nep-geo New Economics Papers
on Economic Geography
Issue of 2009‒11‒14
thirteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. A model of urban demography By Hiroshi Aiura; Yasuhiro Sato
  2. Regional Factors and Innovativeness – An Empirical Analysis of Four German Industries By Tom Broekel; Thomas Brenner
  3. How do regions diversify over time? Industry relatedness and the development of new growth paths in regions By Frank Neffke; Martin Henning; Martin Ron Boschma
  4. "Reverse" Intergovernmental Transfers Between Regions with Local Public Goods By John M. Hartwick
  5. Does Accounting for Spatial Effects Help Forecasting the Growth of Chinese Provinces? By Eric Girardin; Konstantin A. Kholodilin
  6. Reflexões sobre a Avaliação do Quadro Fiscal Regional: Implicações para o Algarve By Martins, Alexandre; Pinto, Hugo
  7. Centralized Wage Determination and Regional Unemployment Differences: The Case of Italy By Vincenzo Caponi
  8. Is Agglomeration Desirable ? By Fabien CANDAU
  9. Inter-Regional redistribution through infrastructure investment: tactical or programmatic? By Albert Solé-Ollé
  10. Optimal country's policy towards multinationals when local regions can choose between firm-specific and non-firm-specific policies By Osiris J. Parcero
  11. Regions, Nations and Beyond In Marshallian External Economies By Marco Bellandi
  12. Unionized Wage Setting and the Location of Firms By Elodie Fabre
  13. Rethinking regional competitiveness: Catalonia's international and interregional trade, 1995-2006 By Ghemawat, Pankaj; Llano, Carlos; Requena, Francisco

  1. By: Hiroshi Aiura (Faculty of Economics, Oita University (Japan)); Yasuhiro Sato (Graduate School of Economics, Osaka University (Japan))
    Abstract: This paper develops an overlapping generations model that involves the endogenous determination of fertility and an explicit city structure in order to analyze fully the social and natural changes in city populations. We provide conditions under which the model exhibits the spatial features of demography observed in large Japanese cities. We also show by calibration that the low cost of obtaining human capital in Tokyo metropolitan area played a significant role in establishing its urban primacy in Japan.
    Keywords: urbanization, demography, migration, monocentric city
    JEL: J11 R11 R14 R23
    Date: 2009–06
  2. By: Tom Broekel; Thomas Brenner
    Abstract: A growing body of work emphasizes the importance of regional factors for regional innovativeness. In this paper, about seventy variables approximating the social-economic characteristics of regions are aggregated to twelve regional factors. In four industry-specific set-ups their influence on firms’ innovativeness is tested. The study confirms that inter-industrial differences exist in the importance of these factors. In the empirical analyses a log-linear model is compared with a linear approach. While both are theoretically problematic it is shown that the log-linear model performs better in the empirical assessment.
    Keywords: regional innovation performance, regional innovativeness, knowledge production function, industry comparison, German regions
    JEL: O18 R11 R12
    Date: 2009–10
  3. By: Frank Neffke; Martin Henning; Martin Ron Boschma
    Abstract: The question of how new regional growth paths emerge has been raised by many leading economic geographers. From an evolutionary perspective, there are strong reasons to believe that regions are most likely to branch into industries that are technologically related to the preexisting industries in the region. Employing a new indicator of technological relatedness between manufacturing industries, we analyze the economic evolution of 70 Swedish regions during the period 1969-2002 using detailed plant-level data. Our analyses show that the long-term evolution of the economic landscape in Sweden is subject to strong path dependencies. Industries that were technologically related to pre-existing industries in a region had a higher probability to enter the region, as compared to unrelated industries. And unrelated industries had a higher probability to exit the region. Moreover, we found that industrial profiles of Swedish regions showed a high degree of technological coherence. Despite substantial structural change, this coherence was very persistent over time. Our methodology also proved useful when focusing on the economic evolution of one particular region. Our analysis showed that the Linköping region increased its industrial coherence during 30 years, due to the entry of industries that were closely related to its regional portfolio on the one hand, and the exit of industries that were technologically peripheral to its regional portfolio on the other hand. In sum, we find systematic evidence that the rise and fall of industries is strongly conditioned by industrial relatedness at the regional level.
    Keywords: technological relatedness, related variety, regional branching, regional diversification
    JEL: R11 N94 O14
    Date: 2009–10
  4. By: John M. Hartwick (Queen`s University)
    Abstract: We report on the nature of a utility optimizing transfer from one regional government to another when local public goods are present. Computer examples reveal that small differences in regional endowments result in large differences in equilibrium outcomes for two regions, under optimal transfers. The scale effect (lower tax charge per person for the same public good in more populous regions) leads to the small region generally providing transfers to the larger region.
    Keywords: intergovernmental transfers, local public goods, inter-regional resource allocation
    JEL: H41 H77
    Date: 2009–11
  5. By: Eric Girardin; Konstantin A. Kholodilin
    Abstract: In this paper, we make multi-step forecasts of the annual growth rates of the real GRP for each of the 31 Chinese provinces simultaneously. Beside the usual panel data models, we use panel models that explicitly account for spatial dependence between the GRP growth rates. In addition, the possibility of spatial effects being different for different groups of provinces (Interior and Coast) is allowed. We find that both pooling and accounting for spatial effects helps substantially improve the forecast performance compared to the benchmark models estimated for each of the provinces separately. It was also shown that effect of accounting for spatial dependence is even more pronounced at longer forecasting horizons (the forecast accuracy gain as measured by the root mean squared forecast error is about 8% at 1-year horizon and exceeds 25% at 13- and 14-year horizon).
    Keywords: Chinese provinces, forecasting, dynamic panel model, spatial autocorrelation, group-specific spatial dependence
    JEL: C21 C23 C53
    Date: 2009
  6. By: Martins, Alexandre; Pinto, Hugo
    Abstract: The article discusses the central conclusions of the study "Evaluation of Regional Fiscal Framework: Business Location and Local Finance" (Barreira, 2008). A reflection on some of the core principles of local finance, equity and benefit, shows that there are inconsistencies in the case of the Algarve. The region has generated tax revenue above the national average in which the property taxes have a disproportionate weight. This situation underlines the dependency of municipalities in the Algarve to the real estate activities around tourism. The number of companies registered does not adequately represent the level of economic activities carried out in the region. Many firms have the headquarters situated in other regions and fracture the desired balance between the recipient and taxpayer. The paper shows that a correction of this problem could increase the weight of the Algarve's economy in the national total and significantly increase the regional tax revenues.
    Keywords: Local Finance; Algarve; Benefit; Tax Revenue
    JEL: R11 H3
    Date: 2009–11–15
  7. By: Vincenzo Caponi (Department of Economics, Ryerson University, Toronto, Canada)
    Abstract: This paper presents a general equilibrium model of regional unemployment dispersion based on the Mortensen and Pissarides (1999) framework. The model economy presented here has centralized institutions, such as a single central government and central unions, but regional labor markets with differences productivity. The model assumes that unions dislike wage dispersion across regions and the government dislikes population imbalance across the regions. The set up of the model is used to interpret the economic features of the Italian economy between the mid seventies and the end of the past century. By means of calibration using Italian data collected in the year 2000 the paper shows that the model economy explains the important regional dualism between the North and the South of Italy in terms of unemployment. Moreover, the model indicates that the interaction between unions and the government also generates low wage rates in the high productivity regions accompanied by low unemployment rates, even when the Northern worker is the median worker that determines the unions policies.
    Keywords: Italy, Regional Dualism, Mezzogiorno.
    JEL: E24 J51 J60
    Date: 2009–11
  8. By: Fabien CANDAU
    Abstract: Is Agglomeration Desirable ?
    Date: 2009–10
  9. By: Albert Solé-Ollé (Universitat de Barcelona)
    Abstract: In this paper we analyze the effects of both tactical and programmatic politics on the inter-regional allocation of infrastructure investment. We use a panel of data for the Spanish electoral districts during the period 1964-2004 to estimate an equation where investment depends both on economic and political variables. The results show that tactical politics do matter since, after controlling for economic traits, the districts with more ‘Political power’ still receive more investment. These districts are those where the incumbents’ Vote margin of victory/ defeat in the past election is low, where the Marginal seat price is low, where there is Partisan alignment between the executives at the central and regional layers of government, and where there are Pivotal regional parties which are influential in the formation of the central executive. However, the results also show that programmatic politics matter, since inter-regional redistribution (measured as the elasticity of investment to per capita income) is shown to increase with the arrival of the Democracy and EU Funds, with Left governments, and to decrease the higher is the correlation between a measure of ‘Political power’ and per capita income.
    Keywords: infrastructures, political economy, redistribution
    JEL: R1 O4
    Date: 2009
  10. By: Osiris J. Parcero (United Arab Emirates University)
    Abstract: This paper looks at a county’s central government optimal policy in a setting where its two identical local regions compete for the attraction of footloose multinationals to their sites, and where the considered multinationals strictly prefer this country to the rest of the world. For the sake of reality the model allows the local regions to choose between the implementation of firm-specific and non-firm-specific policies. We find that, even though the two local regions are identical, some degree of regional tax competition is good for country’s welfare. Moreover, we show that the implementation of the regional firmspecific policies weakly welfare dominates the implementation of the regional non-firmspecific ones. Hence the not infrequent calls for the central government to ban the former type of policies go against the advice of this paper.
    Keywords: FDI, regional, tax competition, concurrent taxation, bargaining, tax posting, footloose multinational, optimal policy, country’s welfare
    JEL: F23 H25 H71
    Date: 2009
  11. By: Marco Bellandi (Università degli Studi di Firenze, Dipartimento di Scienze Economiche)
    Abstract: The clearest expressions of Marshallian external economies are found in the life and working of compact industrial districts. However Alfred Marshall did not limit their application to such types of places, nor to their territorial scale. This paper illustrates some important extensions found in Marshall’s works, particularly in Industry and Trade, concerning firstly the advantages accruing to industrial districts within larger industrial regions and national contexts. The concept of a national capital including technical, human and social resources, or of a “Marshallian capital” as Silvio Goglio proposed to call it, plays a pivotal role in suggesting both the common nature of the different expressions and scales of Marshallian external economies, and the possible interrelation between them. Processes and conditions associated by Marshall to either non place-bound or distant trans-local contexts of external economies are considered too. An implicit and open multi-territorial framework emerges. Some of its different meanings are discussed in the conclusions of this paper with the help of interpreta-tions of industrial districts, regions, nations, and global networks developed after Mar-shall, starting from those of Austin Robinson and Giacomo Becattini.
    Keywords: External economies; Alfred Marshall; industrial districts, regions and nations
    JEL: D24 R12 B10
    Date: 2009
  12. By: Elodie Fabre
    Abstract: One of the most recent transformations of the structure of a state came in the aftermath of Belgian federalisation. The United Kingdom underwent a process of empowerment of regional entities after Labour’s landslide victory of 1997. British devolution, however, took a very different form, one that is both less extensive and more asymmetrical than the form of federalism chosen in Belgium. This paper describes the institutional set-up of devolution in Scotland and Wales, reports the results of the devolved elections and discusses the political debates on the future of devolution. It shows that devolution, which Labour envisioned as a way to settle the debates on self-rule in eth Celtic fringes, is instead a process.
    Date: 2009
  13. By: Ghemawat, Pankaj (IESE Business School); Llano, Carlos (Universidad Autonoma de Madrid); Requena, Francisco (Universidad de Valencia)
    Abstract: Studies of competitiveness tend to focus on a local economy's global interactions, particularly its international trade. But for countries that are at least mid-sized (such as Spain), interregional trade tends to be as large as or significantly larger than international trade. The case of Catalonia illustrates the importance of interregional flows in truly analyzing and devising strategies for a region's external competitiveness. Accounting for interregional trade changes and performing analyses of Catalonia's overall merchandise trade balance, which sectors generate external surpluses as opposed to deficits, and who Catalonia's key trading partners are, and the use of a gravity-model approach to estimate external border effects at the regional level for Catalonia and the rest of Spain, reveal significant variations by sector and by trading partner, generally higher external border effects for exports than imports, and declines in border effects over time - but with a discernible flattening in recent years.
    Keywords: Border Effect; Gravity Model; Interregional trade; transport flows;
    JEL: F14 F17 F21 L14
    Date: 2009–07–11

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