nep-geo New Economics Papers
on Economic Geography
Issue of 2007‒10‒20
nineteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Uncovering the Factors behind Comparative Regional Economic Performance: A Dynamic CGE Approach By James A Giesecke; John R Madden
  2. Impact of Cultural Tourism upon Urban Economies: An Econometric Exercise By Elena Bellini; Ugo Gasparino; Barbara Del Corpo; William Malizia
  3. Spatial Competition and Agglomeration: An Application to Motion Pictures By Darlene C. Chisholm; George Norman
  4. No Place like Home? Location choice and firm survival after forced relocation in the German machine tool industry By Guido Buenstorf; Christina Guenther
  5. Agglomeration Economies and the Location of Foreign Direct Investment: Empirical Evidence from Romania By Hilber, Christian A. L.; Voicu, Ioan
  6. Why Do the Swiss Rent? By Steven C. Bourassa; Martin Hoesli
  7. Determinants of interregional migration in Italy:A panel data analysis By Etzo, Ivan
  8. A multilevel approach to geography of innovation By Martin Srholec
  9. The quality of banking and regional growth By Hasan, Iftekhar; Koetter, Michael; Wedow, Michael
  10. The Geography of the European Creative Class: A Rank-Size Analysis By Mark Lorenzen; Kristina Vaarst Andersen
  11. A price model to assess the inflationary effects of the European Regional Policy By M. Carmen Lima Díaz; M. Alejandro Cardenete Flores
  12. Regional Differences in the Severity of Recessions in the UK By Robert Dixon
  13. The producer service sector in Italy: Long-term growth and its local determinants By Valter Di Giacinto; Giacinto Micucci
  14. Knowledge Flows through Social Networks in a Cluster: Interfirm versus University- Industry Contacts By Christian R. Østergaard
  15. Net Capital Stock and Capital Productivity for China and Regions: 1960-2005. An Optimal Consistency Method By Jose Miguel Albala-Bertrand
  16. Formation of SEZ, Agricultural Productivity and Urban Unemployment By Chaudhuri, Sarbajit; Yabuuchi, Shigemi
  17. Investimentos em infra-estrutura no Nordeste: projeções de impacto e perspectivas de desenvolvimento By Edson Paulo Domingues; Francisca Diana Ferreira Viana; Heder Carlos de Oliveira
  18. Intervenção Estatal e Desigualdades Regionais no Brasil: contribuições ao debate contemporâneo. By Aristides Monteiro Neto
  19. Sectoral Economic Potentials of Bandung Metropolitan Area By Adhitya Wardhana

  1. By: James A Giesecke; John R Madden
    Abstract: Recently a new method has emerged for uncovering the factors driving regional disparities in growth performance. The method involves historical analysis with a multiregional computable general equilibrium model. This paper has three main aims. The first is to demonstrate the capacity of the CGE historical technique to decompose the causes of regional divergence into clearly-specified economic factors. The second is to provide a generic miniature model that can be used as a template for adapting any multiregional CGE model to give it the capacity for undertaking historical analysis. The third is to demonstrate that this same miniature model can be used to explain the regional results in terms of the major model mechanisms behind them.
    Keywords: Computable general equilibrium, Regional growth, Regional divergence, Multi-regional historical analysis
    JEL: D58 R13
    Date: 2006–12
  2. By: Elena Bellini (Fondazione Eni Enrico Mattei); Ugo Gasparino (Fondazione Eni Enrico Mattei); Barbara Del Corpo (Fondazione Eni Enrico Mattei); William Malizia (Fondazione Eni Enrico Mattei)
    Abstract: In recent years, interest in tourism has spread rapidly throughout many small and medium European cities, which previously have not necessarily considered themselves as tourist destinations. Tourism is increasingly seen as a potential lever towards high economic growth, measured both in terms of income and employment. In the present Working Paper we report the analysis on the economic impact undertaken in the framework of the PICTURE Project, showing the results of a novel econometric exercise to statistically assess the impacts of cultural tourism upon European municipalities. More precisely the analysis aims at estimating the effects of tourism specialisation on local income and prices. The Working Paper is built as follows. Section 1 presents and discusses secondary data about tourism facts and figures, including the economic impact of tourism upon European economies, with a focus on cultural tourism. An extensive review of literature, which identifies the main categories of impacts and the currently available methodologies to assess them, is undertaken. Section 2 focuses on the state of the art. Section 3 describes the database built for the analysis, sources and variables. In order to visually represent the spatial variability of the main parameters, a series of thematic maps at NUTS 3 level(“Maps of European tourism”), using GIS (Geographical Information System) are also included in the Working Paper. Section 4 shows the results of the econometric analysis of European panel data for the estimation of the effects of tourism specialisation on both local incomes and prices. Section 5 concludes.
    Keywords: Cultural Tourism, Economic Growth
    JEL: O4 R0 L83
    Date: 2007–09
  3. By: Darlene C. Chisholm; George Norman
    Abstract: This paper presents an empirical assessment of movie theatre attendance in two major metropolitan markets and provides strong support for the importance of spatial characteristics in determining attendance. We consider the hypothesis that attendance at a particular movie theatre reflects a tension between two effects: a competition effect and an agglomeration effect. We find evidence that the agglomeration effect dominates. Further, we identify a pattern of systematic spatial decay in the benefits deriving from agglomeration.
    JEL: L11 D43 L82
    Date: 2007
  4. By: Guido Buenstorf; Christina Guenther
    Abstract: We study location choices and firm performance in the German machine tool industry, focusing on the forced migration of East German firms after World War II. Our analysis of location choices supports earlier findings that industry agglomerations attract further entrants. Relocating firms outperformed entrants that possessed no prior industry experience; apparently were able to build on their prewar capabilities. We find no evidence suggesting that firm performance benefited from agglomeration effects.
    Keywords: Capabilities; agglomeration economies; location choice; firm survival; machine tool industry
    JEL: L20 R20 R30
    Date: 2007
  5. By: Hilber, Christian A. L.; Voicu, Ioan
    Abstract: Relatively little is known about the determinants of FDI location in transition economies. We exploit the large inflow of FDI into Romania, after the revolution in 1989, to study this question. Using a conditional logit setup, we find that external economies from service agglomeration are the main determinant of FDI-location. An increase in service employment density by 10 percent makes the average Romanian county 11.9 percent more likely to attract a foreign investor. Industry specific foreign and domestic agglomeration economies and labor conflicts also impact FDI-location. Our findings imply that results are sensitive to the inclusion of locational fixed effects.
    Keywords: Agglomeration economies; foreign direct investment; transition economies.
    JEL: R3 P33
    Date: 2007–09–30
  6. By: Steven C. Bourassa (University of Louisville, School of Urban and Public Affairs); Martin Hoesli (University of Geneva, HEC and Swiss Finance Institute)
    Abstract: At 34%, Switzerland has the lowest home ownership rate in Western Europe. This is a puzzle given the economic strength of the country. We use 1998 household survey data for five Swiss cantons to explore some possible reasons for this. We estimate a tenure choice equation that allows us to analyze the impacts of a number of key variables on the ownership rate. We pay particular attention to the relative cost of owning and renting, which is a function of house prices, rents, and the user cost of owning. The latter is a function of income tax policy and expected house price inflation, among other things. We also measure mortgage underwriting criteria and consider rent control and other policies affecting rental housing. By simulating a number of hypothetical changes to taxation and other policies, underwriting criteria, and price levels, we assess the importance of these variables in explaining the ownership rate. We conclude that high house prices—relative to rents and to household incomes and wealth—are by far the most important cause of Switzerland’s low ownership rate.
    Keywords: Home ownership, Switzerland
    JEL: R21 R31
    Date: 2006–12
  7. By: Etzo, Ivan
    Abstract: After two decades of low internal migration rates, official national statistics report a considerable increase of internal mobility which started in 1996 and still continues to grow at the time of writing. Using panel data analysis on gross migration flows between regions, this study investigates the role of the main economic determinants during the period 1996-2002.. The analysis distinguishes between the role played by the same explanatory variable in the sending region (push factor) and in the destination region (pull factor). The per capita GDP turns out to be the main economic determinant, showing a strong effect both when it acts as a push factor and when it acts as an attractive factor. On the contrary, the effect of the unemployment rate estimates is much stronger in the sending region than in the destination region. Moreover, the standard gravity variables like distance and population size are also significant and with the expected sign.
    Keywords: Interregional migration; gravity model; panel data.
    JEL: R1
    Date: 2007–09
  8. By: Martin Srholec (Centre for Technology, Innovation and Culture, University of Oslo)
    Abstract: The aim of this paper is to demonstrate how research on geography of innovation can benefit from multilevel modeling. Using explanatory factors operating at different levels of the analysis, we assess the hypothesis that regional innovation systems influence the firm’s likelihood to innovate. We estimate a logit multilevel model of innovation on micro data from the third Community Innovation Survey in the Czech Republic. The results indicate that the quality of the regional innovation system directly determines firm’s likelihood to innovate and mediates the effect of some firm-level factors. Also structural problems in the region influence innovation in firms.
    Keywords: innovation, multilevel modeling, regional innovation system, Czech Republic.
    JEL: O32 R15 D21
    Date: 2007–10
  9. By: Hasan, Iftekhar; Koetter, Michael; Wedow, Michael
    Abstract: We test whether output growth in European economic agglomeration regions depends on financial development. To this end we suggest a relative measure of the quality of financial institutions rather than the usual quantity proxy of nancial development. In order to measure the quality of financial development we use profit efficiency derived from stochastic frontier analysis. We show that more efficient banks spur regional growth while the typically used quantity measure of financial development is negligible. Also, our results suggest an additional channel through which better banking can spur growth: the interaction of more credit with efficient banks.
    Keywords: Bank performance, regional growth, bank efficiency, Europe
    JEL: G21 O16 O47 O52
    Date: 2007
  10. By: Mark Lorenzen; Kristina Vaarst Andersen
    Abstract: Using novel statistical data, the paper analyzes the geographical distribution of Richard Florida’s creative class among 445 European cities. The paper demonstrates that size matters, i.e. cities with a high proportion of creative class tend to get more creative through attraction of still more creative labor. More specifically, the distribution of the European creative class falls into three phases, each approximating a rank-size rule, with different exponents (i.e., inequality). The exponent for the smallest cities is profoundly more negative than for the middle-sized cities, and this tendency is stronger for the creative class than for the general population. Furthermore, the exponent of the largest cities is slightly less negative than the middle-sized cities, and this tendency is also stronger for the creative class. In order to explain this, the paper presents four propositions about how effects of large and small population sizes of cities may be more detrimental to attracting the creative class than attracting the population in general. Below a population size of approximately 70,000 inhabitants, there is a rapid drop of attractiveness to the creative class with decreasing city size. We propose that this may be because below this size, cities begin to drop below minimum efficient market sizes for particular creative services, below minimum labor market sizes for particular creative job types, and below minimum levels of political representation by the creative class. Above a European city population size of approximately 1,2 million inhabitants, the attractiveness of increasing city size for the creative class drops, and we propose that the creative class may respond particularly adversely to urban congestion.
    Date: 2007
  11. By: M. Carmen Lima Díaz (Department of Economics, Universidad Pablo de Olavide de Sevilla); M. Alejandro Cardenete Flores (Department of Economics, Universidad Pablo de Olavide de Sevilla)
    Abstract: Social Accounting Matrices (SAM) are databases that complete the information provided by the input-output tables. They study the intersectorial relationships of an economy, the behaviour of consumers, the government or the foreign sector, while being able to close the income flow of rent. In this work, we deal with the European Regional Development Fund (ERDF) in Andalusia, a Spanish region classified as Objective 1 by the European Regional policy. We apply the Leontief model on the SAMs for 1990, 1995 and 1999 to get the gross output fall when we remove these regional funds. Furthermore, we develop a price model to assess the impact of this financial support on aggregate and sectorial prices.
    Keywords: Social Accounting Matrix, Regional Accounting, Structural Analysis.
    JEL: C67 D57 R15
    Date: 2007–10
  12. By: Robert Dixon
    Abstract: This paper aims to provide a fresh approach to understanding regional unemployment dynamics and differences. Specifically, we develop a framework to explain differences between regions in the severity (measured in terms of how far unemployment rises) of recessions. The main contribution of this paper is draw attention to the role of the elasticity of the outflow rate with respect to unemployment in determining the severity of recessions. The key parameter of the model - the elasticity of the outflow rate with respect to unemployment - is estimated using regional data for the United Kingdom over the period 1989:1 - 2003:4. This elasticity appears to be higher in the north than the south implying that, for the same percentage increase in inflow, the level (and rate) of unemployment will rise further in northern regions than in southern regions. It follows that, if there has indeed been any reversal of the north-south divide in the United Kingdom as some have claimed, it must have its origins on the inflow, not the outflow, side of the labour market.
    Date: 2007
  13. By: Valter Di Giacinto (Bank of Italy, Branch of L'Aquila); Giacinto Micucci (Bank of Italy, Branch of Ancona)
    Abstract: This paper analyses the local determinants of producer service growth in Italy, focusing on agglomeration economies, and taking into account the particular features of this sector with respect to manufacturing. Using an OECD classification, we estimate a dynamic specification allowing for transitory dynamics around the long-run employment path derived from a model in which both demand and supply factors are considered. Compared with the prevailing modelling approach, the spatial scope of externalities is extended to include possible interactions across different urban areas. Our main findings are the following. Long-run employment growth is positively affected by Marshall-Arrow-Romer externalities, with a minor role played by urbanization externalities, a result similar to that obtained by more recent research on the Italian manufacturing sector and its industrial districts. Among the remaining supply factors, human capital exerts a positive influence on the long-run employment level in producer services industry; among demand factors, the size of the local market appears to be important, given the still incomplete tradability of service output. Significant interactions across urban areas are shown to occur; in particular, positive knowledge externalities on local productivity appear to be induced by location in urban areas contiguous to cities specializing in producer services.
    Keywords: agglomeration economies, human capital, producer services
    JEL: L80 R10 R12
    Date: 2007–09
  14. By: Christian R. Østergaard
    Abstract: Knowledge spillovers from a university to the local industry play an important role in clusters, but we know little about these spillovers. This paper examines empirically the extent of university-industry informal contacts. Furthermore, it analyses the characteristics of an engineer that acquire knowledge from informal contacts with university researchers. The university-industry contacts are compared with results for interfirm contacts. The research shows that the interfirm informal contacts are more numerous than university informal contacts. Likewise, knowledge is more frequently acquired from other firms than through university-industry contacts. Engineers that have participated in formal projects with university researchers and engineers that are educated at the university have a higher likelihood of acquiring knowledge from informal contacts with university researchers.
    Keywords: Knowledge flows; informal contacts
    JEL: D83 O32 I23
    Date: 2007
  15. By: Jose Miguel Albala-Bertrand (Queen Mary, University of London)
    Abstract: This analysis is based on the optimal consistency method (OCM) proposed by Albala-Bertrand (2003), which enables to estimate a capital stock for a benchmark year. This method, in contrast to most current approaches, pays due regards both to potential output and to the productivity of capital. From an initial OCM benchmark estimate, we produce series for the net capital stock, via a perpetual inventory method (PIM), for all China and some useful regional disaggregations over the 45-year period 1960-2005. As a by-product, we also make available the optimal productivities of incremental or “marginal” capital, corresponding to the net accumulated GFCF over 5-year sub-periods from 1960 onwards. We then attempt some structural analysis, showing that the quantity of resources rather than their quality appears to be largely behind growth rates, especially since the 1990s.
    Keywords: China, Benchmark capital, Perpetual Inventory Method (PIM), Potential output, Capital productivity, Optimal Consistency Method (OCM), Structural analysis
    JEL: O4 B4 E2
    Date: 2007–10
  16. By: Chaudhuri, Sarbajit; Yabuuchi, Shigemi
    Abstract: Formation of SEZ using agricultural land to promote industrialization has recently been one of most controversial policy issues in many developing economies including India. This paper critically theoretically evaluates the consequences of this policy in terms of a three-sector Harris-Todaro type general equilibrium model reasonable for a developing economy. It finds that agriculture and SEZ can grow simultaneously provided the government spends more than a critical amount on irrigation projects and other infrastructural development designed for improving the efficiency of land. Agricultural wage and aggregate employment in the economy may also improve.
    Keywords: Special economic zone; fiscal concessions; agricultural productivity; rural wage; urban unemployment.
    JEL: R14 H54 R13
    Date: 2007–10–11
  17. By: Edson Paulo Domingues (Cedeplar-UFMG); Francisca Diana Ferreira Viana (Cedeplar-UFMG); Heder Carlos de Oliveira (Cedeplar-UFMG)
    Abstract: This paper analyzes a set of infrastructure programs (Sewer, Housing, Transports, Communications and Energy) in the Northeast region of Brazil, announced by the federal government in the scope of the PAC (Plano de Aceleração do Crescimento). We use an interregional computable general equilibrium model in order to estimate short run and long run impacts in the region’s states. The results indicate the potential impact of these projects on growth and regional inequality.
    Keywords: regional economics; regional inequality; infrastructure; computable general equilibrium; Brazil
    JEL: R11 R13 R40 C68
    Date: 2007–09
  18. By: Aristides Monteiro Neto
    Abstract: This paper brings light to some connections between the crisis of state intervention and regional inequalities in contemporary Brazil. For such, a macroeconomic approach for public expenditures is developed, focusing on public investment - in both public administration and state enterprises - and on some instruments of governmental credit to stimulate the private spending in investment. It shows that the role played by the government to reduce inter-regional disparities in per capita income has markedly diminished in the recent decade. One consequence that arises is that the government has lost its capacity to define growth trajectories in the regional economies: when one compares the regional economic growth rates among 1960-1989 (strong state intervention), 1980-1989 (the "lost decade") and 1990-2002 (liberal inspiration) periods, the latter presents the weakest performance. Another negative consequence is related to the private sector that has, in absence of public planning, considered to locate in more developed areas of the country. These points explain why the convergence process has no longer put forward as it was until 1985.
    Date: 2006–11
  19. By: Adhitya Wardhana (Department of Economics, Padjadjaran University)
    Abstract: The result of an “overlay analysis approach” suggests that Bandung municipality (Kota Bandung) need to re-emphasize the role of service sectors such electricity, gas, water supply, financial sector, and others service sector as engine of economic development. Those sectors are found to be the most promising in term of its future potential as the driver of economic growth of the region. The potential economic sector of Bandung regency (Kabupaten Bandung) on the other hand are still dominated by its traditionally-dominant sector such as agriculture and manufacturing.
    Keywords: Overlay analysis, Bandung
    JEL: R11 R12 R15
    Date: 2007–10

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