nep-geo New Economics Papers
on Economic Geography
Issue of 2010‒11‒13
twenty-two papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Spatial Dependencies in German Matching Functions By Franziska Schulze
  2. Efficiency Cluster in Organic Grassland Farming in Germany â Methodological and Practical Implications By Lakner, Sebastian
  3. Sources of the rural-urban productivity disparities and the policy implications on rural development in Korea By Kim, Hanho; Gopinath, Manisamy
  4. Decomposing regional efficiency By Schaffer, Axel; Simar, Léopold; Rauland, Jan
  5. The role of the Common Agricultural Policy in the spatial location of agricultural activities By Viaggi, D.; Bartolini, F.; Raggi, M.; Sardonini, L.
  6. Quality Agro-Food Districts, typical Products, local Governance By Montresor, Elisa; Pecci, Francesco; Pontarollo, Nicola
  7. Regional identity as a trigger for agricultural regional development By Mettepenningen, Evy; Mazodier, Marion; Vandermeulen, Valerie; Van Huylenbroeck, Guido
  8. Economic Linkages Across Space.. By Overman, Henry G.; Rice, Patricia; Venables, Anthony J.
  9. A multi-regional general equilibrium model to assess policy effects at regional level By Lovo, S.; Magnani, R.; Perali, F.
  10. Spatial Relocation with Heterogeneous Firms and Heterogeneous Sectors By Forslid, Rikard; Okubo, Toshihiro
  11. Spatial Structure of the Food Industry in Germany By Gouzhary, Izhar; Margarian, Anne
  12. The Impact of Trade Liberalization on Regional Growth and Poverty in Tunisia By Rim Chatti; Faycel Zidi
  13. Regional input-output analysis: application on rural regions in Germany, the Czech Republic and Greece By Semerak, Vilem; Zigic, Kresimir; Loizou, Efstratios; Golemanova-Kuhar, Antoaneta
  14. Questioning polycentric development and its effects: issues of definition and measurement for the Italian NUTS 2 Regions By Veneri, Paolo; Burgalassi, David
  15. Lessons of best practice in rural development: is there a pan-European consensus? By Hubbard, Carmen; Gorton, Matthew
  16. Identification of spatial agglomerations in the German food processing industry By Hoffmann, J.
  17. Fisheries policies impacts consideration towards the development of rural coastal areas By Loizou, Efstratios; Chatzitheodoridis, Fotsis; Mattas, Konstadinos; Polymeros, Konstadinos
  18. The relationship between spatial price transmission and geographical distance: the case of Brazil By HernandezâVillafuerte, Karla
  19. Short supply chain: analysis of the competitiveness of organic horticultural farmers at Italian regional level By Bertazzoli, Aldo; Ruggeri, Arianna; Samoggia, Antonella
  20. Mapping Serbia: more targeted rural areas for better policies By Monasterolo, Irene; Coppola, Nicola
  21. Halting the rural race to the bottom: an evolutionary model of rural development to analyse neo-endogenous policies in the EU By Petrick, Martin
  22. A Nonlinear Panel Model of Cross-sectional Dependence By George Kapetanios; James Mitchell; Yongcheol Shin

  1. By: Franziska Schulze
    Abstract: This paper proposes a spatial panel model for German matching functions to avoid possibly biased and inefficient estimates due to spatial dependence. We provide empirical evidence for the presence of spatial dependencies in matching data. Based on an official data set containing monthly information for 176 local employment offices, we show that neglecting spatial dependencies in the data results in overestimated coefficients. For the incorporation of spatial information into our model, we use data on commuting relations between local employment offices. Furthermore, our results suggest that a dynamic modeling is more appropriate for matching functions.
    Keywords: Empirical Matching, Geographic Labor Mobility, Spatial Dependence, Regional Unemployment
    JEL: C21 C23 J64 J63 R12
    Date: 2010–11
  2. By: Lakner, Sebastian
    Abstract: This paper investigates regional cluster of organic grassland farms with respect to technical efficiency. The data-base consists of organic grassland and mixed farms in Germany from 1994/95 to 2005/06. In a first step five inputs and one output are analyzed by means of a stochastic frontier production function, allowing for heteroscedasticity and technical effects. The selection of determinants of technical efficiency is based on location theory. Since organic farming has regional centers, technical efficiency (TE) of organic farms is found to be affected by regional variables (such as agglomeration effects). In a second step we identified regional clusters of organic farms and analyzed the technical efficiency of the regional clusters. The results show that organic farms in distinct regions show different efficiency performance - suggesting that there are agglomeration and urbanization effects in the organic market.
    Keywords: Efficiency, Agglomeration Effects, Organic Farming., Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,
    Date: 2010–10–27
  3. By: Kim, Hanho; Gopinath, Manisamy
    Abstract: This paper investigates the effect of trade cost changes on the spatial productivity distribution in Korea. Data on gross value added and primary factors for 163 spatial units during 2000-2005 are assembled to estimate local TFP using a value-added function. In our application, we control for agglomeration economies so as to identify factors shifting the regional raw-productivity distribution over time. The TFP estimation results show that the Korean regional economy exhibits constant returns to scale, along with significant localization economies. We find that and trade costs reduction and infrastructure improvement significantly shift to the right all percentile values of the regional productivity distribution, while amenity does not affect the movement of the distribution. An important policy implication of this study is that a country pursuing foreign market opportunities to boost economic growth and to raise incomes, like Korea, should also consider the consequent spatial realignment of resources. Also, productivity enhancements along with transfers to alleviate adjustments to trade-cost changes cannot be space blind.
    Keywords: agglomeration economies, spatial productivity distribution, trade cost, Community/Rural/Urban Development, F1, R3,
    Date: 2010–08
  4. By: Schaffer, Axel; Simar, Léopold; Rauland, Jan
    Abstract: Applying an outlier robust extension of the data envelopment analysis (DEA) followed by a geoadditive regression analysis, this study identifies and decomposes the efficiency of 439 German regions in using infrastructure and human capital. The findings show that the regions' efficiency is driven by a spatial and a non-spatial, arguably structural factor. As a consequence, concrete regional funding schemes, shaped by best practice results, might not be appropriate for all regions. Instead, a more differentiated funding scheme that accounts for both spatial and structural factors seems more promising. --
    Keywords: outlier robust DEA,regional efficiency,geoadditive regression
    JEL: C14 R12 R15
    Date: 2010
  5. By: Viaggi, D.; Bartolini, F.; Raggi, M.; Sardonini, L.
    Abstract: The objective of this paper is to analyse and quantify the spatial dimension of the CAP effects in an area of Northern Italy. The analysis is based on survey information about stated intentions of farm-household in two CAP scenarios, treated through statistical analysis intended to identify the potential determinants of different farm reactions, focusing on explicit spatial variables (altitude, LFA, agrarian regions) among explanatory variables. Altogether, the study shows the relevance of explicitly addressing the spatial effects of policies and also the differentiated spatial effect of policy on different dimensions of agricultural activities. However, the work also highlights the limitation of the location-based representation of the spatial dimension compared with both non-spatial variables and more functional variables underlying the spatial dimension.
    Keywords: Common Agricultural Policy, Spatial effects, Emilia-Romagna., Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,
    Date: 2010–10–27
  6. By: Montresor, Elisa; Pecci, Francesco; Pontarollo, Nicola
    Abstract: The paper investigates the coexistence of different organisational patterns of local productions and evaluate which local governance may be more appropriate in a globalized agro-food scenery. We analyze, through the spatial analysis tools and the use of suitable indicators at municipality level, some PDO/PGI products in two Italian regions, Veneto and Emilia Romagna, which adopted very different strategies. The regional institutions in Veneto preferred to individualize "from the top" the quality agro-food districts at provincial level. In Emilia Romagna, instead, the policy makers decided to recognize the initiatives from the "bottom", born through various types of agreements. The spatial analysis allows to select the most appropriate indicators in order to identify homogeneous local systems, reducing the complexity of the issues to be addressed in the definition of their geographic boundaries. The results of our analysis allow to evaluate these approaches, highlighting the strengths and weaknesses of two different models of the agro-food districts. The purpose of our comparison is not to suggest the best model to be transferred to other regions, but rather to assess whether the regional strategies are appropriate to the specificities of their territories.
    Keywords: Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,
    Date: 2010–10–27
  7. By: Mettepenningen, Evy; Mazodier, Marion; Vandermeulen, Valerie; Van Huylenbroeck, Guido
    Abstract: Regional development is receiving a lot of attention nowadays in European policy. A possible stepping stone to achieve regional development is regional identity. This paper investigates whether regional identity can contribute to the specific case of agricultural regional development. One possible way for agriculture to profit from regional identity is by diversifying farm activities. The paper shows that regional identity can stimulate farmers to take up diversification and can also stimulate inhabitants of the region to consume products directly from the farmer.
    Keywords: Regional identity, regional development, multifunctional agriculture, diversification, farm income, Community/Rural/Urban Development,
    Date: 2010–08
  8. By: Overman, Henry G.; Rice, Patricia; Venables, Anthony J.
    Abstract: We develop a diagrammatic framework that can be used to study the economic linkagesbetween regions or cities. Hitherto, such linkages have not been the primary focus of eitherthe theoretical or empirical literatures. We show that our general framework can be used tointerpret both the New Economic Geography and Urban Systems literatures to help usunderstand spatial economic linkages. We then extend the theoretical framework to allow usto consider a number of additional issues which may be particularly important for analyzingthe impact of policy. Such policy analysis will also require empirical work to identify thenature of key relationships. In a final section, we consider what the existing empiricalliterature can tell us about these relationships.
    JEL: R58 R00
    Date: 2010
  9. By: Lovo, S.; Magnani, R.; Perali, F.
    Abstract: In this paper we develop a multi-regional general equilibrium model (MEG-R) to compare the social desirability of the CAP reform in the three Italian macro-regions: North, Center and South. The model employs a mixed complementary framework that allows for the decision of not producing a particular crop in one or more regions and presents an attempt to model interregional trade flows. The model incorporates the links between production and consumption that characterize farm householdâs behavior and allows for heterogeneous household responses across regions. Results show a general tendency to reallocations from cereal crops to forage that appear more severe in the South. In this region, the reduction in crops cannot be translated into an effective expansion of fodder and could lead to the âdeactivationâ of the land.
    Keywords: Multi regional general equilibrium model, farm households, interregional trade., Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,
    Date: 2010–10–27
  10. By: Forslid, Rikard (Dept. of Economics, Stockholm University); Okubo, Toshihiro (Kobe University)
    Abstract: The present paper focuses on sorting as a mechanism behind the well-established fact that there is a central region productivity premium. Using a model of heterogeneous firms that can move between regions, Baldwin and Okubo (2006) show how more productive firms sort themselves to the large core region. We extend this model by introducing different capital intensities among firms and sectors. In accordance with empirical evidence, more productive firms are assumed to be more capital intensive. As a result, our model can produce sorting to the large regions from both ends of the productivity distribution. Firms with high capital intensity and high productivity as well as firms with very low productivity and low capital intensity tend to relocate to the core. We use region and sector productivity distributions from Japanese micro data to test the predictions of the model. Several sectors show patterns consistent with two-sided sorting, and roughly an equal number of sectors seem to primarily be driven by sorting and selection. We also find supportive evidence for our model prediction that two-sided sorting occurs in sectors with a high capital intensity.
    Keywords: Agglomeration; firm heterogeneity; productivity; spatial sorting
    JEL: F12 F15 F21 R12
    Date: 2010–11–04
  11. By: Gouzhary, Izhar; Margarian, Anne
    Abstract: Food production and food processing, nowadays, are economic activities in which local and global strategies are interconnected. Moreover the importance of the food industry in total manufacturing is growing; local production systems are competing on the global market by producing specific quality goods or products. Many local regions have attempted to improve their economic situation by encouraging the growth of manufacturing activities. The basic objective of this study to determine and analyze the patterns of food manufacturing and the spatial changes between 2007 and 2001 in the 439 regions in Germany.
    Keywords: Spatial analysis, Food, Germany., Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,
    Date: 2010–10–27
  12. By: Rim Chatti (Ministère des Finances du Québec, Canada); Faycel Zidi
    Abstract: The paper focuses on how trade reform affected regional growth during the stage of economic transformation. The main question addressed is whether progressive trade liberalization has an impact on regional economic growth and poverty and reduces regional disparities amongst the Tunisian regions. The paper explores the factors behind such transformations. In order to achieve this goal the paper is divided into 3 sections. The first section briefly describes the data and model underlying the study. The second section presents the simulation results on regional growth and poverty. Simulation results reveal that all the regions experience better economic performance with freer-trade, but poverty outcomes differ from one region to another. The concluding remarks are presented in the last section.
    Date: 2010–11
  13. By: Semerak, Vilem; Zigic, Kresimir; Loizou, Efstratios; Golemanova-Kuhar, Antoaneta
    Abstract: While agriculture definitely is a traditional and important sector of national economy, it is also a sector the importance of which is often underestimated. More correct and realistic description of its economic role should be based on input-output methods. Unfortunately regional level input-output tables are only rarely available. We therefore apply modified GRIT regionalization methodology on a remote rural NUTS 2 level region in three different countries (Germany, Greece, and the Czech Republic respectively) and demonstrate that this approach makes regional-level input-output analysis a viable tool in realistic evaluation of contribution of the agri-food production chain for local economies. We provide empirical results that enable us to describe the importance of regional role of agriculture (both individually and in combination with down-stream sectors) more realistically. Our research based on application of regional level input-output methods clearly demonstrates that the importance of agri-food production chain especially for remote regions remains very high â even for heavily industrialized countries - and its demise would lead to dramatic structural shocks.
    Keywords: input-output analysis, regionalization, intersectoral linkages, GRIT, Community/Rural/Urban Development, C67, Q11,
    Date: 2010–08
  14. By: Veneri, Paolo; Burgalassi, David
    Abstract: Polycentric development is a widely-used term both in academic research and in the normative agenda. However, its theoretical foundations and economic implications are still unknown and the concept of polycentricity still does not have a shared definition, or a shared measurement method. The aim of this paper is twofold. Firstly polycentricity is defined and measured at a NUTS 2 regional level, by comparing functional and morphological methods. Secondly, in the light of the role assigned to polycentric development in terms of policy, the paper investigates the relationships between the degree of regional polycentricity and the key economic variables of performance – namely competitiveness, social cohesion and environmental sustainability. The main finding was that functional and morphological methods led to similar results. In addition, a correlation was found between polycentricity and a more unequal income distribution and a higher level of productivity, especially when polycentricity was measured in functional terms. No stable correlations were found between polycentricity and measures of environmental sustainability, such as land consumption and greenhouse emissions.
    Keywords: Polycentric development; Italian regions; Rank size distribution; Ordinary polycentricity.
    JEL: R12 R11 R14
    Date: 2010–10
  15. By: Hubbard, Carmen; Gorton, Matthew
    Abstract: This paper analyses expert attitudes to managing rural development in both established (EU15) and New Member States (NMS). It draws on case studies of five regions in the EU15 that have undergone, at least in some respects, successful rural development post-accession. Lessons of best practice were identified from interviews and supporting documentation, and verified / refined using a policy Delphi exercise. The results highlight the importance of creating appropriate national and regional structures to implement EU funded projects, capacity building, decentralisation, social capital and networking, and the role of âinstitutional memoryâ.
    Keywords: rural development, EU, Policy Delphi, Community/Rural/Urban Development, O18, P25, R58,
    Date: 2010–08
  16. By: Hoffmann, J.
    Abstract: This paper deals with the identification of spatial agglomerations in the German food processing industry, using the Cluster Index developed by Sternberg and Litzenberger. Previous studies have analyzed this industry as one of several others utilizing highly aggregated data. The results of these studies mostly indicate a lack of agglomerations for the German food industry. Given the very heterogeneous character of this branch, an analysis at such an aggregated level might provide flawed results. Therefore, the following study analyzes German industry sectors for the first time at a highly disaggregated spatial (429 districts) and sectoral (23 subsectors of food processing industry) level. Results show that spatial agglomerations exist for several subsectors. This holds especially for processing and preserving of meat, fish, fruit, wine and milk processing as well as for breweries and the processing of mineral water.
    Keywords: Regional Cluster, Spatial Economics, German Food Processing Industry, Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,
    Date: 2010–10–27
  17. By: Loizou, Efstratios; Chatzitheodoridis, Fotsis; Mattas, Konstadinos; Polymeros, Konstadinos
    Abstract: The current study aims to examine the effectiveness of fisheries policies and specifically of the Greek Operational Programme for Fisheries, 2007-13. In specific, aims to examine and assess possible impacts generated, in the regional economy of Voreio and Notio Aigaio from its four axis, with particularity to the forth one. For this a regional Input-Output model was built in order to capture direct and indirect impacts in terms of output, employment and income. Results indicate that the dynamics of the fisheries sector in the regional economy are very weak and along with the continuous shrinking of the sector, leads to the necessity of supporting alternative vocational activities for the development of coastal rural areas. Though, results indicate that the funds attributed to such policies are very small, resulting in very weak generated impacts in the regional economy. And thus it is not expected current policies to seriously affect the development of such regions through the promotion of alternative to fishing activities.
    Keywords: rural coastal areas, operational fisheries programme, impact analysis, regional analysis, Community/Rural/Urban Development, R11, R15, R58, Q22,
    Date: 2010–08
  18. By: HernandezâVillafuerte, Karla
    Abstract: The objectives of this research are to investigate the influence of geographical distance on the cointegration relationship in order to increase knowledge on the issue, and to indentify its role in Brazilian agricultural markets. With this intention, the cointegration framework is applied allowing for the presence of multiple structural breaks in the long run equation. The inclusion of breaks is in response to the multiple changes of the agricultural system during the period of investigation. The spatial integration is calculated between each market pair. The cointegration coefficient and geographical distance relationship is calculated by means of an OLS regression, taking into account the quality of roads and the proximity to a border or port. The effect of the distance depends on the product. In the case of rice markets, there is a weak, negative and significant relation. Concerning soybeans, the relationship is not significant. After allowing for the inclusion of breaks in the long run, the results remain unvaried. In addition, the region and a better access to export points are the main variables in the definition of the prices.
    Keywords: cointegration, price transmission, geographical distance, structural breaks, rice, soybeans, Brazil., Agribusiness, Agricultural and Food Policy, Community/Rural/Urban Development, Food Consumption/Nutrition/Food Safety, Labor and Human Capital,
    Date: 2010–10–27
  19. By: Bertazzoli, Aldo; Ruggeri, Arianna; Samoggia, Antonella
    Abstract: The paper focuses on the competitiveness of organic horticultural farms implementing short food supply chain (SFSC), by analysing the organisational structures adopted by farmers and their economic performance. The collection of data based on face to face interviews with farmers and the review of the rural development plans of three central Italy regions. Results show that farms prefer a combination of organizational structures that involve both business to consumer and business to business strategies. A high number of farms realise direct selling to consumers implemented through in farm selling and market distribution channels. Nonetheless, farms performing the highest turnover take advantage from the support of informal or formal network of producers. At policy level intervention towards strengthening SFSCâs competitiveness is still lacking.
    Keywords: short chain, direct selling, horticultural, organisation, economic performance, Community/Rural/Urban Development, Q13, R11,
    Date: 2010–08
  20. By: Monasterolo, Irene; Coppola, Nicola
    Abstract: The analysis of the experiences of Central and Eastern European Countries (CEEs) in transition, which became EU members in the historical 2004 (and 2007) enlargement, evidences the importance of timing and targeting policy intervention for a balanced growth (Monasterolo et. al, 2008). In fact, even if the Countries, till the last financial and economic crisis, showed a clear path of convergence (EC, 2008; EC, 2009) with EU average levels of development thanks to a sustained growth in GDP, at the same time they had to face a notable increase in regional inequality (Brasili, 2005), mainly driven by the persisting backwardness of agricultural and rural areas. The European pre-accession funds had limited effect in preventing the spread in internal divergence because of the lack of ex ante and in itinere monitoring and evaluation (Monasterolo, 2008). Moreover, they failed in addressing specific problems and needs of so variegated areas due to the deficiencies in identifying and defining the characteristics of rural areas (Csáki, 2009). This paper will introduce a new map of Serbia, a current EU pre-accession Country, where a clear identification of rural areas is still lacking (Bogdanov, 2007). We identified the dynamic characteristics of urban and rural areas as well as their strengths and weaknesses, computing a principal components analysis on a group of 37 socio-economic, agricultural and structural variables, which are available periodically at a municipality level. Then, we delineated homogeneous regions through the cluster analysis. This disaggregated mapping at the local level represents the fundamental starting point for developing integrated and diversified rural policies, enriched by a bottom up approach, following a neo-endogenous vision (Hubbard, 2009).
    Keywords: mapping rural areas, policy targeting, RD policy evaluation, EU enlargement, Community/Rural/Urban Development, O18, P25, R58,
    Date: 2010–08
  21. By: Petrick, Martin
    Abstract: The article contributes to the understanding of neo-endogenous rural development policies from the perspective of evolutionary game theory. Rural development is modelled as the increasing realisation over time of gains from interaction by rural stakeholders. The model exhibits two dynamically stable equilibria, which depict declining and prospering regions. Neo-endogenous policies are interpreted as stimuli emerging from an external government authority which help decentralised actors to coordinate on the superior of the two equilibria. External intervention may thus be possible and desirable without giving up the autonomy of local decision makers. However, because initial conditions matter, outcomes cannot be planned or engineered from the outside.
    Keywords: Rural governance, neo-endogenous policies, evolutionary game theory, collective action, Community/Rural/Urban Development, C73, R23, R58,
    Date: 2010–08
  22. By: George Kapetanios (Queen Mary, University of London); James Mitchell (NIESR); Yongcheol Shin (University of Leeds)
    Abstract: This paper proposes a new panel model of cross-sectional dependence. The model has a number of potential structural interpretations that relate to economic phenomena such as herding in financial markets. On an econometric level it provides a flexible approach to the modelling of interactions across panel units and can generate endogenous cross-sectional dependence that can resemble such dependence arising in a variety of existing models such as factor or spatial models. We discuss the theoretical properties of the model and ways in which inference can be carried out. We supplement this analysis with a detailed Monte Carlo study and two empirical illustrations.
    Keywords: Cross-sectional dependence, Nonlinearity, Factor models, Panel models, Fixed effects
    JEL: C31 C32 C33 G14
    Date: 2010–11

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