nep-geo New Economics Papers
on Economic Geography
Issue of 2005‒11‒12
nineteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Spatial externalities between Brazilian municipios and their neighbours By Philippe De Vreyer; Gilles Spielvogel
  2. Property Tax and Urban Sprawl: Theory and Implications for U.S. Cities By Song, Yan; Zenou, Yves
  4. The mechanisms of spatial mismatch By Laurent Gobillon; Harris Selod; Yves Zenou
  5. Determinants of Total Factor Productivity in the Italian Regions By Guido Ascari; Valeria Di Cosmo
  6. A new look at the Feldstein-Horioka puzzle : an "European-Regional" perspective. By Jérôme Héricourt; Mathilde Maurel
  7. Cournot competition in spatial markets. By Andrea Cosnita
  8. The shoe industry of Marikina City, Philippines: a developing country cluster in crisis By Allen J. Scott
  9. A Rank-order Analysis of Learning Models for Regional Labor Market Forecasting By Roberto Patuelli; Simonetta Longhi; Aura Reggiani; Peter Nijkamp; Uwe Blien
  10. " Take Time to Smell the Flowers, Please! Public Gardens and Economic Development." By William R. Latham; Adrienne Donald
  12. "Not So Footloose after All: Locational Behavior of Information Technology Establishments in the United States, 1989-1998" By William R. Latham; Simon Condliffe
  13. Consumption growth and spatial poverty traps: an analysis of the effect of social services and community infrastructures on living standards in rural Peru By Philippe De Vreyer; Javier Herrera
  14. Multicriteria Analysis of Neural Network Forecasting Models: An Application to German Regional Labour Markets By Roberto Patuelli; Simonetta Longhi; Aura Reggiani; Peter Nijkamp
  15. Forecasting Regional Employment in Germany by Means of Neural Networks and Genetic Algorithms By Roberto Patuelli; Simonetta Longhi; Aura Reggiani; Peter Nijkamp
  16. A Commuting Model of the Non-urban Residents: Case Study of Hiiumaa and Läänemaa By Karin Juurikas
  17. Importance économique du Port Autonome de Liège: rapport 2003 By Frédéric Lagneaux
  18. Income Disparity and Economic Growth: Evidence from China By Duo Qin; Marie Anne Cagas; Geoffrey Ducanes; Xinhua He; Rui Liu; Shiguo Liu
  19. Local Competition and Impact of Entry by a Dominant Retailer By Ting Zhu; Vishal Singh; Anthony J. Dukes

  1. By: Philippe De Vreyer (DIAL, Paris); Gilles Spielvogel (DIAL, Paris)
    Abstract: Clustering of economic performance and growth in space has generated considerable research on the spillovers and linkages among geographical neighbours. In this paper, we study the growth process of a large sample of Brazilian municipalities for the period 1970-1996 and attempt to evaluate the spatial externalities at work among them. We estimate the convergence speed of per capita income among municipios and test whether spatial externalities are linked to local income growth. Conditionally on structural characteristics, we find evidence of convergence between municipios and of positive spatial dependence in growth. These two facts could help explain the persistent inequalities between municipios and the increasing clustering of poor localities in the Northeast region.
    Keywords: Local growth, convergence, spatial externalities, spatial econometrics, Brazil
    JEL: O40 R11 R12
    Date: 2005–10–21
  2. By: Song, Yan (Department of City and Regional Planning); Zenou, Yves (The Research Institute of Industrial Economics)
    Abstract: This article attempts a formal analysis of the connection between property tax and urban sprawl in U.S. cities. We develop a theoretical model that includes households (who are also landlords) and land developers in a regional land market. We then test the model empirically based on a national sample of urbanized areas. The results we obtained from both theoretical and empirical analyses indicate that increasing property tax rates reduces the size of urbanized areas.
    Keywords: Urban Sprawl; Full Closed City; Urban Economics; Property Tax; Instrumental Variables
    JEL: H30 H71 R14
    Date: 2005–10–24
  3. By: Allen J. Scott (UCLA)
    Abstract: Regional push derives from the geographic agglomeration of economic activities, and is expressed in increments to national productivity. Various pieces of statistical evidence in favor of the existence of regional push effects in low- and middle-income economies are marshalled. The origins of these effects in different sorts of externalities and increasing returns to agglomerative scale and scope are analyzed in theoretical terms. Further evidence for the existence of these effects is displayed in a brief review of published case studies of African, Asian, and Latin American regions. A number of observations are then offered on the possibilities of identifying viable developmental policies and practices directed to enhancing the productivity-boosting properties of regions in low- and middle-income economies.
    Keywords: Agglomeration, big push, regional development, developing countries, local economic development
    JEL: O P
    Date: 2005–11–07
  4. By: Laurent Gobillon; Harris Selod; Yves Zenou
    Abstract: The Spatial Mismatch Hypothesis (SMH) argues that low-skilled minorities residing in U.S. inner cities experience poor labor-market outcomes because they are disconnected from suburban job opportunities. This assumption gave rise to an abundant empirical literature which confirmed this hypothesis. Surprisingly, however, it is only recently that theoretical models have emerged, which probably explains why the mechanisms of spatial mismatch have long remained unclear and not properly tested. In this survey, we present relevant facts, review the theoretical models of spatial mismatch, confront their predictions with available empirical results, and indicate which mechanisms deserve further empirical tests.
    Keywords: ghettos, urban unemployment, segregation, discrimination
    JEL: J15 J41 R14
    Date: 2005–11
  5. By: Guido Ascari (University of Pavia); Valeria Di Cosmo (University of Pavia)
    Abstract: This paper investigates the determinants of TFP for Italian regions. We find strong evidence in favour of the factors commonly suggested by the theoretical literature. In particular, R&D expenditures and the number of researchers are positively related to regional TFP. Moreover, human capital is an important determinant of TFP. Finally, we find a strong difference between Northern and Southern regions, particularly regarding the effect of research activity and social capital. Our results are robust across different estimation methods.
    Keywords: Total factor productivity, Italian regions, panel data, human capital, social capital
    JEL: O47 C23 R11
    Date: 2005–11–08
  6. By: Jérôme Héricourt (TEAM); Mathilde Maurel (ROSES)
    Abstract: The purpose of this paper consists in assessing the extent of financial integration in the European Union using the Feldstein-Horioka criterion. More precisely, we test the cross-correlation of savings and investment rates across the regions of the European Union, using regional data from Regio and national statistical offices, over the period 1995-2000. Several important outcomes are reported by our article. First, we find that the financial integration seems to be realized inside each country, and we are able to rationalize the few puzzles we face. Second, we find that overall financial integration between EU regions is almost complete. After performing additional investigations on consistent sub-groups of regions, however, our analysis discards the illusion that the sole suppression of institutional barriers to capital mobility would be sufficient to achieve a perfect financial integration. In that spirit, our main finding is that History, language, borders and distance as a proxy for transaction and information costs, still matter.
    Keywords: Feldstein-Horioka puzzle, regional savings, investment, capital market, capital flows.
    JEL: E22 F21 G15
    Date: 2005–10
  7. By: Andrea Cosnita (EUREQua)
    Abstract: We study location equilibria for Cournot oligopolies selling complementary goods. For a single-store triopoly, we prove that the circular market also yields partial diamentrical dispersion besides total agglomeration. We turn to multi-plant duopolies and in contrast to other contributions on the topic, we allow firms to sell more than one product. We confirm the intuition that total agglomeration of outlets is always an equilibrium, whatever the market shape. However, the circular case also exhibits intra-firm agglomeration and inter-firm equal distance dispersion. This is a pattern never before obtained, entirely due to the assumption of intra-firm product complementarity.
    Keywords: Complementary products, multi-store competition, spatial Cournot model.
    JEL: D43 L13 R32
    Date: 2005–10
  8. By: Allen J. Scott (UCLA)
    Abstract: I initiate the discussion with a few general remarks on industrial clusters and commodity chains. I describe the main features of the shoe industry in the Philippines. The core of the industry is located in Marikina City in the northeast of the Manila Metropolitan Area. I provide a detailed account of the internal structure and changing fortunes of this cluster. The deeply-rooted failures of the cluster since the early 1990s are pinpointed. I show that these can be directly related to the liberalization of the Filipino economy, and the concomitant increase in Chinese-made shoes on domestic markets. Various private and public responses to the crisis are described and evaluated. I argue that as helpful as many of these responses may be, their overall impact is likely to remain limited. I enumerate a series of possible policy options, but I also emphasize the high risks of failure. I try, in particular, to provide a developmental scenario based on cluster upgrading and intensified export activity.
    Keywords: shoe industry, industrial districts, regional development, clustering, agglomeration
    JEL: R
    Date: 2005–11–07
  9. By: Roberto Patuelli (Vrije Universiteit); Simonetta Longhi (University of Essex); Aura Reggiani (University of Bologna); Peter Nijkamp (Vrije Universiteit); Uwe Blien (Institut fuer Arbeitsmarkt und Berufsforschung)
    Abstract: Using a panel of 439 German regions we evaluate and compare the performance of various Neural Network (NN) models as forecasting tools for regional employment growth. Because of relevant differences in data availability between the former East and West Germany, NN models are computed separately for the two parts of the country. The comparisons of the models and their ex-post forecasts have been carried out by means of a non-parametric test: viz. the Friedman statistic. The Friedman statistic tests the consistency of model results obtained in terms of their rank order. Since there is no normal distribution assumption, this methodology is an interesting substitute for a standard analysis of variance. Furthermore, the Friedman statistic is indifferent to the scale on which the data are measured. The evaluation of the ex-post forecasts suggests that NN models are generally able to correctly identify the fastest-growing and the slowest-growing regions, and hence predict rather well the correct ranking of regions in terms of their employment growth. The comparison among NN models – on the basis of several criteria – suggests that the choice of the variables used in the model may influence the model’s performance and the reliability of its forecasts.
    Keywords: forecasts, regional employment, learning algorithms, rank order test
    JEL: C23 E27 R12
    Date: 2005–11–08
  10. By: William R. Latham (Department of Economics,University of Delaware); Adrienne Donald
    Abstract: A model of economic impacts of public gardens on their communities is developed stressing the roles of visitors as well as staff and suppliers in creating impacts. The model is implemented for four different gardens using a combination of survey and normal business data from the gardens with a well-known impact model system.The gardens selected span the major types in terms of metropolitan-nonmetropolitan locations and walk-in vs. destination facilities as well as being located in different regions of the U.S. The results show significant direct and multiplier effects which vary systematically with the typed of facility. The model can be applied to other facilities using a workbook available from the authors.
    Keywords: Public Gardens, Economic Impact, Economic Development Policy
    JEL: O18 R11 R58
    Date: 2005
  11. By: Allen J Scott (UCLA)
    Abstract: The paper opens with a brief definition of the cultural economy. A first generation of local economic development policy approaches based on place-marketing and associated initiatives is described. The possibilities of a more powerful second-generation approach are then sketched out with special emphasis on localized complexes of cultural- products industries. An extensive review and classification of these complexes is laid out, and their inward and outward relations to global markets are considered. On this basis, a critical discussion of local economic policy options focussed on cultural-products industries is offered. Contrasting examples of development initiatives in major global cities, in selected old manufacturing towns, and in the Multimedia Super Corridor of Malaysia are briefly presented. It is suggested that the growth and spread of localized production agglomerations based on cultural-products industries is leading not to cultural uniformity but to greatly increased diversity at the global level.
    JEL: R
    Date: 2005–11–08
  12. By: William R. Latham (Department of Economics,University of Delaware); Simon Condliffe
    Abstract: Among the benefits that technology can provide is greater connectivity among economic agents. Commerce now occurs across great geographic distances at nominal transaction costs. Technology, therefore, seems to have the potential to unshackle economic agents from their suppliers and customers, enabling them to seek out alternative locations without being at a comparative disadvantage to other businesses. This possibility has spawned the “death of distance” notion that distance no longer matters, that technology has made all locations equal. Such thinking has been encouraged by phenomena such as the widespread “outsourcing” of many back-office and service functions by U.S. firms and/or the location of many of these functions in India and other foreign countries.
    Keywords: industrial location, distance, footloose, information technology, establishments births, agglomeration economies
    JEL: R30 O33
    Date: 2005
  13. By: Philippe De Vreyer (DIAL, Paris); Javier Herrera (DIAL, Paris)
    Abstract: We test the effect of local geographic endowment of capital on household growth in living standards in rural Peru, using a four years unbalanced panel data set. Our theoretical model of household consumption growth allows for the effect of community variables to modify the returns to augmented capital in the household production function. Three different sources of data are used: the ENAHO 1997-2000 household surveys, the population census of 1993 and the district infrastructure census of 1997. Altogether the addition of these different data sources makes an unusually rich data set, at least when considered with developing country standards. As in Jalan and Ravallion (2002), we use a quasi-differencing method to identify the impact of locally determined geographic and socioeconomic variables, while removing unobserved household and community level fixed effects. GMM are then used to estimate the model parameters. Several significant interesting results appear, confirming that private consumption growth depends on local geographic variables.
    JEL: C33 H23 I18 I32 I38
    Date: 2005–10–21
  14. By: Roberto Patuelli (Vrije Universiteit); Simonetta Longhi (University of Essex); Aura Reggiani (University of Bologna); Peter Nijkamp (Vrije Universiteit)
    Abstract: This paper develops a flexible multi-dimensional assessment method for the comparison of different statistical-econometric techniques based on learning mechanisms, with a view to analysing and forecasting regional labour markets. The aim of this paper is twofold. A first major objective is to explore the use of a standard choice tool, namely Multicriteria Analysis (MCA), in order to cope with the intrinsic methodological uncertainty on the choice of a suitable statistical- econometric learning technique for regional labour market analysis. MCA is applied here to support choices on the performance of various models – based on classes of Neural Network (NN) techniques – that serve to generate employment forecasts in West Germany at a regional/district level. A second objective of the paper is to analyse the methodological potential of a blend of approaches (NN-MCA) in order to extend the analysis framework to other economic research domains, where formal models are not available, but where a variety of statistical data is present. The paper offers a basis for a more balanced judgement of the performance of rival statistical tests.
    Keywords: multicriteria analysis; neural networks; regional labour markets
    JEL: C9
    Date: 2005–11–08
  15. By: Roberto Patuelli (Vrije Universiteit); Simonetta Longhi (University of Essex); Aura Reggiani (University of Bologna); Peter Nijkamp (Vrije Universiteit)
    Abstract: The aim of this paper is to develop and apply Neural Network (NN) models in order to forecast regional employment patterns in Germany. NNs are statistical tools based on learning algorithms with a distribution over a large amount of quantitative data. NNs are increasingly deployed in the social sciences as a useful technique for interpolating data when a clear specification of the functional relationship between dependent and independent variables is not available. In addition to traditional NN models, a further set of NN models will be developed in this paper, incorporating Genetic Algorithm (GA) techniques in order to detect the networks’ structure. GAs are computer-aided optimization tools that imitate natural biological evolution in order to find the solution that best fits the given case. Our experiments employ a data set consisting of a panel of 439 districts distributed over the former West and East Germany,. The West and East data sets have different time horizons, as employment information by district is available from 1987 and 1993 for West and East Germany, respectively. Separate West and East models are tested, before carrying out a unified experiment on the full data set for Germany. The above models are then evaluated by means of several statistical indicators, in order to test their ability to provide out- of-sample forecasts. A comparison between traditional and GAenhanced models is ultimately proposed. The results show that the West and East NN models perform with different degrees of precision, because of the different data sets’ time horizons.
    Keywords: forecasting; neural networks; regional labour markets
    JEL: C8
    Date: 2005–11–08
  16. By: Karin Juurikas (Tallinn University of Technology)
    Abstract: Nowadays, increasing attention is paid to studying the circumstances of people`s migration. First of all, researchers are interested in the behavioural aspects and people´s choices of purpose and destination. The author’s interest was how the traffic models of travelling routes reflect the individual choices and movement trends. The research territory was Hiiumaa, one of the smallest counties of Estonia, which is the least affected by outside influence. As a control area, the coastal region of Läänemaa County was used. About Hiiumaa one can state that the shape of migration models depends on the network of roads; this, in its turn, depends on settlement patterns; this, however, depends on naturals and other features. People usually go to work near their home, but in the case of higher-paid and highly skilled jobs, the workplaces may be rather far away from home. Workplaces are mostly situated in larger settlements; therefore, the direction of migration from home to workplace is predominantly from a smaller to a larger settlement. In Hiiumaa, several forms of commuting to work are used and also expeditional migration. Comparison with Läänemaa shows that, under fairly similar conditions, the movement models are different. This difference is partly caused by the isolation of Hiiumaa, which is an island. Läänemaa, being situated on the mainland, has direct links with the capital city, Tallinn. In many cases, the people of Läänemaa commute to Tallinn every day, which would be impossible from an island.
  17. By: Frédéric Lagneaux (National Bank of Belgium, Microeconomic Information Department)
    Abstract: The Port Autonome de Liège, with its 26 kilometres of berths and several multimodal platforms, plays an important role in the Walloon and Belgian economy. This update paper gives an extensive overview of the economic importance and the latest developments of the Port Autonome de Liège, through revised results for the period 1997 - 2003. Focusing on the three major variables of value added, employment and investment, it also provides some information about the financial situation of a few vital sectors. An indication concerning the financial health of the companies studied is also provided, using the National Bank's bankruptcy prediction model. In addition, it includes figures of several cargo traffics and draws a picture of social developments in the Port Autonome de Liège. Annual accounts data from the Central Balance Sheet Office were used for the calculation of direct effects, the study of financial ratios and the analysis of the social balance sheet. The indirect effects of these port activities are estimated in terms of value added (VA) and employment, on the basis of data from the National Accounts Institute. In the Liège harbour's network, direct VA came to 1 billion euro and total VA - the sum of direct and indirect VA - to 2 billion euro in 2003. In the same year direct and total employment respectively attained 12,400 and 28,500 fulltime equivalents, while investment directly linked with the port fell to 121 million euro. The position of the Port Autonome de Liège as the second largest inland port in Europe is threatened by the planned closure of the Cockerill Sambre's blast furnaces. This will take place gradually but will be completed by 2009. 2,700 direct and 4,500 indirect jobs are concerned, as well as 8 million tonnes of transhipment. However new spaces will be opened up, which means that new businesses will be created in the port area. New development sites are under construction and will soon be operative. An overall restructuring of the Liège harbour's network is under way and constitutes the main challenge for the Port Autonome de Liège's authorities in the next five years. In spite of this climate of uncertainty, the Port Autonome de Liège is striving to establish itself as a major logistic centre in the region, able to add value to the goods passing through it, in order to withstand the climate of increasing regional and international competition.
    Keywords: branch survey, maritime cluster, subcontracting, indirect effects, transport intermodality, public investments.
    JEL: C67 H57 J21 L22 L91 L92 R15 R34 R41
    Date: 2005–10
  18. By: Duo Qin (Queen Mary, University of London); Marie Anne Cagas (Asian Development Bank); Geoffrey Ducanes (Asian Development Bank); Xinhua He (Chinese Academy of Social Sciences); Rui Liu (Chinese Academy of Social Sciences); Shiguo Liu (Chinese Academy of Social Sciences)
    Abstract: This paper carries out a pilot empirical study on how income inequality affects growth and the macro economy by means of incorporating panel data information into a macro-econometric model. China is used as the pilot field. Provincial urban and rural household data are used to construct inequality measures, which are then used to augment household consumption equations in the ADB China model. Model simulations are performed to study the effect of inequality on GDP growth and its sectoral components. Results show that inequality is a robust explanatory variable of consumption and that the way inequality develops over time carries certain negative consequences on GDP and sectoral growth.
    Keywords: Income inequality, Growth, Econometric model, China
    JEL: R11 E21 D3 C5 C2
    Date: 2005–11
  19. By: Ting Zhu (Carnegie Mellon University); Vishal Singh (Carnegie Mellon University); Anthony J. Dukes (School of Economics and Management, University of Aarhus)
    Abstract: This paper analyzes the competition between two spatially differentiated multi-product retailers who encounter entry from a dominant discount retailer. Our primary objective is to determine how entry affects the pricing and relative profits of the incumbent stores and the role played by the location of the entrant. The new entrant has partial overlap in product assortment with the incumbents and is assumed to have lower procurement costs for the common goods. Consumers are heterogeneous in their location, economic status (shopping costs and valuations), as well as purchase basket or the types of products demanded. Results show that in the post entry equilibrium, the prices for the products not offered by the discounter are higher than the pre entry prices. More interestingly, contrary to the conventional wisdom we find that the store that is closer to the new entrant is better off compared to the incumbent located further away. The intuition for these results is that the discounter with its low price draws away the poor consumers – the price sensitive segment – out of the market for the items it carries. This in turn softens price competition between the incumbents for these items. Furthermore, the new entrant’s unique product offering attracts more consumers to visit the location it occupies, which introduces positive demand externalities to the neighboring retailer, leading to an increase in sales for the non-competing products. We provide empirical evidence for our results and discuss implications for retailers facing competition from large discount stores.
    Keywords: entry; retail competition; agglomeration
    JEL: L13 L81 M31
    Date: 2005–05

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