nep-geo New Economics Papers
on Economic Geography
Issue of 2007‒06‒30
ten papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Dual gravity : Using spatial econometrics to control for multilateral resistance By KOCH, Wilfried; ERTUR, Cem; BEHRENS, Kristian
  2. Self-Employment and Unemployment in Spanish Regions in the Period 1979-2001 By Antonio Golpe; Andre van Stel
  3. The influence of regional innovation systems on regional economic growth - Linking regional input-output analysis and agent based modelling By Frank Beckenbach; Ramón Briegel; Maria Daskalakis
  4. NASCAR as a Public Good By Dennis Coates; David Gearhart
  5. A regional multiplier approach to estimating the impact of cash transfers: The case of cash aid in rural Malawi By Davies, Simon; Davey, James
  6. Short-term to long-term employment effects of the Football World Cup 1974 in Germany By Florian Hagn; Wolfgang Maennig
  7. On the Origins of Border Effects: Insights from the Habsburg Customs Union By Schulze, Max Stephan; Wolf, Nikolaus
  8. Production Subcontracting and Location By Adelheid Holl
  9. Knowledge Management System for Cluster Development in Small and Medium Enterprises By Pradorn Sureephong; Nopasit Chakpitak; Yacine Ouzrout; Gilles Neubert; Abdelaziz Bouras
  10. Fiscal federalism and soft budget constraint: does the nature of public spending matter? By Marie-Laure Breuillé; Thierry Madiès; Emmanuelle Taugourdeau

  1. By: KOCH, Wilfried (LEG - CNRS UMR 5118 - Université de Bourgogne); ERTUR, Cem (LEO - Université d'Orléans); BEHRENS, Kristian
    Abstract: We propose a quantity-based "dual" version of the gravity equation that yields an estimating equation with both cross-sectional interdependence and spatially lagged error terms. Such an equation can be concisely estimated using spatial econometric techniques. We illustrate this methodology by applying it to the Canada-U.S. data set used previously, among others, by Anderson and van Wincoop (2003) and Feenstra (2002, 2004). Our key result is to show that controlling directly for spatial interdependence across trade flows, as suggested by theory, significantly reduces border effects because it captures "multilateral resistance". Using a spatial autoregressive moving average specification, we find that border effects between the U.S. and Canada are smaller than in previous studies : about 8 for Canadian provinces and about 1.3 for U.S. states. Yet, heterogeneous coefficient estimations reveal that there is much variation across provinces and states.
    Keywords: gravity equations, multi-region general equilibrium trade models, spatial econometrics, border effects
    Date: 2007–03
  2. By: Antonio Golpe (University of Huelva, Spain); Andre van Stel (EIM Business and Policy Research, Zoetermeer, Netherlands; Cranfield University School of Management, UK; Max Planck Institute of Economics, Jena, Germany)
    Abstract: This paper investigates the relation between changes in self-employment and changes in unemployment at the regional level in Spain in the period 1979-2001. We estimate a vector autoregression model as proposed by Audretsch, Carree, van Stel and Thurik (2005) using a data base for Spanish regions. By estimating the model we are able to empirically distinguish between two directions of causality. On the one hand increases in self-employment may contribute to lower unemployment rates (the "entrepreneurial" effect). On the other hand, higher unemployment rates may push individuals into self-employment, thereby contributing to higher self-employment rates (the "refugee" effect). In our analysis of these two effects we distinguish between higher and lower income regions within Spain. We find empirical support for the "entrepreneurial" effect to exist, both in higher income and in lower income regions. As regards the "refugee" effect, the evidence is mixed. We find empirical support for this effect for higher income regions. Remarkably, we do not find evidence for a "refugee" effect in lower income regions of Spain, even though unemployment rates are on average higher in these regions. We argue that this may be partly related to a lack of incentives for unemployed individuals in these regions to find paid employment.
    Keywords: entrepreneurship, self-employment, unemployment, economic growth, Spain
    JEL: E24 L11 M13 O10 O52
    Date: 2007–06–25
  3. By: Frank Beckenbach (Department of Economics, University of Kassel); Ramón Briegel (Department of Economics, University of Kassel); Maria Daskalakis (Department of Economics, University of Kassel)
    Abstract: In the focus of the research on regional innovation systems (RIS) is an interaction pattern of different regional agents and institutions on one side and an observation of regional outcomes (in terms of value added, employment etc.) attributed to the aforementioned interaction pattern on the other side. Neither how this interaction pattern comes about nor how this pattern generates the attributed regional outcome is usually investigated more closely. In this article we try to fill this gap in the research about RIS. In section II we specify the two focal points of the literature about RIS and the resulting research gap to bridge. In section III it is shown how input-output tables (IOT) can be used to map the regional interaction dynamics on the level of branches. This is supplemented by an agent-based modelling of the final demand dynamics resulting from the innovation activities of regional agents (section IV). Finally some conclusions for further research are drawn (section V).
    Keywords: Regional Innovation System, Multi-Agent-System, Input-Output-Analysis, Evolutionary Economics
    Date: 2007–05
  4. By: Dennis Coates (Department of Economics, University of Maryland, Baltimore County); David Gearhart (Department of Economics, University of Maryland, Baltimore County)
    Abstract: This paper evaluates the impact of NASCAR on the communities that have tracks and host races of the three most prominent series, Cup, Grand National, and Truck. We estimate models in which the rent on housing units is determined by characteristics of the house or apartment, of the neighborhood, and of the standard metropolitan statistical area. The evidence is that tracks and races are significant determinants of rents, especially on non-central city housing units. For those units, a track raises rents from 5 to 8%, a Cup series races raises it an additional 13%, a Grand National race about 6%. Truck races are associated with a small reduction in rents of about 2.5%.
    Keywords: tourism, economic impact, special events, NASCAR, auto racing
    JEL: L83
    Date: 2007–06
  5. By: Davies, Simon; Davey, James
    Abstract: This paper analyses the impact on the local economy of an emergency cash transfer programme in rural Malawi. The results are of interest given the growing use of cash transfers as development aid as well as the increasing popularity of such transfers as a form of social protection across Sub-Saharan Africa. Using a form of social accounting matrix, we find that there are widespread benefits for regional economy as a whole (with multiplier estimates of 2.02 to 2.45) and for certain groups in particular. Small farmers and small businesses gain particular advantage as this is where poorer households’ purchases are focused; education and health also benefit. Such payments can also help to support the regional economy during the most “lean” periods of the year.
    Keywords: Rural Economic Development; Cash Transfers; Income Multiplier; Poverty; Malawi; Africa
    JEL: D19 O15 O22 O18
    Date: 2007–06
  6. By: Florian Hagn; Wolfgang Maennig (University of Hamburg)
    Abstract: This study demonstrates that the Football World Cup 1974 in Germany was not able to generate any short to long-term employment effects that were significantly different from zero. It is the first work to examine long-term employment effects of Football World Cup tournaments. It is also one of the first work to undertake a multivariate analysis of the employment effects of a major sporting event outside of the USA. In addition, this study does not arbitrarily determine the time period for the potential positive effects of a major sporting event but instead examines several alternative periods. Furthermore, the study tests for method sensitivity by analysing the data set in parallel with the approaches used in the studies of sporting events in the USA as well as in a fourth modifying estimation approach. In contrast to the conclusions reached in comparable studies, the results are not regarded as a clear refutation of the positive effects of major sporting events.
    Keywords: Labour market, regional economics, sports economics, World Cup, Stadium Impact
    JEL: L83 R53 R58
    Date: 2007–06
  7. By: Schulze, Max Stephan; Wolf, Nikolaus
    Abstract: This paper examines the emergence and dynamics of border effects over time. We exploit the unique historical setting of the multinational Habsburg Empire prior to the Great War to explore the hypothesis that border effects emerged as a result of persistent trade effects of ethno-linguistic networks within an overall integrating economy. While markets tended to integrate, the process was strongly asymmetric and shaped by a simultaneous rise in national consciousness and organisation among Austria-Hungary’s different ‘nationalities’. We find that the political borders which separated the empire’s successor states after the First World War became visible in the price dynamics of grain markets already 25-30 years before the First World War. This effect of a ‘border before a border’ cannot be explained by factors such as physical geography, changes in infrastructure or patterns of asymmetric integration with neighbouring regions outside of the Habsburg customs and monetary union. However, controlling for the changing ethno-linguistic composition of the population across the regional capital cities of the empire does explain most of the estimated border effects.
    Keywords: border effects; Habsburg Empire; market integration; networks; pre-1914 Europe
    JEL: F15 N13 Z13
    Date: 2007–06
  8. By: Adelheid Holl
    Abstract: Using data from a panel of Spanish manufacturing firms, I examine factors that explain firms’ production subcontracting decisions and test whether there is any evidence that production subcontracting is facilitated in areas typically associated with higher agglomeration economies. The results show that location matters. Firms in industry agglomerations are more likely to subcontract production activities. While in general, larger and older firms as well as high wage firms show a greater probability for production subcontracting, industry agglomeration particularly facilitates subcontracting for smaller and lower wage firms and it allows firms to respond to a greater degree to expansive demand conditions by taking advantage of subcontracting.
  9. By: Pradorn Sureephong (LIESP - Laboratoire d'Informatique pour l'Entreprise et les Systèmes de Production - [Université Claude Bernard - Lyon I][Université Lumière - Lyon II] - [Institut National des Sciences Appliquées de Lyon]); Nopasit Chakpitak (LIESP - Laboratoire d'Informatique pour l'Entreprise et les Systèmes de Production - [Université Claude Bernard - Lyon I][Université Lumière - Lyon II] - [Institut National des Sciences Appliquées de Lyon]); Yacine Ouzrout (LIESP - Laboratoire d'Informatique pour l'Entreprise et les Systèmes de Production - [Université Claude Bernard - Lyon I][Université Lumière - Lyon II] - [Institut National des Sciences Appliquées de Lyon]); Gilles Neubert (LIESP - Laboratoire d'Informatique pour l'Entreprise et les Systèmes de Production - [Université Claude Bernard - Lyon I][Université Lumière - Lyon II] - [Institut National des Sciences Appliquées de Lyon]); Abdelaziz Bouras (LIESP - Laboratoire d'Informatique pour l'Entreprise et les Systèmes de Production - [Université Claude Bernard - Lyon I][Université Lumière - Lyon II] - [Institut National des Sciences Appliquées de Lyon])
    Abstract: Many countries such as Canada, Japan, Korea and France gains their competitive advantage through the utilization of clusters development. A cluster contains many Small and Medium Enterprises (SMEs) operating in the same or similar industry strongly connected with each other to produce good and services.,In developing country , especially, Small and Medium Enterprises (SMEs) take very important role to their economic. Most governments, as facilitator, support cluster through initiate help and encourage SMEs' linkage to reach the concept of industry cluster. Many literature reviewed claimed that the most difficult processes in creating a cluster is the development and sustain the collaboration to connect these SMEs together. After some investigation, the problem of creating SMEs connection is information sharing at micro-economic level.. Knowledge sharing is one of the most important key success factors of cluster management to gain collaboration among SMEs since there are abundant of explicit and tacit knowledge within each SMEs in a cluster. Naturally, most firms do not want to share their business information and knowledge. In reality, however they needs these information to successfully manage their business cluster. It is crucial and necessary we find out what kind of information or knowledge they want to know and shareable among them in order to manage cluster successfully. Many operation management techniques already existed in many firms. One of the ways to help knowledge sharing operate successfully using information technology as a tool is directed to Knowledge Management System (KMS). This methods can help facilitate the communication and information ow and needs to be investigated further to help maintain the cluster collaboration and knowledge sharing.. This paper propose framework and methodology for analyzing, industry cluster for the sustain the lifecycle of cluster.
    Date: 2007–06–22
  10. By: Marie-Laure Breuillé; Thierry Madiès; Emmanuelle Taugourdeau
    Abstract: This paper analyses the impact of both the nature of regional public spending and the federal government’s fiscal tools on the softness of the regional budget constraint and the regional provision of public good. We show that i) whatever the nature of regional public spending, the regional budget constraint is harder when the federal government can no longer manipulate its lump sum tax and ii) under the assumption that the federal government can no longer manipulate its lump sum tax, the federal bailout is lower when the region provides a public input rather than a public good but the regional budget constraint can be either softer or harder.
    Keywords: Soft Budget Constraint, Fiscal Federalism, Tax Competition, Public Input
    JEL: E62 H7
    Date: 2007

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