ACCOUNTING FOR STATE ECONOMIC-GROWTH - A PRODUCTION FUNCTION-APPROACH

Using a production function model, this paper examines Olson's thesis that political organization contributes to economic decline. The findi ngs confirm that political organizations have a slight negative influe nce on state income growth rates. However, other variables account for almost 80 percent of the variation across states. This analysis point s to the importance of capital markets and business and occupational i nterests and the utility of the production function approach for expla ining growth.