Economic viability and regional development

A scheme for identifying underdeveloped but viable economies in which publicly financed development programs have the greatest prospects for success from both the local and national points of view. An area is considered developed if all members of its population are able to earn as much as people of comparable ability elsewhere in the national economy, and if regional aggregate welfare is at a maximum. A region is considered economically viable if it can be developed without either permanent subsidy or loss of population. For viable but underdeveloped regions, the proper policy is to remove market imperfections and provide infrastructure where equity considerations warrant or historical agglomeration patterns are inappropriate. For nonviable economies, the alternative to permanent subsidy is population adjustment through new educational techniques, information and aid for alternative employment, and loans on human capital. 27 pp.