nep-geo New Economics Papers
on Economic Geography
Issue of 2009‒07‒28
seventeen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Aggregate and Regional Economic Effects of New Railway Infrastructure By Polasek, Wolfgang; Schwarzbauer, Wolfgang; Sellner, Richard
  2. Individual earnings and educational externalities in the European Union By Andrés Rodríguez-Pose; Vassilis Tselios
  3. Methodological Issues in Measuring Innovation Performance of Spatial Units By Thomas Brenner; Tom Broekel
  4. Functional Polycentrism and Urban Network Development in the Greater South East UK: Evidence from Commuting Patterns, 1981-2001 By Goei, B. de; Burger, M.J.; Oort, F.G. van; Kitson, M.
  5. Agglomeration and population ageing in a two region model of exogenous growth By Theresa Grafeneder-Weissteiner; Klaus Prettner
  6. On the spatial diffusion of knowledge by universities located in small and medium sized towns By Rego, Conceição; Caleiro, António
  7. On the Economic Foundation of the Urban Network Paradigm: Spatial Integration, Functional Integration and Economic Complementarities within the Dutch Randstad By Oort, F.G. van; Burger, M.J.; Raspe, O.
  8. GMM estimation of spatial panels By Moscone, Francesco; Tosetti, Elisa
  9. Une adresse à Mayfair ou Vendôme: La rationalité spatiale des Hedge Funds By Yamina Tadjeddine
  10. The Location of Financial Activities: The Impact of New Technologies and the Financial Crisis By Gunther Capelle-Blancard; Yamina Tadjeddine
  11. Counterfactual Distribution Dynamics across European Regions By Davide Fiaschi, Andrea Mario Lavezzi and Angela Parenti
  12. Conceptualizing clusters through the lens of networks: a critical synthesis By Joana Almodovar; Aurora A.C. Teixeira
  13. Geodata By Tobia Lakes
  14. Urban Issues and Solutions in the Context of Sustainable Development - A review of the literature By Jurijs Grizans
  15. Observatorio económico regional By Cámara de Comercio de Bogotá
  16. Power in the Heterogeneous Connections Model: The Emergence of Core-Periphery Networks By Dotan Persitz
  17. Dynamic models of residential segregation: Brief review, analytical resolution and study of the introduction of coordination By Florence Goffette-Nagot; Pablo Jensen; Sébastian Grauwin

  1. By: Polasek, Wolfgang (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria); Schwarzbauer, Wolfgang (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria); Sellner, Richard (Department of Economics and Finance, Institute for Advanced Studies, Vienna, Austria)
    Abstract: Economists expect positive returns to investments in infrastructure. However a project with higher national returns might have less favourable effects on a regional level than the alternative. Therefore new infrastructure should also be assessed on a regional level, but econom(etr)ic evaluation models are scarce, especially in regional science. This paper proposes new approaches to evaluate infrastructure by a dynamic spatial econometric model that allows long-term predictions. We investigate the regional effects for two Austrian railway projects and show that infrastructure returns are positive on an aggregate and at a regional level but spatial variation can be large.
    Keywords: Regional growth convergence, traffic accessibility, infrastructure evaluation, spatial econometrics
    JEL: C31 H43 H54 R11 R12
    Date: 2009–07
  2. By: Andrés Rodríguez-Pose (London School of Economics); Vassilis Tselios (Newcastle University)
    Abstract: This paper examines whether differences in educational externalities affect individual earnings across regions in the EU. Using microeconomic data from the European Community Household Panel, the analysis relies on spatial economic analysis in order to determine to what extent differences in individual earnings are the result of (a) the educational attainment of the individual, (b) the educational attainment of the other members of the household he/she lives in, (c) the educational endowment of the region where the individual lives, or (d) the educational endowment of the neighbouring regions. The results highlight that, in addition to the expected positive returns of personal educational attainment, place-based regional and supra-regional educational externalities generate significant pecuniary benefits for workers. These findings are robust to the inclusion of different individual, household, and regional control variables.
    Keywords: individual earnings; educational attainment; externalities; households; regions; Europe
    Date: 2009–07–23
  3. By: Thomas Brenner (Department of Geography, Philipps University Marburg); Tom Broekel (Department of Human Geography and Planning, Faculty of Geosciences, Utrecht University)
    Abstract: Measuring the innovation performance of regions or nations has been repeatedly done in the literature. What is missing in the literature is a discussion of what innovation performance of a region means. How do regions or nations contribute really to the innovation output of ï¬rms? And how can this contribution be investigated in an empirically sound way? We argue that while the literature offers many suggestions, their theoretical foundation is often weak and the underlying assumptions are rarely discussed. In this paper, we systematize various mechanisms by which spatial units influence ï¬rms' innovation activities. On the basis of this, common innovation performance measures and analyses are discussed and evaluated. It is concluded that there is no general best way of measuring the innovation performance of spatial units. In fact, the most interesting insights can be obtained using a multitude of different approaches at the same time.
    Keywords: Innovation performance, regional innovativeness, innovation generation, regional innovation system, national innovation system
    Date: 2009–01
  4. By: Goei, B. de; Burger, M.J.; Oort, F.G. van; Kitson, M. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: In contemporary literature on changing urban systems, it is often argued that the traditional central place conceptualisation is outdated and should be replaced by a network view that emphasises the increasing criss-crossing pattern of interdependencies between spatial units. This paper tests for urban network development by looking at commuting patterns in the Greater South East UK. The analysis is based on census commuting interaction data for three points in time during the past three decades (1981, 1991, and 2001). Although the empirical results indicate that the Greater South East UK can still not be characterized as a polycentric urban region or integrated urban network, there is some evidence for urban network development at the local, intra-urban, level as well as a decentralization of the system at the regional, inter-urban, level.
    Keywords: United Kingdom;gravity model;commuting;urban networks;Greater South East
    Date: 2009–06–25
  5. By: Theresa Grafeneder-Weissteiner; Klaus Prettner
    Abstract: This article investigates the effects of introducing demography into the New Economic Geography. We generalize the constructed capital approach, which relies on infinite individual planning horizons, by introducing mortality. The resulting overlapping generation framework with heterogeneous individuals allows us to study the effects of ageing on agglomeration processes by analytically identifying the level of trade costs that triggers catastrophic agglomeration. Interestingly, this threshold value is rather sensitive to changes in mortality. In particular, the introduction of a positive mortality rate makes the symmetric equilibrium more stable and therefore counteracts agglomeration tendencies. In sharp contrast to other New Economic Geography approaches, this implies that deeper integration is not necessarily associated with higher interregional inequality.
    Keywords: Agglomeration, New Economic Geography, Trade and Growth, Constructed Capital Model, Population Ageing.
    JEL: C61 F12 F15
    Date: 2009–05
  6. By: Rego, Conceição; Caleiro, António
    Abstract: Many studies, provided by diverse authors and institutions, demonstrate that, at a territorial level, development is directly related to the level of education and R&D. Territories with higher development levels are, generally, those that have a higher level of education and R&D. The relationship between the acquisition of knowledge and institutional education is therefore decisive. In this area, the role of universities is fundamental. The retention of university graduates is one of the main ways that the cities and the regions can adopt to retain those endowed with higher propensity to innovation, enterprise spirit and management capacity. Given that higher education institutions, in general, and universities, in particular, are obviously crucial in the process of knowledge increase, it becomes important to analyse how can these institutions act as ways of spatial diffusion of knowledge given that their graduates may migrate to other regions of the country (or for another country). The alleged increased probability of this migration to occur when the university is located in a small or medium sized town makes that analysis also interesting from the viewpoint of the development role that this kind of cities can perform, not only in the adjacent rural areas, but also across all the urban areas of the territory. The focus of our work consists in this analysis, which complements a theoretical approach with an empirical part based upon the results that can be observed for the influence of one university located in a small/medium sized town (the University of Évora) in the spatial diffusion of knowledge through its graduates.
    Keywords: Human capital; Small towns; Spatial diffusion of knowledge; Universities
    JEL: O15 I23 J24 R11
    Date: 2009–07–13
  7. By: Oort, F.G. van; Burger, M.J.; Raspe, O. (Erasmus Research Institute of Management (ERIM), RSM Erasmus University)
    Abstract: The current debate on polycentric urban development suggests that inter-firm relations are important for the creation and sustainment of urban networks. Conceptually, the degrees of spatial and functional integration and urban complementarities in economic network relations are hypothesised to be important. However, the theoretical economic rationale has not been convincingly tested. In this paper, we use data on inter-firm relations in the Dutch Randstad to test conditions for integration and the existence of economic complementarities within this region. Contrary to the ‘polycentricity hypothesis’, we observe a clear hierarchy in the different types of spatial interdependencies in the Randstad, in which the central place model prevails. Furthermore, we do not find evidence for the functional integration of municipalities in the Randstad. We conclude that at this moment the Randstad does not function as a spatially and functionally integrated region, and that spatial economic policy can better focus on smaller regions within the Randstad when urban economic complementarities and integration are desired. This also calls into question the applicability of the urban network concept in general, as the Dutch Randstad is usually seen as a prime example of an economically successful polycentric urban system.
    Keywords: competitiveness;Randstad;urban networks;decentralization
    Date: 2009–06–29
  8. By: Moscone, Francesco; Tosetti, Elisa
    Abstract: We consider Generalized Method of Moments (GMM) estimation of a regression model with spatially correlated errors. We propose some new moment conditions, and derive the asymptotic distribution of the GMM based on them. The analysis is supported by a small Monte Carlo exercise.
    Keywords: Generalized Method of Moments; spatial econometrics
    JEL: C13 A19
    Date: 2009–04–17
  9. By: Yamina Tadjeddine
    Abstract: With financial globalization, there has been a thorough reorganization of financial activities. A new geography of finance has emerged with, first of all, activities being transferred from the historical heart of big cities to the peripheral areas. Alternative asset management that has emerged in Europe in the past ten years is undoubtedly the paradox example of this suburbanization movement. We notice a high level of spatial concentration in the historical heart of Paris and London. Hedge Funds, particularly independent organizations choose Upper Class area. To provide an understanding of the future dynamics of the location of financial activities we need to redefine the notion of financial market. To provide an understanding of this location of alternative activities we need to redefine the socio-economic characteristics of hedge funds. The specific nature of this activity – highly skilled employees, high value-added knowledge services, lack of public information – justify concentration in order to take advantage of informational externalities and of the presence of specialized companies. An address in Mayfair or at Place Vendôme counts in the world of hedge funds.
    Keywords: Financial Institution, Financial Geography, Informational Externalities
    JEL: R1 G2
    Date: 2009
  10. By: Gunther Capelle-Blancard; Yamina Tadjeddine
    Abstract: The location of financial activities is traditionally characterized by a great deal of inertia. However, the boom in new information and communication technologies, the globalization of economies and the 2007-08 financial crisis have considerably modified the geography of finance. Financial globalization has, first of all, had a heavy impact on the level of spatial concentration / dispersion of activities. The dynamics have not acted in a uniform way – schematically speaking three levels can be distinguished. On the urban scale, financial activities have been spread out (suburbanization), while on the regional scale or the national scale, due to financial globalization, financial activities have been more tightly grouped. Lastly, on the international scale, a movement of dispersion has mainly been observed, along with a specialization of financial centers. The 2007-08 financial crisis might well accentuate this last effect and cause an upheaval in world hierarchy. Actually, the financial centers that are most elastic to the economic situation – London, New York and tax havens – are massively losing jobs, while the stock markets in Shanghai, Hong Kong and Bombay are now upstaging them as major players.
    Keywords: Financial Geography, International Financial Centers, Globalization, Informational Externalities
    JEL: E44 G2 R1
    Date: 2009
  11. By: Davide Fiaschi, Andrea Mario Lavezzi and Angela Parenti
    Abstract: This paper proposes a methodology which combines elements of parametric regression analysis with the nonparametric distribution dynamics approach in order to analyse the role of some variables in the convergence of productivity across European regions over the period 1980-2002. We find that the initial productivity crucially accounts in the convergence process across European regions. Differently, employment growth seems not to play a role, while the Structural and Cohesion Funds seem to play a positive role, even though such effect seems to be very low and statistically significant only at the low bound of the range of initial productivity. The structural change of regional economies plays a positive role, but such e effect is statistically significant only for the least productive regions. The output composition of a region in 1980 a effects the convergence process of productivity growth in several ways. In particular, the share of non market services on output acts like a source of convergence from 1980 to 2002 but in the long-run it plays a negligible role. Finally, the share of finance acts like a force of divergence across European regions, especially for the least productive regions.
    Keywords: European regional policy, structural change, convergence, European regions.
    JEL: C21 E62 R11 O52
    Date: 2009–06–19
  12. By: Joana Almodovar (MIoIR, Manchester Business School, U.K); Aurora A.C. Teixeira (CEF.UP, Faculdade de Economia, Universidade do Porto; INESC Porto)
    Abstract: Clusters, as spatial concentrations of economic activity, constitute an important form of coordination with significant repercussions in the configuration of firm and territorial strategies. They are recognized, both by academics and policymakers, as a territorial pattern of economy yielding critical issues in terms of competitive advantage, innovation, and economic growth. Despite that, a rigorous and clear-cut definition of cluster is still far from being reached. In the present paper, resorting to a critical synthesis of the literature on networks and clusters, we propose a unified, encompassing, and less blurred definition of cluster.
    Keywords: Clusters, Networks, Concepts
    JEL: R10 B52
    Date: 2009–07
  13. By: Tobia Lakes
    Abstract: Empirical data can be characterized by a precise location in space and time. An estimated 80% of all data holds such a spatio-temporal reference and is termed geodata. This paper starts with the question: What is the additional benefit for socio-economic sciences using geodata and the spatial dimension respectively? In the following a multidimensional approach is chosen to outline the Status Quo of geodata and spatial techniques in Germany. It is particularly the continuously growing amount and the variety of available geodata which is stated. Data security is an issue of high importance when using geodata. Furthermore, the present developments in price and user concepts, accessibility, technical standards and institutionalisation are addressed. A number of challenges concerning the field of geodata are identified including the open access to geodata, data security issues and standardization. The main challenge however seems to be the exchange between the rather segregated fields of geoinformation and the information infrastructure. Furthermore, the census 2011 is identified as a major challenge for the acquisition and management of geodata. Geodata and spatial techniques are a rapidly developing field due to technology developments of data and methods as well as due to recently growing public interest. Their additional be efit for socioeconomic research should be exploited in the future.
    Keywords: geodata, geoinformation, Web-GIS, geodata-infrastructure, spatial techniques
    Date: 2009
  14. By: Jurijs Grizans (Department of Environmental and Business Economics, University of Southern Denmark)
    Abstract: Cities are at the heart of Europe. As four of every five European citizens live in urban areas, their quality of life and the quality of their environment depends upon how cities look and how they function. Cities are also places where business is done, investments are made and jobs are created. In Northern Europe, people spend over 90% of their time inside and in the winter months, this can rise to almost 100%. If they are not inside, people are usually travelling from one building to another, using civil infrastructure facilities such as roads, bridges and railways. For most people in the developed world, most of the time, the urban environment is their environment. As cities continue to grow, increasing attention must be given to the quality of their urban environment and to their livability. Improving the urban environment – and city dweller's quality of life – has become a major issue in the global effort to achieve sustainable development. This literature study focuses on the urban environment issues and solutions in the context of sustainable development. The purpose of this paper is to study the causes and processes of the emergence, formation and development of the city and the urban environment. The field of urban environment comprises a vital area for the application of sustainable development principles, not least because of the scope for conflicts between interpretations of development. As an activity that has clear economic, social and environmental dimensions, urban policy holds considerable potential to make a positive contribution to the practical realization of sustainable development. Urban environment in this paper is seen as a complex social, economic and biophysical system produced by the interaction between a man-made fabric and the physical characteristics of the landscapes.
    Date: 2009–06
  15. By: Cámara de Comercio de Bogotá
    Abstract: Publicación trimestral que ofrece información de coyuntura con base en un conjunto de las variables e indicadores líderes más importantes de la economía bogotana, para conocer y analizar los principales cambios en las actividades productivas de la ciudad, la inversión empresarial, el empleo, comercio exterior, y recaudo del impuesto de industria y comercio.
    Date: 2009–07–20
  16. By: Dotan Persitz (Tel Aviv University)
    Abstract: The heterogeneous connections model is a generalization of the homogeneous connections model of Jackson and Wolinsky (1996) in which the intrinsic value of each connection is set by a discrete, positive and symmetric function that depends solely on the types of the two end agents. Core periphery networks are defined as networks in which the agents' set can be partitioned into two subsets, one in which the members are completely connected among themselves and the other where there are no internal links. A two-type society is defined as "power based" if both types of agents prefer to connect to one of the types over the other, controlling for path length. An exhaustive analysis shows that core periphery networks, in which the "preferred" types are in the core and the "rejected" types are in the periphery, are crucial in the "power based" society. In particular, if the linking costs are not too low and not too high, at least one such network is pairwise stable. Moreover, in many cases these networks are the unique pairwise stable networks and in all cases they are the unique strongly efficient networks. The set of efficient networks often differs from the set of pairwise stable networks, hence a discussion on this issue is developed. These results suggest heterogeneity accompanied by "power based" linking preferences as a natural explanation for many core-periphery structures observed in real life social networks.
    Keywords: Network Formation, Heterogeneity, Pairwise Stability
    JEL: D85 L14
    Date: 2009–05
  17. By: Florence Goffette-Nagot (GATE - Groupe d'analyse et de théorie économique - CNRS : UMR5824 - Université Lumière - Lyon II - Ecole Normale Supérieure Lettres et Sciences Humaines); Pablo Jensen (Phys-ENS - Laboratoire de Physique de l'ENS Lyon - CNRS : UMR5672 - Ecole Normale Supérieure de Lyon - ENS Lyon, LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat, IXXI - Institut rhône-alpin des systèmes complexes - INRIA - Ecole Normale Supérieure de Lyon - ENS Lyon - Institut National des Sciences Appliquées de Lyon - Université Claude Bernard - Lyon I - Ecole Normale Supérieure Lettres et Sciences Humaines - Université Joseph Fourier - Grenoble I - CNRS - IRD); Sébastian Grauwin (Phys-ENS - Laboratoire de Physique de l'ENS Lyon - CNRS : UMR5672 - Ecole Normale Supérieure de Lyon - ENS Lyon, IXXI - Institut rhône-alpin des systèmes complexes - INRIA - Ecole Normale Supérieure de Lyon - ENS Lyon - Institut National des Sciences Appliquées de Lyon - Université Claude Bernard - Lyon I - Ecole Normale Supérieure Lettres et Sciences Humaines - Université Joseph Fourier - Grenoble I - CNRS - IRD)
    Abstract: In his 1971's Dynamic Models of Segregation paper, the economist Thomas C. Schelling showed that a small preference for one's neighbors to be of the same color could lead to total segregation, even if total segregation does not correspond to individual preferences and to a residential configuration maximizing the collective utility. The present work is aimed at deepening the understanding of the properties of dynamic models of segregation based on Schelling's hypotheses. Its main contributions are (i) to offer a comprehensive and up-to-date review of this family of models ; (ii) to provide an analytical solution to the most general form of this model under rather general assumptions ; to the best of our knowledge, such a solution did not exist so far ; (iii) to analyse the effect of two devices aimed at decreasing segregation in such a model. Chapter one summarizes the ingredients of Schelling's models. We show how the choices of the agent's utility function, of the neighborhood description and of the dynamical rule can impact the outcome of a model. Based on the observation of simulations' results, we find that the neighborhood description does not have a qualitative impact. As regards the dynamical rules, we show that the Logit Behavioral rule introduced in this literature by Young (1998) ; Zhang (2004b) presents several advantages relatively to the Best Response rule. Chapter two presents a general analytical solution to the model. To that aim, Schelling's model is recasted within the framework of evolutionary game theory, as previously done by Young (1998) ; Zhang (2004b). This allows to define sufficient assumptions regarding agents' utility functions that permit predicting the final state of the system starting from any configuration. This analytical resolution is then used to consider the outcomes of Schelling's utility function and of other utility functions previously used in this context. Chapter three examines the effects of introducing coordination in the moving decisions. This coordination is achieved through two different ways. We first impose different levels of taxes proportional to the externality generated by each move of the agents. It is shown that even a low level of tax is sufficient under certain circumstances to significantly reduce segregation. We then investigate the effect of the introduction of a local coordination by vote of co-proprietors, who are defined as the closest neighbors of each agent. It is shown that even a small amount of coordination can break segregation.
    Keywords: segregation; Schelling; potential function; coordination; tax; vote
    Date: 2009

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