Research on the relationship between real estate investment and economic\ngrowth has a long history in the economic development literature. This study\nadds to the literature by focusing on the largest segment of commercial real\nestate, retail establishments. Not only quantifying the economic impacts of\nretail establishments, but also understanding how the economic and socio-\ndemographic characteristics of an area affect investment location decisions,\ncontributes to the understanding of regional growth process. A 3SLS\nsimultaneous equations model derived from is used to analyze the role of\nâ??smallâ? and â??largeâ? retail establishments in the economic development of the\nNortheast region of the United States. The study concludes that growth in retail\nestablishments indeed plays a significant role in the economic growth\nprocess in the study region. Countiesâ?? government expenditure and housing\nvalues play a strong role in attracting retail businesses. Population density has\ndifferent effects on â??smallâ? and â??largeâ? retail establishments; high population\ndensity areas are found to be attractive, particularly to â??smallâ? retail establishments,\nwhereas â??large establishmentsâ? prefer areas with low population\ndensities.
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