This is a preview of subscription content, log in via an institution to check access.
References
It is important to note that under Public Law 89-136, which institutes the EDA, there is a strict prohibition gainst assistance to relocating firms.
Labor Mobility, The Transfer of Skills and Area Redevelopment, prepared for the Area Redevelopment Administration, United States Department of Commerce, by William Miernyk and Robert Britt, Bureau of Economic Research, Institute of Behavioral Science, University of Colorado, March 11, 1965.
Because of a lack of data, employment multipliers will be omitted in these analyses.
Further data and results of this study are presented in later sections.
The data were obtained from Form ED-254, monthly report on status of ARA-EDA loans, which is submitted by each of the seven EDA area offices.
For example, employment estimates could have been obtained from field visits of EDA and SBA at any point of time during the past year.
This equation and the following analysis consider only the cost to federal government. To be complete, we should include the cost of state and local monies which form a portion of total investment.
Office of Audits Report, May 6, 1968.
The 18 per cent loss rate will be utilized as the maximum level of loan losses.
The administrative costs estimates include costs incurred by SBA in servicing the ARA-EDA loan program.
We shall assume that the cost of funds to the government is the long-term interest rate paid by the Treasury. Although this rate varies from year to year, 4 per cent is a reasonable approximation over the 1962–68 time period.
The administrative cost streams will be discounted because one dollar in the present is more valuable than at a future date, i.e., it has a higher time preference. The 10 per cent discount rate, which is rather high, is used primarily to establish a range of cost levels
Social costs are not accounted for in this section. Data and methodological gaps prevent accountability of externalities and analysis of what would have taken place in the absence of ARA and EDA loan assistance.
Weisbrod utilizes 10 per cent as the high value for the return on capital in the private sector. SeeMeasuring Benefits of Government Investment (The Brookings Institution, 1965) pp. 125–126.
The total employment estimates needed for the calculation of column 6 are presented in Table 4 as column headings.
Analysis of preliminary data of the pilot survey indicates that the work force in EDA assisted plants increased income levels approximately 100 per cent on the average.
Approximately 5 per cent of the employed were formerly nonresidents. Defining benefits as income to target residents would necessitate an additional small reduction of program benefits.
Additional information
Federal Highway Administration
Economic Development Administration
Rights and permissions
About this article
Cite this article
Miller, S., Gaskins, D. & Liner, C. Evaluation of the ARA-EDA loan program. Papers of the Regional Science Association 23, 201–215 (1969). https://doi.org/10.1007/BF01941883
Issue Date:
DOI: https://doi.org/10.1007/BF01941883