nep-geo New Economics Papers
on Economic Geography
Issue of 2008‒07‒14
seventeen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Economic Space Trajectory through Different Regional Growth Models By Lo Cascio, Martino; Bagarani, Massimo; Zampino, Simona
  2. The Bright and Dark Side of Cooperation for Regional Innovation Performance By Tom Broekel; Andreas Meder
  3. Regional Path-Dependence in Start-up Activity By Thomas Brenner; Dirk Fornahl
  4. The spatial structure of French wages: Investigating the robustness of two-stage least squares estimations of spatial autoregressive models By Sylvain Barde
  5. Summary of 2000‐2007 Population Changes in Iowa's Cities By Eathington, Liesl; Swenson, David A.
  6. Regional development and monetary policy : a review of the role of monetary unions, capital mobility and locational effects By Ridhwan, M.M.; Nijkampa, P.; Rietveld, P.
  7. Housing externalities : evidence from spatially concentrated urban revitalization programs By Esteban Rossi-Hansberg; Pierre-Daniel G. Sarte; Raymond E. Owens, III
  8. Anatomy of Russia’s Market Segmentation By Konstantin Gluschenko
  9. Cluster Emergence and Network Evolution: A longitudinal analysis of the inventor network in Sophia-Antipolis By Anne Ter Wal
  10. Monetary Valuation of Aircraft Noise By Jasper Dekkers; Willemijn van der Straaten
  11. Human Capital, Economic Growth, and Regional Inequality in China By Fleisher, Belton M.; Li, Haizheng; Zhao, Min Qiang
  12. Urban Growth, Uninsured Risk, and the Rural Origins of Aggregate Volatility By Steven Poelhekke
  13. Knowledge spillovers and the equilibrium location of vertically linked industries: the return of the black hole By Sylvain Barde
  14. Marginal Cost Pricing of Noise in Railway Infrastructure By Andersson, Henrik; Ögren, Mikael
  15. Locational Conditions, Cooperation, and Innovativeness : Evidence from Research and Company Spin-Offs By Anna Lejpras; Andreas Stephan
  16. Reassessing the relationship between inequality and development By Joseph F. Francois; Hugo Rojas-Romagosa
  17. The institutions of house tenancy markets in post-war Western Europe: an economic analysis By Juan S. Mora

  1. By: Lo Cascio, Martino; Bagarani, Massimo; Zampino, Simona
    Abstract: Since the early 1990s, regional economic growth processes assume a key role in the EU policy agenda as a main tool to enhance social and economic convergence within the EU spatial landscape. Literature on regional economic growth and convergence provides some evidence on the most relevant factors affecting economic processes, mainly assuming homogeneity of production functions and steady state conditions in cross-section and panel regressions. In this framework, assuming a minimal definition of transitional steady state, econometric methods are adopted to identify regional characteristics and examine the determinants of different development models. The quantitative analysis is centred on - LSDV (Least Square Dummy Variables) estimates to cluster EU 11 regions (EU 13 excluding UK and Ireland due to lack of statistical data) by defining homogeneous latent structures affecting different transitional growth patterns; - coupled with multinomial conditional logit models to qualify the spatial distribution of expected vs actual regional gaps. Even conscious of the shortcomings of the described neoclassical production function convergence and divergence mechanisms, a sort of metaphor of substantive economic behaviour, three main findings for an explorative analysis are proposed i) the role of enlarged neoclassical production function and, at same time, its limited weight on average with respect to social and political factors as well as other stock fundamental determinants; ii) the deep differences of above defined weight of enlarged neoclassical production function at regional level in Europe; iii) the need for an adaptive governance of EU finance effort, within the same strategic objective of convergence.
    Keywords: Economic regional growth, Panel models
    JEL: O47 R11 C21 C23
    Date: 2008–06–30
  2. By: Tom Broekel; Andreas Meder
    Abstract: Studies analyzing the importance of intra- and inter-regional cooperation for regional innovation performance are mainly of qualitative nature and focus strongly on the positive effects that high levels of cooperation can yield. For the case of the German labor market regions and the Electrics & Electronics industry the paper provides a quantitative-empirical analysis taking into account the possibility of negative effects related to regional lock-in, lock-out, and cooperation overload situations. Using conditional nonparametric frontier techniques and cooperation behavior measures we find positive as well as substantial negative effects of cooperation with the latter being induced by excessive and unbalanced cooperation behavior.
    Keywords: regional innovation performance, cooperation, lock-out, lock-in, cooperation overload
    JEL: R12 O18 O31
    Date: 2008–06
  3. By: Thomas Brenner; Dirk Fornahl
    Abstract: This paper studies the impact of an existing industrial structure in a region on the number of start-ups in this region. The aim is to detect path-dependencies in the regional industry structure. To this end we study empirically the regional factors that influence start-up rates. The approach deviates from the huge literature on start-up rates by studying each 2-digit industry separately, including the employment in other industries into the analysis and distinguishing between factors that provide founders and factors that influence their likelihood to start a firm.
    Keywords: industrial dynamics, regional industry structure, start-ups, entrepreneurship, path-dependence
    JEL: R11 L26 R30
    Date: 2008–06
  4. By: Sylvain Barde (Observatoire Français des Conjonctures Économiques)
    Date: 2008
  5. By: Eathington, Liesl; Swenson, David A.
    Abstract: This brief report summarizes recent patterns of population growth and decline among Iowa's 947 cities. The report examines population changes from 2000 to 2007 and contrasts differences in performance by city size and metropolitan or non-metropolitan status.
    JEL: R0
    Date: 2008–07–14
  6. By: Ridhwan, M.M. (Vrije Universiteit Amsterdam, Faculteit der Economische Wetenschappen en Econometrie (Free University Amsterdam, Faculty of Economics Sciences, Business Administration and Economitrics); Nijkampa, P.; Rietveld, P.
    Abstract: Standard economic theory assumes money to be neutral, at least in the long run, driven by interregional arbitrage and perfect capital mobility. This may easily be used as a justification for regional economists to ignore monetary factors. However, in a world with market imperfections, such arguments are no longer valid. This paper provides a critical review of theoretical arguments and empirical evidence on the issue. Special attention is devoted to asymmetric information problems caused by geographical factors. We conclude that monetary policy and financial markets can have a potentially important role to play in promoting regional development especially in less-developed countries.
    Keywords: Regional Finance; Monetary Union; Capital Mobility; Asymmetric Regional Finance; Monetary Union; Capital Mobility; Asymmetric;Information; Economic Geography
    JEL: R51 R58 G14 E44 F15
    Date: 2008
  7. By: Esteban Rossi-Hansberg; Pierre-Daniel G. Sarte; Raymond E. Owens, III
    Abstract: Using data compiled from concentrated residential urban revitalization programs implemented in Richmond, VA, between 1999 and 2004, we study residential externalities. Specifically, we provide evidence that in neighborhoods targeted by the programs, sites that did not directly benefit from capital improvements nevertheless experienced considerable increases in land value relative to similar sites in a control neighborhood. Within the targeted neighborhoods, increases in land value are consistent with externalities that fall exponentially with distance. In particular, we estimate that housing externalities decrease by half approximately every 990 feet. On average, land prices in neighborhoods targeted for revitalization rose by 2 to 5 percent at an annual rate above those in the control neighborhood. These increases translate into land value gains of between $2 and $6 per dollar invested in the program over a six-year period. We provide a simple theory that helps us interpret and estimate these effects.
    Keywords: Housing ; Land use ; Economic development ; Federal Reserve District, 5th
    Date: 2008
  8. By: Konstantin Gluschenko
    Abstract: Based on a relationship between price difference and demand difference among locations, the role of various market frictions in causing segmentation of the Russian goods market is analyzed. The spatial sample covers most of Russian regions (70 of all the 89); the data are yearly, spanning 1992 through 2000. Spatial disconnectedness of regions is found to be responsible for about 70 percent of average price differential, while the rest is caused by “artificial” impediments to market integration such as shipping conditions, regional protectionism, and organized crime.
    Keywords: Market integration, law of one price, market frictions, Russian regions.
    JEL: P22 R10 R15
    Date: 2008
  9. By: Anne Ter Wal
    Abstract: A widely held view in cluster research is that clusters are characterized by the presence of networks of local collective learning. However, with a growing number of studies indicating this is not necessarily the case, the question arises under which conditions clusters exhibit dense networks of local collective learning. Taking a longitudinal view at the high-tech cluster of Sophia-Antipolis this paper investigates whether and how networks of collective learning among inventors emerged throughout the growth of the cluster from the late 1970s onwards. On the basis of EPO and USPTO patent data we reconstructed co-inventorship networks for the cluster’s two main industries. Detecting a network of local collective learning only in Information Technology, in which growth has been increasingly based on spin-offs and start-ups, and not in Life Sciences, we suggest that the extent and nature of the local concentration of firms over time strongly affect the evolution of local collective learning networks.
    Keywords: cluster evolution, network evolution, collective learning, Sophia-Antipolis
    Date: 2008–06
  10. By: Jasper Dekkers (VU University Amsterdam); Willemijn van der Straaten (VU University Amsterdam)
    Abstract: In densely-populated countries and in particular in large metropolitan areas, the presence of so much human activity causes all sorts of negative externalities, for example traffic noise disturbance. These externalities call for corrective measures by the government. Economists have developed a number of procedures that provide reasonable estimates on the monetary value of some amenities and externalities. In this paper we develop a spatially-explicit hedonic pricing model for house prices in order to quantify the social cost of aircraft noise disturbance in monetary terms. While focusing on aircraft noise around Amsterdam airport in the urban fringe of the Amsterdam region, a key point in our analysis is that we account for background noise. We do this by taking multiple sources of traffic noise (i.e. road, railway and aircraft noise) into account simultaneously and by setting threshold values for all three sources of noise above which sound is generally experienced as nuisance. Based on our regression results we conclude that a higher noise level means ceteris paribus a lower house price. Air traffic has the largest price impact, followed by railway traffic and road traffic. These model outcomes can subsequently be used to estimate the marginal and total benefits of aircraft noise reduction in the studied area around Amsterdam airport. We find a marginal benefit of 1 dB noise reduction of 1,459 Euro per house, leading to a total benefit of 1 dB noise reduction of 574 million Euros.
    Keywords: aircraft noise; GIS; hedonic price theory; noise reduction; valuation
    JEL: D62 Q53 R41 R48
    Date: 2008–06–24
  11. By: Fleisher, Belton M. (Ohio State University); Li, Haizheng (Georgia Tech); Zhao, Min Qiang (Ohio State University)
    Abstract: We study the dispersion in rates of provincial economic- and TFP growth in China. Our results show that regional growth patterns can be understood as a function of several interrelated factors, which include investment in physical capital, human capital, and infrastructure capital; the infusion of new technology and its regional spread; and market reforms, with a major step forward occurring following Deng Xiaoping’s “South Trip” in 1992. We find that FDI had much larger effect on TFP growth before 1994 than after, and we attribute this to emergence of other channels of technology transfer when marketization accelerated. We find that human capital positively affects output per worker and productivity growth. In particular, in terms of its direct contribution to production, educated labor has a much higher marginal product. Moreover, we estimate a positive, direct effect of human capital on TFP growth. This direct effect is hypothesized to come from domestic innovation activities. The estimated spillover effect of human capital on TFP growth is positive and statistically significant, which is very robust to model specifications and estimation methods. The spillover effect appears to be much stronger before 1994. We conduct cost-benefit analysis and a policy “experiment,” in which we project the impact of increases in human capital and infrastructure capital on regional inequality. We conclude that investing in human capital will be an effective policy to reduce regional gaps in China as well as an efficient means to promote economic growth.
    Keywords: China, TFP growth, economic growth, human capital, infrastructure
    JEL: O15 O18 O47 O53
    Date: 2008–07
  12. By: Steven Poelhekke
    Abstract: The level of urbanization has increased by over 5 percentage points per decade outside the developed world since 1960. Rapid urbanization was accompanied by fast economic growth and job creation in most parts of the world. However, notably Africa (and Latin America after 1980) has had a different experience: while growth in GDP per capita slowed significantly or even reversed, the rate of urbanization continued its fast pace. This paper aims to explain this by introducing an aggregate risk differential between the countryside and the city. Uninsurable expected risk will lead to rural-urban migration as a form of ex-ante insurance if households are liquidity constrained in incomplete markets and cannot overcome adverse shocks. Macroeconomic volatility finds its origins in risk-prone natural resource production including agriculture and has a robust positive effect on urban growth, especially when economic growth is slow. The effect stands up to the transitional view on urbanization of economies shifting from an agricultural to an industrial base.
    Keywords: urbanization, risk, natural resources, volatility, rural-urban migration
    JEL: O1 R11 R23 R51 D81
    Date: 2008
  13. By: Sylvain Barde (Observatoire Français des Conjonctures Économiques)
    Date: 2008
  14. By: Andersson, Henrik (VTI); Ögren, Mikael (VTI)
    Abstract: In order to mitigate negative effects from traffic it has been decided that infrastructure charges in the European Union (EU) should be based on short run marginal costs. The Swedish Parliament has legislated that operators in the Swedish railway infrastructure must pay charges based on short run marginal social costs in order to mitigate externalities in railway infrastructure. Internalization of the social cost of noise is of particular interest, since it is the only environmental problem perceived as more troublesome today than in the early 1990s. <p> <p> Inclusion of a noise component in rail infrastructure charges raises two issues: (i) the monetary evaluation of noise abatement, since noise is a non-market good, and (ii) the estimation of the effect on the noise level that one extra train will create. Regarding the latter, we are interested in the marginal noise, since infrastructure charges based on the short-run marginal cost principle should be based on the effect from the marginal train, not the noise level itself. <p> <p> Using already existing knowledge, this study shows that it is possible to implement a noise component in the rail infrastructure charges. The values that are used today to estimate the social cost of noise exposure in cost benefit analysis can also be used to calculate the marginal cost. We recommend, however, that further research be carried out in order to get more robust estimates based on railway traffic. We also show that the existing noise estimation models can easily be modified to estimate the marginal noise. Noise infrastructure charges give the operators incentives to reduce their noise emissions. We believe that this kind of charge can be used to reduce overall emission levels to an optimal social level, but that it is important for the charge to be based on monetary estimates for rail-traffic and not road-traffic.
    Keywords: Externalities; Marginal Cost; Noise; Railway
    JEL: D62 Q51 R41
    Date: 2008–07–01
  15. By: Anna Lejpras; Andreas Stephan
    Abstract: This paper has two goals. First, it analyzes the extent to which the innovativeness of spin-offs, either born from a research facility or from another company, is influenced by locational conditions. Second, it provides evidence on how important local cooperation links are in comparison to nonlocal ones. Using a sample of approximately 1,500 East German firms from knowledge-intensive sectors, we estimate a structural equation model applying the partial least squares method. We find that proximity to local research institutes and universities is the most influential factor for the cooperation intensity of spin-offs. Furthermore, the higher the cooperation intensity, the greater the innovativeness of a firm. Moreover, the results indicate that it is not the local but the nonlocal cooperation ties that are more conducive to innovativeness of research spin-offs. The findings also highlight that the innovativeness of research spin-offs with solely local links is strongly depends on support from various authorities and institutions.
    Keywords: Research and Company Spin-Offs, Locational Conditions, Cooperation Intensity, Innovativeness, Structural Equation Modeling, Partial Least Squares Approach
    JEL: M13 O18 R3
    Date: 2008
  16. By: Joseph F. Francois; Hugo Rojas-Romagosa
    Abstract: We reassess the empirical relevance of the Kuznets Curve with a new inequality dataset. Using panel data estimations that account for the heterogeneity of inequality observations, we test for both the unconditional and the conditional hypothesis that includes alternative inequality determinants. We find that inequality and income levels are related in a cubic function or "tilde-pattern". This novel finding does not contradict the traditional Kuznets hypothesis, but extends it. Increasing inequality in OECD countries during recent years suggests that inequality rises at high levels of economic development. This "tilde-pattern" is robust to different inequality indicators, estimation techniques and control variables.
    Keywords: D31; O15
    Date: 2008–06
  17. By: Juan S. Mora
    Abstract: This study provides an economic analysis of the post-War institutions of the European tenancy markets. Two representative types of market interventions are analyzed: the introduction of compulsory terms in the tenancy contracts and rent control. First of all this study offers a description and an analysis of the recent history of those institutions. The cases of Spain (as a benchmark), Italy, Finland and UK are analyzed more in depth, as examples of "big reformers" during the 20th century, in order to extract some general conclusions about the evolution of the European institutions in the last decades. Then the effects of those interventions are theoretically explored by adapting a model of tenancy markets (Basu and Emerson, 2000). The results show that the analyzed institutions potentially entail negative effects for the European tenancy markets. Those effects are consistent with the tendences observed during the second half of the 20th century in the different european markets.
    Keywords: Rent control, Institutions, Tenancy contracts, Compulsory terms
    JEL: N4 K12 L51 R31 O47
    Date: 2008–06

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