to explain the issue theoretically.
Econometric types of analyses on regional development, on the other hand into account regional public finance. However they depict dynamic changes of regional finance and welfare rigorously, they fail to discuss causes of the inverse effects during the development process theoretically. Simply because they handle too many variables to analyze their relationships. With simple specification of regional development, this paper gives an explanation of the issue assuming that the cause of inverse effects in the development process is that the speed of regional development exceeds the adaptation capability of economic-financial systems in a region.
The purpose of this paper is to develop a model to explain the inverse effects of development during the process and to present a desirable regional development process from the standpoints of residents and governments in a region with the special emphasis on regional development speed.
First, in section I, the regional development speed is defined as a key variable of this research. Then, in II, the regional financial economic model which describes the causal relationships between the public capital and their current outlays in a financial system is formulated. The study proposes the criteria from the viewpoints of regional agents and collectivities which are called “regional development speed criteria” in short R. D. S. C., they are, regional welfare and finance should not decrease nor imbalance with respect to time t during the development process (in section III).
In section IV, conventional resource allocation for maximizing welfare in an autonomusly developing region is assessed by the RDS criteria.
The purpose of section V is to analyze the feasible regions of regional development speed which satisfy the RDSC in the context of a nonautonomus or dependent to central gvernment (i.e. exogenous governmental investments and resource allocations are done without considering the present level of surplus reverue in a region) and in autonomus or independent development process.
