nep-geo New Economics Papers
on Economic Geography
Issue of 2006‒06‒17
seventeen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. New culture-oriented economic development trajectories: the case study of four Dutch cities By Antonio Russo; Jan van der Borg
  2. How important is geography for agglomeration? By Michael Roos
  3. Spatial agglomeration and product market competition By Christoph Alsleben
  4. Regional patterns and determinants of new firm formation and survival in western Germany By Brixy, Udo; Grotz, Reinhold
  5. Towards a European Spatial Policy for Culture By Jan van der Borg; Antonio Russo
  6. Specialized consumer services cause agglomeration - A theoretical model and some implications for regional policy By Michael Roos
  7. Wages and Market Potential in Germany By Michael Roos
  8. Structural change and regional employment dynamics By Blien, Uwe; Sanner, Helge
  9. RATIONAL UNDERDEVELOPMENT By Ignacio Ortuño Ortín; Klaus Desmet
  10. Evidence on the Geographic Concentration of German Industries: Do High-Tech Clusters Really Matter? By Björn Alecke; Christoph Alsleben; Frank Scharr; Gerhard Untiedt
  11. Labour market dynamics from a regional perspective : the multi-account system By Haas, Anette; Rothe, Thomas
  12. The Downside of Knowledge Spillovers: An Explanation for the Dispersion of High-tech Industries By Christoph Alsleben
  13. Does crime affect economic decisions? An empirical investigation of savings in a high-crime environment By João Manoel Pinho de Mello; Eduardo Zilberman
  14. Formula allocation : the regional allocation of budgetary funds for measures of active labour market policy in Germany By Blien, Uwe; Hirschenauer, Franziska
  15. Local economic structure and industry development in Germany, 1993-2001 By Blien, Uwe; Suedekum, Jens
  16. Agglomeration und regionaler Wettbewerb By Michael Roos
  17. Geographic and technological spillovers within the triad: micro evidence from US patents By Luigi Aldieri; Michele Cincera

  1. By: Antonio Russo (School of tourism and leisure, University Rovira i Virgili, Tarragona); Jan van der Borg (Department of Economics, University Of Venice Cà Foscari)
    Abstract: Culture is a key ingredient of post-industrial, information-intensive economic activity. Culture-oriented economic development (COED) is emerging as a dominant paradigm, integrating the symbolic and creative elements into any aspect of the urban economy, pursuing distinction, innovativeness, and a higher level of interaction between localised individual and collective knowledge and globalising markets. This article presents a dynamic analysis of the effects of culture on the economic development trajectories of European cities. It may contribute to shed more light on the relevance of cultural industries for spatial development, addressing issues such as: cultural endowment, identity and urban competitiveness; dispersed vs. concentration; cultural participation and social inclusion. The analysis uses data collected within the ESPON project 1.3.3 and other information of qualitative and quantitative nature collected by EURICUR in occasion of a study of a sample of European cities . In this paper we present the investigation conducted in the three largest Dutch cities, Amsterdam, Rotterdam and the Hague, which are part of the city-region of the Randstand, and the fifth largest Dutch city, Eindhoven, one the most important economic and educational centres in the Netherlands.
    Keywords: Cultural industry, urban economy, creativity, sustainable development, The Netherlands
    JEL: R11 Z10
    Date: 2006
  2. By: Michael Roos
    Abstract: The economic geography literature distinguishes between two types of reasons for economic agglomeration. Regional concentration of economic activity can be attributed to ''first nature'' meaning geographic advantages and disadvantages given by nature or to ''second nature'' meaning agglomeration economies by the interaction of economic agents. Several recent studies tried to estimate the relative importance of the two types of explanation. Most of these studies seem to exaggerate the importance of natural advantages because of loose definitions of geography. We describe geography by a small set of non-economic variables and estimate their importance for agglomeration in Germany. We find that about one third of the agglomeration of economic activity can be attributed to geography.
  3. By: Christoph Alsleben
    Abstract: This paper tests the hypothesis that product market competition has a negative impact on spatial agglomeration. This hypothesis emerges as an interpetation of the models by Combes and Duranton (2001) and Alsleben (2005) which are about firms' location choice in the presence of knowledge spillovers. Using data for German manufacturing industries, the result is that, while controlling for other agglomeration forces, higher industrial concentration, measured by the Herfindahl index of concentration of sales, implies stronger spatial agglomeration, as measured by Ellison and Glaeser's (1997) index of concentration.
  4. By: Brixy, Udo (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Grotz, Reinhold
    Abstract: "There is a large body of literature on the determinants of regional variation in new firm formation. In contrast there are few articles on the spatial differences in new firm survival. Using panel data we analyse both items for 74 western German regions over a ten-year period. The positive relationship between entry and exit which is often stated suggests a negative correlation between entry and survival. On the other hand, however, it seems convincing that regions with high birth rates should also have high survival rates, because a favourable environment for the founding of new firms should also be encouraging for the development of these firms. However, an analysis of both rates for 74 western German regions over a ten-year period reveals the existence of a negative relationship in general. This means that the survival rates are below average in regions with high birth rates. Despite this overall correlation, however, it is shown that the spatial pattern of a combination of both rates is complex, and all types of possible relationships exist. With a multivariate panel analysis we study the factors that influence regional birth and survival rates using the same set of independent variables. It is shown that in the service sector most variables literally work in opposite directions in the birth and survival rates models. But this does not hold for the manufacturing sector. This can be rated as evidence for the 'supportive environment thesis'. The reason for this is a completely different outcome of the estimated birth rates models for both industry sectors, whereas there are only minor differences in the estimated survival rate models. We can therefore deduce firstly that the two industries have different requirements for their 'seed bed' but not for their further successful development; and secondly, that the spatial structures which increase the number of newly founded businesses in the service sector are detrimental to the survival rates of newly founded firms." (author's abstract, IAB-Doku) ((en))
    Keywords: Unternehmensgründung, regionale Disparität, Unternehmenserfolg, Wirtschaftszweige, Westdeutschland, Bundesrepublik Deutschland
    JEL: R11 J23 L25 M13
    Date: 2006–04–27
  5. By: Jan van der Borg (Department of Economics, University Of Venice Cà Foscari); Antonio Russo (School of tourism and leisure, University Rovira i Virgili, Tarragona)
    Abstract: The European space finds itself in a moment of profound change. On one hand it is adapting to the challenges that are inherent to the global, post-industrial economy. A shift from traditional manufacturing towards innovative and service oriented activities, the relocation of economic activities to countries where inputs, in particular labour, are cheaper, an ageing population in combination with growing in migration from non-member countries have an immediate impact on the Europe of Regions. On the other hand, the extension of the European Union towards the East inevitably triggers complex and Europe-wide processes of social, economic and territorial reorganization. In this context, the role of Cultural Heritage and Identity (CHI) may very well become a very crucial one. First of all, cultural heritage and identity are assets that are putting Europe in pole position with respect to the rest of the world, offering all European regions, no one excluded, unique social and economic development opportunities. They are important inputs for the creative industry and the tourist industry, two of the most important (the second already employs more than 10% of the global workforce) and dynamic sectors of the post-industrial economy. Moreover, cultural assets are typical place products that can not be separated nor moved from the regions they are located in. This makes these economic strictly bound to that location and impossible to re-localize. Thirdly, many cultural assets and traditions are not only points of reference for the local populations but for Europeans as such. Finally, in a Europe that is pursuing cohesion and competitiveness contemporarily, CHI forms sort of a natural bridge between two (apparently) not always compatible objectives. This means that CHI should become a cornerstone of European territorial policy.
    Keywords: Cultural Heritage; Identity; Regional Development; Cultural Heritage Policies, Spatial Policies
    JEL: O52 R00 R58 Z10
    Date: 2006
  6. By: Michael Roos
    Abstract: This paper presents a regional economic model in which increasing returns to scale in the production of non-traded consumer services cause the agglomeration of high-skilled workers in one region. The residential choice of high-skilled individuals exerts a pecuniary externality on immobile low-skilled individuals. Therefore, the low-skilled in the periphery reach a lower utility level than those in the core. We analyze minimum wages, training, and redistributive taxation as policy instruments to promote the low-skilled in the periphery. Even if they affect one region only, all these instruments alter the interregional equilibrium and have complexly interacting effects.
  7. By: Michael Roos
    Abstract: Using a market potential function, we examine the spatial correlation of wages and consumer purchasing power across regions in West Germany. The market potential function can be regarded as a reduced form of several new economic geography models. Thus, the estimation results provide some first evidence on the validity of these models for European regions. We find that the wage in one region is indeed positively related to purchasing power in other regions. However, this relationship only holds for skilled wokers' salaries and wages, whereas it does not for the wages of untrained workers.
  8. By: Blien, Uwe (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Sanner, Helge
    Abstract: "A casual look at regional unemployment rates reveals that there are vast differences which cannot be explained by different institutional settings. Our paper attempts to trace these differences in the regions' labour market performance back to the regions' specialisation in products that are more or less advanced in their product cycle. The model we develop shows how individual profit and utility maximisation endogenously leads to decreasing employment in the presence of process innovation. Things deteriorate even further if the region under observation is less innovative than others. Our model suggests that the only way to escape from this vicious circle is to specialize in products that are at the beginning of their economic life." (author's abstract, IAB-Doku) ((en))
    Keywords: Arbeitslosenquote, regionale Disparität, regionaler Arbeitsmarkt, Produktinnovation, Wirtschaftsstrukturwandel, Beschäftigungsentwicklung
    JEL: O41 D91 J23 R23
    Date: 2006–04–19
  9. By: Ignacio Ortuño Ortín (Universidad de Alicante); Klaus Desmet (Universidad Carlos III de Madrid)
    Abstract: We propose a two-region two-sector model of uneven development,where technological change benefits either the lagging or the leading region. Inthis framework inter-regional transfers may lead to persistentunderdevelopment; by raising wages, transfers reduce the chance of thebackward region adopting a new technology and taking o.. Due to uncertaintyabout which region benefits from technological change, the backward regionmay rationally choose to remain underdeveloped, while the advanced regioncontinues to pay transfers. The model provides a rationale for cases, such asItaly’s Mezzogiorno, where the same rich region subsidizes the same poorregion on a continuous basis.
    Keywords: inter-regional transfers, regional policy, uneven development.
    JEL: R58 H7
    Date: 2006–06
  10. By: Björn Alecke; Christoph Alsleben; Frank Scharr; Gerhard Untiedt
    Abstract: The agglomeration of industries has received much interest both in empirical and theoretical work in recent time. Especially in Germany politicians became inspired by the notion of high-technology industry clusters and German regional policy has seen a wave of initiatives aiming at the formation of such clusters. This papers explorers in a systematic w ay the geographic concentration of German manufacturing industries and relates it to industry characteristics and agglomeration forces proposed by theory. The main finding is that there is no general relationship between agglomeration and R&D or high-technology related business which suggests that hope put in the fast and effective development of "high-tech" clusters might be disappointed.
  11. By: Haas, Anette (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Rothe, Thomas (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "In the last years the analysis of flow figures turned out to highly informative for labour market research and policy advice. Among researchers it is a well known fact that cross-sectional information about labour market is not sufficient to understand ungoing development. A pure sequence of employment and unemployment figures would hide the turnover in the market. Here we follow the useful analytical framework of transitional labour markets dealing centrally with flow figures. By developing the multiaccount system (MAS) we go some steps ahead compared to indicators like job and labour turnover rates. First we combine the information of administrative data of the micro level with macro data containing pupils, self employed, retired persons. Embedded in an external framework, which is given by demography (birth, death, moving in and out), the MAS describes the transition process of the labour market on the regional level and contains all 180 local employment agencies in Germany. The multiaccount system thus serves as a basis for strategically aligning each agency with the individual local situation of the labour market by explicitly taking into account the regional specifics. Thus it helps for future strategic decisions of active labour market policy. The creation of models for supporting regional monitoring and benchmarking is already far advanced and initial basic versions are tested in practice. For estimating the unknown transitions of the data matrix we use a new algorithm the so called ADETON tool, which has the additional merit comparing to other entropy maximizing methods, that constraints can be formulated in a fuzzy way rather than exactly. Further we demonstrate on the basis of the agency Heilbronn some practice and numerical examples. Thus we present transitions into and out of unemployment and also from vocational training to employment. We believe that the analytical potential of this instrument is not yet exhausted. In any event, it is already clear that the information content of this model by far exceeds that of a system of individual indicators. Details and relations of the regional labour market become apparent which show a high-resolution image of possible obsolete structures or increasing labour market dynamics. The model thus gives clear hints as to the scope and limits of the active labour market policy." (author's abstract, IAB-Doku) ((en))
    Keywords: Arbeitskräftemobilität, labour turnover, job turnover, Berufsverlauf, Arbeitslosigkeit, Erwerbstätigkeit, arbeitsmarktpolitische Maßnahme, regionale Disparität
    JEL: R15 R23 J23 J63 J68
    Date: 2005–04–04
  12. By: Christoph Alsleben
    Abstract: Both theoretical work on knowledge spillovers and regional policy initiatives often assume that there exists a general and unanimous advantage for firms to cluster. But opposed to the benefit is the disadvantage of sharing knowledge with other (rival) firms. This paper highlights the "downside" associated with knowledge spillovers and presents a four-stage game of location choice where spillovers result from labour poaching and where the strategic interaction between firms may make them avoid colocation with spillovers. The model follows Combes and Duranton (2001) and provides an explanation for the dispersion of German high-tech industries we found in a companion paper.
  13. By: João Manoel Pinho de Mello (Department of Economics PUC-Rio.); Eduardo Zilberman (Department of Economics, New York University)
    Abstract: While most economic studies of crime have focused on its determinants, we study the reverse question: does crime affect economic behavior? Being such an important social phenomenon, one would expect crime to affect economic decisions. Using local data on crime rates and savings per capita in a high-crime environment, we document a striking empirical relationship: crime induces savings. Our paper is one of the first to successfully relate crime to an economic outcome. This result is robust to an extensive sensitivity analysis, which include: 1) controlling to a large set of demographic covariates; 2) accounting for the fact that crime and savings may be determined jointly; 3) measuring savings in different ways; 4) accounting for the presence of possible outliers; 5) weighting the data according to population; 6) accounting for spatial correlation; and, finally, 7) estimating the model for different sub-samples of cities. Our estimates indicate that only property, not violent, crime induces savings, which is consistent with the theoretical explanations on why crime would increase thriftiness
    Keywords: Crime, Economic Behavior, Savings
    JEL: D00 D91 R11 Z19
    Date: 2006–05
  14. By: Blien, Uwe (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Hirschenauer, Franziska (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany])
    Abstract: "A common problem of regional policy is the distribution of funds to regional units. To follow the specific purpose of this budgeting process in a rational way this is often done in a formula allocation on the basis of official statistics. In the paper this is shown with the example of funds for active labour market policy. In Germany, measures of active labour market policy - e.g. training measures, integration subsidies and job creation schemes - are paid from a common budget. For the allocation of these budgetary funds (amounting to EURO 0,194 billion in 2004) to the regions of the Federal Republic of Germany, a formula was developed which was to be based essentially on a labour market indicator. The criteria for the development of a formula allocation were: most accurate fit to the legal guidelines of the Social Code, transparency of the procedure, openness for necessary policy decisions, scientific correctness in implementation, efficiency of the whole process. Here the procedure used in constructing the distribution process is explained and the distribution result is set out. Both were finally passed by the Supervisory Board of the Federal Employment Agency in Germany." (author's abstract, IAB-Doku) ((en))
    Keywords: Arbeitsmarktpolitik - Finanzierung, regionale Verteilung, Budget, Indikatorenbildung
    JEL: H11 J00 R10
    Date: 2005–04–25
  15. By: Blien, Uwe (Institut für Arbeitsmarkt- und Berufsforschung (IAB), Nürnberg [Institute for Employment Research, Nuremberg, Germany]); Suedekum, Jens
    Abstract: "This paper analyses the impact of dynamic MAR- and Jacobs-externalities on local employment growth in Germany between 1993 and 2001. In order to facilitate a comparison between the neighbouring countries we firstly replicate the study of Combes (2000) on local employment growth in France and find very similar results for Germany. Afterwards we formulate an alternative empirical model that is based on a weighted regression approach. With this model we find that Jacobs-externalities matter in manufacturing, whereas MAR-externalities are present in advanced service sectors." (author's abstract, IAB-Doku) ((en))
    Keywords: Wirtschaftswachstum - Auswirkungen, Beschäftigungsentwicklung, regionale Disparität, Regionalentwicklung, regionale Faktoren
    JEL: R11 O40
    Date: 2005–01–13
  16. By: Michael Roos
    Abstract: Das Papier stellt ein 2-Regionen Modell vor, in dem das Verhalten von Lokalregierungen Bevölkerungsagglomeration verursachen kann. Ein lokales öffentliches Gut wirkt als Zentripetalkraft. Die Zentrifugalkraft ist der Wettbewerb der interregional mobilen Arbeiter um einen fixen Wohnraumbestand. Im Modell steigt das Angebot des öffentlichen Gutes mit der Zahl der Arbeiter in einer Region. Dies schafft wieder Zuwanderungsanreize. Je nach relativer Stärke der Zentripetalkraft kann es selbst bei vollkommen identischen Regionen zur Agglomeration der gesamten mobilen Bevölkerung in einer Region kommen. Dadurch entsteht für die Lokalregierungen jeder Region ein Anreiz, das öffentliche Gut strategisch bereitzustellen, was zu Überversorgung und suboptimaler Agglomeration führt.
  17. By: Luigi Aldieri (Università degli Studi di Napoli "Parthenope", Naples & DULBEA-CERT, Université libre de Bruxelles, Brussels.); Michele Cincera (DULBEA-CERT, Université libre de Bruxelles, Brussels, and CEPR)
    Abstract: This paper aims at assessing the magnitude of R&D spillover effects on large international R&D companies’ productivity growth. In particular, we investigate the extent to which R&D spillover effects are intensified by both geographic and technological proximities between spillover generating and receiving firms. We also control for the firm’s ability to identify, assimilate and absorb the external knowledge stock. The results estimated by means of panel data econometric methods (system GMM) indicate a positive and significant impact of both types of R&D spillovers and of absorptive capacity on productivity performance.
    Keywords: Geographic and technological R&D spillovers, absorptive capacity, firms’ productivity growth.
    JEL: O33 O47
    Date: 2006–05

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