Prof Colin Campbell-Hunt, the head of the university's department of accountancy and finance, was asked to comment yesterday on AgResearch's announcement to move 85 jobs at its Invermay campus to other parts of the country, and whether the Government could do anything to boost regional development.
Prof Campbell-Hunt said the Invermay announcement was an example of agglomeration, where economic activity was clustered together.
''It's a natural economic process. It means places like Auckland and Wellington will get bigger and the more peripheral areas will get gradually starved.''
The Government controlled a massive chunk of the country's gross domestic product and it had a responsibility to ensure money was spread throughout the country, he said.
Governments in Canada and the United Kingdom did so, he said.
''It's a little less efficient but it's the classic way for political entities, like countries, to do it - spend money in those outlying regions.
"There are many service facilities that all governments run and they can spread offices and business around the country.''
Agglomeration was a major problem for rural areas and some of New Zealand's country communities were ''dying on their feet'', Prof Campbell-Hunt said.
In contrast, the country's largest cities, Auckland and Wellington, were doing fine through agglomeration and did not need any more government help, he said.
Dunedin and other regional communities were entitled to receive government spending, Prof Campbell-Hunt said.
Eventually the cost of transport would create incentives for business to be established closer to home, and smaller centres such as Dunedin would benefit.
But that was a long way off, he said.
The Otago Daily Times also sought opinion on this week's AgResearch decision from University of Otago politics lecturer Bryce Edwards.
He said government intervention to retain jobs at Invermay, near Mosgiel, could be in breach of international law.
The Government had ''given away'' much of its control over businesses and the economy in political reforms of the 1980s and 1990s, Dr Edwards said.
''Central government has given away a lot of its leverage and control over the economy under the current economic model. As far as economic development, it is very hands-off and can't just flick a switch on that control.''
New Zealand was also party to various international economic policy treaties, and the Government could breach those by directing businesses, Dr Edwards said.
For central government to have more sway over business decisions, it would have to change the way it operated, he said.
''At the moment it can't just make a decision to suddenly keep an industry alive or a particular factory or workplace operating. It doesn't really have those mechanisms.
''There are arguments for doing that, but it's a big-picture issue,'' Dr Edwards said.
Central government had decided the best way to foster economic growth was to keep out of the markets and let them take care of themselves, he said.
''That means eventually there will be growth in certain industries and some will decline if they're not viable.''
He cited the closure of Hillside in South Dunedin last year as an example.
The decision was made long ago that even state-owned enterprises such as KiwiRail would be operated along private sector lines without government intervention, Dr Edwards said.
Hillside's closure was a result of KiwiRail being run purely as a commercial business, he said.
''Although Labour campaigned strongly and had heartfelt ideals about Hillside, it wasn't directly apparent that under the current model the Government could have done anything different.
"It was KiwiRail's decision as a commercial enterprise, and currently the Government can't just tell a business not to do what it is doing,'' he said.
