nep-geo New Economics Papers
on Economic Geography
Issue of 2008‒02‒09
nineteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Related variety, trade variety and regional growth in Italy By Ron Boschma; Simona Iammarino
  2. Mapping the ICT in EU Regions: Location, Employment, Factors of Attractiveness and Economic Impact By Barrios, Salvador; Mas, Matilde; Navajas, Elena; Quesada, Javier
  3. Urban Amenities or Agglomeration Economies? Locational Behaviour and Entrepreneurial Success of Dutch Fashion Designers By Rik Wenting; Oedzge Atzema; Koen Frenken
  4. Beyond the Knowledge-Based Theory of the Geographic Cluster By Bjørn Asheim; Ron A. Boschma; Philip Cooke
  5. The Dynamics of City Formation By J. Vernon Henderson; Anthony Venables
  6. Shaping urban traffic patterns through congestion charging: What factors drive success or failure?. By Daniel Albalate; Germa Bel
  7. Constructing regional advantage: Platform policies based on related variety and differentiated knowledge bases By Alexander Cole
  8. Regional Social Policy By Bob Deacon; Isabel Ortiz; Sergei Zelenev
  9. The costs and benefits of providing open space in cities By Jan Rouwendal; Willemijn van der Straaten
  10. Discriminating Factors of Women's Employment. Using Territorial Heterogeneity to Inform Policy By Angela Cipollone; Carlo D'Ippoliti
  11. Analysing Convergence through the Distribution Dynamics Approach: Why and how? By Stefano Magrini
  12. Do Local Economic Development Programs Work? Evidence from the Federal Empowerment Zone Program By Matias Busso; Patrick Kline
  14. Black-White Appreciation of Owner Occupied Homes in Upper Income Suburban Integrated Communities: The Cases of Maplewood and Montclair, New Jersey By Douglas Coate; Richard Schwester
  15. The determinants of budget balances of the regional (Autonomous) governments By Isabel Argimón; Pablo Hernández de Cos
  16. Red Cities, Blue Cities: Creativity, Growth and Politics By Thomas Tiemann; Cassandra DiRienzo; Jayoti Das
  17. Innovation Processes and Industrial Districts By Paul L. Robertson; David Jacobson; Richard N. Langlois
  18. House Prices and Replacement Cost: A Micro-Level Analysis By Rainer Schulz; Axel Werwatz
  19. Geography of Trade Costs in Italy By Michele Fratianni; Francesco Marchionne

  1. By: Ron Boschma; Simona Iammarino
    Abstract: This paper makes an attempt to estimate the impact of regional variety and trade linkages on regional economic growth by means of export and import data by Italian province (NUTS 3) and sector (3-digit) for the period 1995-2003. Our results show strong evidence of related variety contributing to regional economic growth, no matter how growth is defined. Thus, Italian regions well endowed with sectors that are complementary in terms of competences (i.e. having related variety) perform better. The paper also assesses the effects of the breadth and relatedness of international trade linkages on regional growth, as it may bring new and related variety in the region. Our analysis demonstrates that regional growth is not affected by being well connected to the outside world per se, or having a high variety of knowledge flowing into the region. When the extra-regional knowledge originated from sectors the region is already specialised in, it did not positively impact on regional economic growth either. We found, however, some evidence of related extra-regional knowledge sparking off inter-sectoral learning across regions. With respect to employment growth, we could demonstrate that a region benefits from extra-regional knowledge when it originates from sectors that are related, but not similar to the sectors present in the region. Apparently, when the cognitive proximity between the extra-regional knowledge and the knowledge base of the region is neither too small nor too large, real learning opportunities are present, and the external knowledge contributes to regional employment growth.
    Keywords: related variety, agglomeration economies, trade linkages, regional growth, Italy
    JEL: R11 R12 O18
    Date: 2008–01
  2. By: Barrios, Salvador; Mas, Matilde; Navajas, Elena; Quesada, Javier
    Abstract: Factual evidence suggests that ICT-led growth and ICT-producing sectors are strongly localised geographically. Given that the nature of ongoing technological change and innovation dynamics has a strong local/regional component, public policies need to be designed at this level as well. However, little is known - if anything - of the regional impact of ICT. The present study documents the regional impact of ICT by mapping the location of the ICT industry in the EU25, analysing the volume and nature of ICT employment across European regions, identifying the determinants of EU regions’ attractiveness for ICT business location and, finally, assessing the contribution of ICT investment to regional growth and convergence. The study provides evidence for the prominent role played by the Computing Services sector in recent employment and skills' changes in the ICT industry, as well as for the emergence of new regional growth poles in the EU. Departing from traditional business models, this sector of activity presents relatively low sunk costs, especially in terms of physical capital requirement while having strong innovative and skills content, opening-up new opportunities for regional development in the EU. These factors also seem to explain much of the recent trends in ICT multinationals firms' location over the past decade. The study also shows that ICT capital investment tends to promote regional economic convergence. Regional policies aiming to promote regional cohesion must therefore consider ICT diffusion as a potentially important tool for the promotion of convergence throughout the EU. Importantly, ICT diffusion should also be accompanied by other policies and, in particular, policies aiming at improving education and skills levels. The study also shows that the absence of high ICT specialisation should not be seen as a major barrier to promoting the impact of ICT on regional development.
    Keywords: Information and Communication Technologica; European Union; Regions; Location; Employment; Qualifications Atractiveness
    JEL: R11 O3
    Date: 2008–01–31
  3. By: Rik Wenting; Oedzge Atzema; Koen Frenken
    Abstract: Urban economic growth and industrial clustering is traditionally explained by Marshallian agglomeration economies benefiting co-located firms. The focus on firms rather than people has been challenged by Florida arguing that urban amenities and a tolerant climate attract creative people, and the firms they work for, to certain cities. We analyse to what extent these two mechanisms affect the locational behaviour of Dutch fashion designers. On the basis of a questionnaire, we find that urban amenities are considered more important than agglomeration economies in entrepreneurs’ location decision. Designers located in the Amsterdam cluster do not profit from agglomeration economies as such, but rather from superior networking opportunities with peers both within and outside the cluster.
    Keywords: Agglomeration economies, urban amenities, creative class, fashion design, cultural industries, social networks, cluster
    Date: 2008–01
  4. By: Bjørn Asheim; Ron A. Boschma; Philip Cooke
    Abstract: The article presents a regional innovation policy model, based on the idea of constructing regional advantage. This policy model brings together concepts like related variety, knowledge bases and policy platforms. Related variety attaches great importance to knowledge spillovers across complementary sectors, possibly in a region. Then, the paper categorises knowledge into ‘analytical’ (science based), ‘synthetic’ (engineering based) and ‘symbolic’ (artistic based) in nature, with different ‘virtual’ and real proximity mixes. Finally, the implications of this are traced for evolving ‘platform policies’ that facilitate economic development within and between regions in action lines appropriate to related variety and differentiated knowledge bases.
    Keywords: Related variety; Differentiated knowledge bases; Platform policy, Regional innovation policy
    JEL: R11 R58 O38 B52
    Date: 2007–11
  5. By: J. Vernon Henderson; Anthony Venables
    Abstract: This paper examines city formation in a country whose urban population is growing steadily over time, with new cities required to accommodate this growth. In contrast to most of the literature there is immobility of housing and urban infrastructure, and investment in these assets is taken on the basis of forward-looking behavior. In the presence of these fixed assets cities form sequentially, without the population swings in existing cities that arise in current models, but with swings in house rents. Equilibrium city size, absent government, may be larger or smaller than is efficient, depending on how urban externalities vary with population. Efficient formation of cities with internalization of externalities involves local government intervention and borrowing to finance development. The paper explores the institutions required for successful local government intervention.
    JEL: O1 O18 R0 R11
    Date: 2008–02
  6. By: Daniel Albalate (Faculty of Economics, University of Barcelona); Germa Bel (Faculty of Economics, University of Barcelona)
    Abstract: Congestion costs are emerging as one of the most important challenges faced by metropolitan planners and transport authorities in first world economies. In US these costs were as high as 78 million dollars in 2005 and are growing due to fast increases in travel delays. In order to solve the current and severe levels of congestion the US department of transportation have recently started a program to initiate congestion pricing in five metropolitan areas. In this context it is important to determine those factors helping its implementation and success, but also the problems or difficulties associated with charging projects. In this article we analyze worldwide experiences with urban road charging in order to extract interesting and helpful lessons for policy makers engaged in congestion pricing projects and for those interested in the introduction of traffic management tools to regulate the entrance to big cities.
    Keywords: Congestion, Road Pricing, Urban Transportation, Traffic Demand Management.
    JEL: L91 L98 R41 R48
    Date: 2008–01
  7. By: Alexander Cole
    Abstract: The knowledge-based theory of the geographic cluster represents a major attempt to re-conceptualize clusters, in essence arguing that the localization of firms in similar and related industries stimulates learning and innovation, giving a competitive advantage to clustered firms. This paper critically examines the knowledge-based theory the cluster, arguing that it has greatly overstated the advantages of co-location to firms and misidentified the mechanisms through which learning occurs in clusters. In particular, the theory is criticized on three points: the flexible, under-specified way that it defines its object of study; the focus on firms as an explanatory variable instead of more fundamental processes of resource accumulation; and the functionalist mode of theory that employs as an explanation. Ways to address of each of these issues are discussed. In a final section I suggest that the rather static notions of learning put forward in the knowledge-based theory of the cluster be replaced by a developmental theory of regional dynamics that focuses on both learning and structural transformation.
    Keywords: geographic cluster, localization, relatedness, knowledge-based theory
    Date: 2007–11
  8. By: Bob Deacon; Isabel Ortiz; Sergei Zelenev
    Abstract: This paper argues why countries should give priority to developing cross-border regional social policies. The first part presents the conceptual case for regional social policies in terms of how the social dimension of regionalism can provide an alternative to the current pattern of globalization. The second presents the concept and dimensions of regional social policies. The third part reviews progress to date, which suggests that the time is right to pursue this agenda. The paper closes with some institutional issues related to how regional social policy might be advanced, including options for financing regional social policies.
    Keywords: regional social policy, globalization, international public goods, financing for development.
    JEL: F02 I38 H87 O19
    Date: 2007–07
  9. By: Jan Rouwendal; Willemijn van der Straaten
    Abstract: Although many researchers have investigated the value of open space in cities, few of them have compared them to the costs of providing this amenity. In this paper, we use the monocentric model of a city to derive a simple cost-benefit rule for the optimal provision of open space. The rule is essentially the Samuelson-condition for the optimal provision of a public good, with the price of land as the appropriate indicator for its cost. The condition is made operational by computing the willingness to pay for public and private space on the basis of empirical hedonic price functions for three Dutch cities. The conclusions with respect to the optimal provision of open space differ between the three cities.<BR> Further investigation reveals that willingness to pay for parks and public gardens increases with income, although not as fast as that for private residential space.
    Keywords: spatial planning; provision of public goods; cost-benefit analysis
    JEL: R52 H41 D61
    Date: 2008–01
  10. By: Angela Cipollone (Department of Economic and Business Sciences, LUISS Guido Carli); Carlo D'Ippoliti (Department of Economic and Business Sciences, LUISS Guido Carli)
    Abstract: We employ the dramatic heterogeneity across ItalyÕs Regions to assess the impact of selected context factors on menÕs and womenÕs employment by means of multilevel analysis. Observing that individual factors strongly interact with local policies and institutions in determining womenÕs employment, we claim that any attempt to explore solely its supply-side determinants might lead to biased estimates. Aggregate growth and tertiarisation of the economy are surprisingly found beneficial only to menÕs employment, while culture and discrimination are relevant for womenÕs. Social Assistance is found highly significant, with the provision of services being more beneficial to womenÕs employment than monetary transfers.
    Keywords: gender differentials, employment policy, regional development policy
    JEL: J16 C81 J21 R58
    Date: 2008–01
  11. By: Stefano Magrini (Department of Economics, University Of Venice Cà Foscari)
    Abstract: The convergence hypothesis has stimulated a heated debate within the growth literature. The present paper compares the two most commonly adopted empirical approaches, the regression approach and the distribution dynamics approach, and argues that the former fails to uncover important features of the dynamics that might characterise the convergence process. Next, it provides an in depth description of the features and underlying assumptions of the distribution dynamics approach as well as a detailed discussion of some important aspects related to the estimate of stochastic kernels via kernel density estimators. Finally, the empirical section allows to emphasises the interpretational advantages stemming from the use of stochastic kernels to capture the evolution of the entire cross-sectional income distribution. Incidentally, through a comparison between the results obtained from alternative sets of Italian regions, it suggest that the use of administrative regions could lead to ambiguous results.
    Keywords: Distribution Dynamics, Stochastic Kernel, Kernel Density Estimation, beta-convergence, Regions
    JEL: C14 C20 O40 O52 R10
    Date: 2007
  12. By: Matias Busso (University of Michigan); Patrick Kline (Cowles Foundation, Yale University)
    Abstract: This paper evaluates the impact of Round I of the federal urban Empowerment Zone (EZ) program on neighborhood level labor and housing market outcomes over the period 1994-2000. Using four decades of Census data in conjunction with information on the proposed boundaries of rejected EZs, we find that neighborhoods receiving EZ designation experienced substantial improvements in labor market conditions and moderate increases in rents relative to rejected and future zones. These effects were accompanied by small changes in the demographic composition of the neighborhoods, though evidence from disaggregate Census tabulations suggests that these changes account for little of the observed improvements.
    Keywords: Program evaluation, Local economic development, Empowerment zones
    JEL: H2 O1 R58 C21
    Date: 2008–02
  13. By: Giancarlo Corò (Department of Economics, University Of Venice Cà Foscari); Stefano Micelli (Department of Business, University Of Venice Cà Foscari)
    Abstract: This essay examines the situation and the lines of development of industrial districts from the point of view of local systems of innovation. First of all, this article points out to the modernity factors of the district model – which are ascribable to the supply chain economy, to entrepreneurial dynamics and to the importance of geography as a competitive resource – through the analysis of recent contributions of economic literature that examined the emerging organizational models in knowledge economy. Secondly, the outcomes of recent research on leading companies of Italian industrial districts will be presented, looking at three particularly topics of ongoing changes: the process of international opening of the value chain, the technological conditions of competitive advantage, the relationship between strategies and economic performance. Finally, some considerations on the issue of policies will be developed. Such considerations underline the need to re-think the traditional models of local governance of development and suggest to look at the new external district economies, based on service economies, on much more considerable investments in training, technological and cultural activities and, finally, on more aware institutional actions with reference to the association of companies in innovation projects.
    Keywords: Industrial districts, Innovation Systems, Entrepreneurship, Global Value Chain
    JEL: L26
    Date: 2007
  14. By: Douglas Coate; Richard Schwester
    Abstract: The purpose of this paper is to examine black-white differences in housing appreciation in northern New Jersey, with particular emphasis on the communities of Montclair and Maplewood in the 1970 to 2000 period. We find that home appreciation at the block group level in these communities was inversely related to changes in the black population. The effect of changes in the proportion of the population that was black on home appreciation was similar to the effects of changes in black population at the census tract level in the northern New Jersey region as a whole. These high income communities with award winning school districts and well maintained housing stocks were not immune from the effects of race on home appreciation.
    Keywords: Black-white house appreciation
    JEL: R21
    Date: 2008–01
  15. By: Isabel Argimón (Banco de España); Pablo Hernández de Cos (Banco de España)
    Abstract: This paper provides a first approach to the analysis of the determinants of public balances of regional (Autonomous) governments. These determinants have been divided into economic, political and institutional factors and into those factors specific to lower levels of government (fiscal federalism). With data referring to the years 1984-2004, the approach followed helps us to conclude that the debt and deficit ceilings established in the so-called Fiscal Consolidation Scenarios (Escenarios de Consolidación Presupuestaria), in force during the 1990s, do not seem to have had a significant effect on the regional governments balances, while a higher degree of fiscal co-responsibility seems to be associated with a more disciplined behaviour of sub-central governments. Likewise, the analysis shows that a higher degree of fiscal decentralization is accompanied by a higher dependence of the evolution of regional governments’ public budgets on the economic cycle. The implementation of fiscal policy in the regional governments seems, finally, to incorporate a strong inertial component. In any case, the small number of observations of the series used, the existence of important institutional changes during the period of analysis and the high number of explanatory variables, that is, the large number of potential determinants of public balances, oblige us to treat our results with the greatest care.
    Keywords: regional public deficit, fiscal co-responsibility, panel data, déficit públicos regionales, corresponsabilidad fiscal, reglas fiscales, datos de panel
    JEL: H7
    Date: 2008–01
  16. By: Thomas Tiemann (Department of Economics, Elon University); Cassandra DiRienzo (Department of Economics, Elon University); Jayoti Das (Department of Economics, Elon University)
    Abstract: The 2006 Congressional elections seemed to be about change, as well as the war in Iraq. The 2008 Presidential election, though only at the primary stage, seems to be about change as well as the war in Iraq and the faltering economy. What is the force behind Americans wanting “change?” Is it simply frustration or is it because of important changes in the economy and the demography of the United States? In his 2002 book, Richard Florida looked at one of those changes and developed a “creativity index” measuring the existence of creative people, economic activity, and cultural tolerance for Metropolitan Statistical Areas in the U.S. This study looks at the connection between the rise of the creative class, economic growth and voting patterns. We find that more creative metropolitan areas grow faster on average and creative areas are more likely to have voted Democratic in the past. Even after controlling for union membership, the presence of creative people explains how metropolitan areas voted in the 2004 Presidential election, hinting at one force behind Americans’ desire for political change.
    Date: 2008–02
  17. By: Paul L. Robertson (University of Tasmania); David Jacobson (Dublin City University); Richard N. Langlois (University of Connecticut)
    Abstract: In this survey, we examine the operations of innovation processes within industrial districts by exploring the ways in which differentiation, specialization, and integration affect the generation, diffusion, and use of new knowledge in such districts. We begin with an analysis of the importance of the division of labor and then investigate the effects of social embeddedness on innovation. We also consider the effect of forms of organization within industrial districts at various stages of product and process life, and we examine the negative aspects of embeddedness for innovation. We conclude with a discussion of the possible consequences of new information and communications technologies on innovation in industrial districts.
    Keywords: industrial districts, innovation, division of labor, embeddedness, information technology.
    JEL: L14 O31 R11
    Date: 2008–01
  18. By: Rainer Schulz; Axel Werwatz
    Abstract: According to housing investment models, house prices and replacement cost should have an equilibrating relationship. Previous empirical work mainly based on aggregate-level data has found only little evidence of such a relationship. By using a unique data set, covering transactions of single-family houses over a 25 years period, we establish strong support for the relationship at the micro level. In the time series context, we find that new house prices and replacement cost align quickly after a shock. In the cross-sectional context, we find prices of old houses and replacement cost are closely related once building depreciation has been taken into account. As to be expected from these results, replacement cost information also proves to be useful for the prediction of future house prices.
    Keywords: Tobin's Q, building depreciation, prediction accuracy
    JEL: C52 C53 R31
    Date: 2008–01
  19. By: Michele Fratianni (Department of Business Economics and Public Policy, Indiana University Kelley School of Business); Francesco Marchionne (Universita Politecnica delle Marche)
    Abstract: We show that economic development is associated with lower trade costs by applying a gravity equation to exports from 103 Italian provinces to 188 countries over the period 1995-2004. Italian provinces are heterogeneous with respect to trade costs.
    Keywords: trade costs, distance, heterogeneity, gravity equation
    JEL: F10 F14
    Date: 2008–01

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