An analysis of amenity-led rural economic *development in northeast region: A spatial simultaneous equations approach

In a matter of just a few decades, the economic landscape of rural America has changed in fundamental ways. Industries once considered the backbone of rural economies have been transformed by globalization and marketing. Others, such as tourism and amenity-based economies or the service sector, have emerged to replace the traditional natural resource and manufacturing-based economies. These changes have invigorated some areas, and forever altered others. Consequently, Interest in an amenity focused development strategy has exploded as policymakers and community leaders realize that most of the jobs lost in recent decades will not return. Instead, these leaders are looking inside their communities for new sources of economic growth.;In an effort to analyze the role of natural and recreational amenities in rural economic growth, this study develops a simultaneous-equation system under the assumptions of profit maximization of firms and utility maximization of households as well as the neoclassical assumption of equilibrium growth in a partial lag-adjustment growth-equilibrium framework. Past studies assume that amenities have a direct and independent effect on economic growth, but in reality the availability of high amenity levels alone can only create the opportunity for economic growth. But to be an effective development tool it should be coupled with factors that can exploit its existence, encourage its use, and give it a comparative advantage.;This research extends existing studies in this area by incorporating interaction terms that account for the combined impact of amenities with proximity to metropolitan areas and accessibility (Interstate highway density). Furthermore, the study contributes to the amenity and regional growth literature by estimating a simultaneous spatial Durbin model using the two stages least square method. Historical and cultural amenities and water based recreational amenities are found to play a positive role in shaping the growth of population in the northeast region of the US. The role of natural amenities, land and winter based amenities is found to be negative or insignificant. One of the important findings of the study is the positive role of surrounding counties historical and cultural amenities in the growth of population and employment densities. Overall there is no evidence of a consistent and strong relationship and the results can be termed as mixed and inconclusive