nep-geo New Economics Papers
on Economic Geography
Issue of 2007‒02‒03
fifteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Transport Development and the Evolution of Economic Geography By Fujita, Masahisa; Mori, Tomoya
  2. Transport Sector and Regional Price Differentials: A SCGE Model for Chinese Provinces By Ando, Asao; Meng, Bo
  3. The effects of segregation and spatial mismatch on unemployment: evidence from France By GOBILLON Laurent; SELOD Harris
  4. Frontiers of the New Economic Geography By Fujita, Masahisa; Mori, Tomoya
  5. An Economic Derivation on Trade Coefficients under the Framework of Multi-regional I-O Analysis By Meng, Bo; Ando, Asao
  6. Regional Cooperation of Small & Medium Firms in Japanese Industrial Clusters By Arita, Tomokazu; Fujita, Masahisa; Kameyama, Yoshihiro
  7. On the Evolution of the Spatial Economy with Multi-unit・Multi-plant Firms: The Impact of IT Development By Fujita, Masahisa; Gokan, Toshitaka
  8. The mechanisms of spatial mismatch By GOBILLON Laurent; SELOD Harris; ZENOU Yves
  9. Is Learning by Migrating to a Megalopolis Really Important? Evidence from Thailand By Machikita, Tomohiro
  10. Distribution System of China's Industrial Clusters: Case Study of Yiwu China Commodity City By DING, Ke
  11. Economic development capitalizing on brand agriculture : turning development strategy on its head By Fujita, Masahisa
  12. Effectiveness and Challenges of Three Economic Corridors of the Greater Mekong Sub-region By Ishida, Masami
  13. Do Universities Benefit Local Youth? Evidence from University and College Participation, and Graduate Earnings Following the Creation of a New University By Frenette, Marc
  14. The Regional Development Policy of Thailand and Its Economic Cooperation with Neighboring Countries By Tsuneishi, Takao
  15. Patterns of Land Market Developments in Transition By Jo F.M. Swinnen; Liesbet Vranken

  1. By: Fujita, Masahisa; Mori, Tomoya
    Abstract: In this paper, based on the recent advances in the new economic geography (e.g., Fujita, Krugman and Venables [12]), we analyze impacts of transport costs on the spatial patterns of economic agglomeration. We first identify prototypes from the existing models, and explain the mechanism of how transport costs influence the balance between economic forces of agglomeration and dispersion. We then investigate the transformation of the agglomeration/dispersion patterns given gradually decreasing transport costs for different goods.
    Keywords: New economic geography, Transport cost, Industrial belt, Transportation, Costs, Geography, Industrial structure, Economic geography, G World,others
    JEL: R12
    Date: 2006–10
  2. By: Ando, Asao; Meng, Bo
    Abstract: With regression formulas replaced by equilibrium conditions, a spatial CGE model can substantially reduce data requirements. Detailed regional analyses are thus possible in countries where only limited regional statistics are available. While regional price differentials play important roles in multi-regional settings, transport does not receive much attention in existing models. This paper formulates a spatial CGE model that explicitly considers the transport sector and FOB/CIF prices. After describing the model, performance of our model is evaluated by comparing the benchmark equilibrium for China with survey-based regional I-O and interregional I-O tables for 1987. The structure of Chinese economies is summarized using information obtained from the benchmark equilibrium computation. This includes regional and sectoral production distributions and price differentials. The equilibrium for 1997 facilitates discussion of changes in regional economic structures that China has experienced in the decade.
    Keywords: SCGE model, FOB/CIF prices, Transport sector, Chinese regional economy, Transportation, Econometric model, Local economy, Prices, International trade, China
    JEL: C68 O5 R13 R15
    Date: 2007–01
  3. By: GOBILLON Laurent; SELOD Harris
    Abstract: In this paper, we investigate how residential segregation and bad physical access to jobs contribute to urban unemployment in the Paris region. We first survey the general mechanisms according to which residential segregation and spatial mismatch can have adverse labor-market outcomes. We then discuss the extent of the problem with the help of relevant descriptive statistics computed from the 1999 Census of the Population and from the 2000 General Transport Survey. Finally, we estimate the effect of indices of segregation computed at the neighborhood and municipality levels, as well as job accessibility indices on the labor-market transitions out of unemployment using the 1990-2002 Labor Force Survey. Our results show that neighborhood segregation is a key factor that prevents unemployed workers from finding a job. These results are robust to potential location endogeneity biases.
    Keywords: residential segregation, spatial mismatch, urban unemployment, sensitivity analysis
    JEL: J64 R14
    Date: 2007–02
  4. By: Fujita, Masahisa; Mori, Tomoya
    Abstract: This paper presents an overview of recent development in the new economic geography (NEG), and discusses possible directions of its future development. Since there already exist several surveys on this topic, we focus on the selected features of the NEG which are important yet have attracted insufficient attention, and also on the recent refinements and extensions of the framework.
    Keywords: New economic geography, Agglomeration, International trade, Economic growth, Transport costs, Economics, Transportation, Costs, Economic geography, G World,others
    JEL: F12 F23 R11 R12 R13 R14
    Date: 2006–10
  5. By: Meng, Bo; Ando, Asao
    Abstract: The gravity model, entropy model, potential type model and others like these have been adopted to formulate interregional trade coefficients under the framework of Multi-Regional I-O (MRIO) analysis. Since most of these models are based upon analogies in physics or on statistical principles, they do not provide a theoretical explanation from the view of a firm's or individual's rational and deterministic decision making. In this paper, according to the deterministic choice theory, not only is an alternative formulation of the trade coefficients presented, but also a discussion of an appropriate definition for purchasing prices indices. Since this formulation is consistent with the MRIO system, it can be employed as a useful model-building tool in multi-regional models such as the spatial CGE model.
    Keywords: Trade coefficients, Multi-regional, Input-output tables, Armington assumption, Regional economic cooperation, Trade problem, G World,others
    JEL: C67 C68
    Date: 2006–10
  6. By: Arita, Tomokazu; Fujita, Masahisa; Kameyama, Yoshihiro
    Abstract: This study examines the effects of intra-regional cooperation among firms and institutions on the growth of firms, using the unique data set of questionnaire survey collected in the three major industrial clusters in Japan. In contrast to the existing studies on regional innovations or agglomeration economies, this study explicitly focuses on the detailed contents of cooperative activities with two specific viewpoints: 1) the contents of regional cooperation in each of the three production stages of R&D, commercialization, and marketing, and 2) the detailed types of alliance partners. Our results demonstrate three points: 1) positive correlations are observed between the intensity of regional cooperation and the firm growth rate and R&D expenditure, 2) horizontal cooperation such as alliances with universities and cross-industry exchange organizations has positive significant effects on the growth rate of firms, which is in contrast with the previous studies that stressed only the role of vertically integrated inter-firm linkages in Japan, and 3) contents and partners of regional cooperation are different among the three clusters based on different dominant industries.
    Keywords: Industrial clusters, Industrial agglomeration, Knowledge externalities, Japan, Regional economic cooperation, Small and medium-scale enterprises, Research & development, Marketing, Commerce
    JEL: O18 O53 R3
    Date: 2006–12
  7. By: Fujita, Masahisa; Gokan, Toshitaka
    Keywords: Agglomeration, Headquarters, Plants, Supply chain, Re-location, Monopolistic competition, Information technologies (technology), International division of labor, Costs, Communication, International trade, G World,others
    JEL: F12 L13 R13
    Date: 2006–10
  8. By: GOBILLON Laurent; SELOD Harris; ZENOU Yves
    Abstract: The Spatial Mismatch Hypothesis (SMH) argues that low-skilled minorities residing in US 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 is rather supportive of the SMH. Surprisingly, it is only recently that theoretical models have emerged, which probably explains why the mechanisms of spatial mismatch have long remained unclear and, as we believe, 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: 2007–01
  9. By: Machikita, Tomohiro
    Abstract: We examine the effects of learning by migrating on the productivity of migrants who move to a “megalopolis†from rural areas using the Thailand Labor Force Survey. The main contribution is to the development a simple framework to test for self-selection on migration decisions and learning by migrating into the urban labor market, focusing on experimental evidence in the observational data. The role of the urban labor market is examined. In conclusion, we find significant evidence for sorting: the self-selection effects test (1) is positive among new entrants from rural areas to the urban labor market; and (2) is negative among new exits that move to rural areas from the urban labor market. Further, estimated effects of learning by migrating into a “megalopolis†have a less significant impact. These results suggest the existence of a natural selection (i.e. survival of the fittest) mechanism in the urban labor market in a developing economy.
    Keywords: Self-selection, Learning by migrating, Survival of the fittest, Exits, Thailand, Population movement, Labor market
    JEL: D83 J61 R23
    Date: 2007–01
  10. By: DING, Ke
    Abstract: This paper discusses the issue of upgrading industrial clusters from the perspective of external linkages. It is taken for granted that in most developing countries, due to the limited domestic market and poor traditional commercial networks, industrial clusters are able to upgrade only when they are involved in global value chains. However, the rise of China’s industrial clusters challenges this view. Historically, China has had a lot of industrial clusters with their own traditional commercial networks. This fact combined with its huge population resulted in the formation of a unique external linage to China’s industrial clusters after the socialist planning period ended. In concrete terms, since the 1980s, a traditional commercial institution . the transaction market . began to appear in most clusters. These markets within the clusters get connected to those in the cities due to interaction between traditional merchants and local governments. This has resulted in the formation of a powerful market network-based distribution system which has played a crucial role for China’s industrial clusters in responding to exploding domestic demand. This paper explains these features in detail, using Yiwu China Commodity City as a case study.
    Keywords: Industrial cluster, Transaction market, Merchants, Network, Yiwu, Distribution, Industrial structure, Commerce, Market, China
    JEL: L67 L81 O14 O53
    Date: 2006–10
  11. By: Fujita, Masahisa
    Abstract: This paper explores the possibilities of two unique Japanese concepts – the One Village One Product Movement (OVOP) and Michino Eki (or Roadside Stations) – as potential tools for bridging the gap between cities and rural areas through community-driven development. From the viewpoint of spatial economics and endogenous growth theory, this paper considers both OVOP and Michino Eki as rural development strategies of a broader nature based on “brand agriculture.†Here, brand agriculture represents a general strategy for community-based rural development that identifies, cultivates and fully utilizes local resources for the development of products or services unique to a certain "village." Selected examples of OVOP and Michino Eki from Japan and developing countries are introduced.
    Keywords: Japan, Rural development, Brand agriculture, Agricultural products, One village one product movement (OVOP), Michino eki
    JEL: O13 Q10 Q16
    Date: 2006–11
  12. By: Ishida, Masami
    Abstract: Since the Greater Mekong Sub-region (GMS) program began in 1992, activities have expanded and flourished. The three economic corridors are composed of the East-West, North-South, and Southern; these are the most important parts of the flagship program. This article presents an evaluation of these economic corridors and their challenges in accordance with the regional distribution of population and income, population pyramids of member countries, and trade relations of member economies.
    Keywords: GMS, Mekong, Population, Trade, Human resources, Economic development, Income distribution, International trade, Southeast Asia, Thailand, Cambodia, Laos, Myanmar, Vietnam, China
    JEL: F10 J60 O22 R12
    Date: 2006–10
  13. By: Frenette, Marc
    Abstract: In this study, I explore the relationship between the presence of a local university in a city and university and college participation among local youth. The evidence is drawn from Census data, along with information on the creation of new university degree-granting institutions in Canada. Students who do not have access to a local university are far less likely to go on to university than students who grew up near a university, likely due to the added cost of moving away to attend, as opposed to differences in other factors (e.g., family income, parental education, academic achievement). When distant students are faced with a local option, however, their probability of attendance substantially increases. Specifically, the creation of a local degree-granting institution is associated with a 28.1% increase in university attendance among local youth, and large increases were registered in each city affected. However, the increase in university participation came at the expense of college participation in most cities. Furthermore, not everyone benefited equally from new universities. In particular, students from lower income families saw the largest increase in university participation, which is consistent with the notion that distance poses a financial barrier. Also, local aboriginal youth only saw a slight increase in university participation when faced with a local university option.
    Keywords: Education, training and learning, Outcomes of education
    Date: 2007–01–25
  14. By: Tsuneishi, Takao
    Abstract: Thailand has recently strengthened its economic policy toward its neighboring countries in coordination with domestic regional development. It is widely recognized that economic cooperation with neighboring countries is essential in preventing the inflow of illegal labor and effectively utilizing labor and resources through the relocation of production bases. This direction is strengthened by elaborating the GMS-EC and the ECS (Economic Cooperation Strategy). In addition, economic dependency of the neighboring countries on Thailand is generally high. In this report, firstly, Thai regional development policy will be made clear in relation to its economic policy toward neighboring countries as well as the status quo of the industrial estates. Secondly, Thai policy toward the neighboring countries is examined referring to the concept of wide-ranging economic zones, regional economic cooperation and special border economic zones. Thirdly, the paper will discuss how closely the economies between Thailand and the neighboring countries are related through trade and investment. Lastly, some implications on Japan's economic cooperation will also be explored.
    Keywords: Industrial estates, GMS-EC, ECS, Economic corridors, Border zones, Regional economic cooperation, Regional planning, Development policy, Thailand, Cambodia, Laos, Myanmar, Vietnam
    JEL: O53 R11
    Date: 2006–10
  15. By: Jo F.M. Swinnen; Liesbet Vranken
    Abstract: Transition countries provide a natural experiment to study the development of land markets. This paper provides survey-evidence of the variation in the development of land markets, identifies a series of patterns, and provides a set of hypotheses to explain these variations in land market development.
    Date: 2007

This nep-geo issue is ©2007 by Vassilis Monastiriotis. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.