nep-geo New Economics Papers
on Economic Geography
Issue of 2011‒10‒15
seventeen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Spatial Structure and Productivity in Italian NUTS-3 Regions By Paolo VENERI; David BURGALASSI
  2. The Cluster Policy Paradox: Externalities vs. Comparative Advantages By Argentino Pessoa
  3. Regional Unemployment in the EU before and after the Global Crisis By E. Marelli; R. Patuelli; M. Signorelli
  4. Entrepreneurial opportunities in peripheral versus core regions in Chile By José Ernesto Amoros; Christian Felzensztein; Eli Gimmon
  5. Related Variety, Unrelated Variety and Regional Functions: Identifying Sources of Regional Employment Growth in Germany from 2003 to 2008 By Matthias Brachert; Alexander Kubis; Mirko Titze
  6. Agglomeration Externalities and Urban Growth Controls By Wouter Vermeulen
  7. Regional Inequality in Human Capital Formation in Europe, 1790 - 1880 By Ralph Hippe; Joerg Baten
  8. Regional patterns in the achievement of the Lisbon Strategy: a comparison between polycentric regions and monocentric ones By Paola Bertolini; Enrico Giovannetti; Francesco Pagliacci
  9. Allocation of CAP modulation funds to rural development measures at the regional level in Finland By Hyytia, Nina
  10. Sustainable regional development, innovation and state capacity By Kümpel, Arndt
  11. Spatial Pricing and the Location of Processors in Agricultural Markets By Graubner, Marten; Balmann, Alfons; Sexton, Richard J.
  12. Urban Structure and Housing Prices: Some Evidence from Australian Cities By Mariano Kulish; Anthony Richards; Christian Gillitzer
  13. Spatial Adaptation of the MSV Model, with Special Reference to World Development Report 2009 and Korean Examples By Jinhwan Oh
  14. Effects of the rural credit subsidy on economic growth and welfare of Brazilian regions By Cardoso, Debora Freire; Teixeira, Erly Cardoso; Gurgel, Angelo Costa; Castro, Eduardo Rodrigues de
  15. Halting the Rural Race to the Bottom: An Evolutionary Model of Rural Development to Analyse Neo-endogenous Policies in the EU By Petrick, Martin
  16. Spatial Dimensions of Income Inequality and Poverty in Bangladesh: An Analysis of the 2005 Household Income and Expenditure Survey Data By Kazi Arif Uz Zaman; Takahiro Akita
  17. Redes empresariales e integración económica regional en perspectiva histórica: el caso de Andalucía By Josean Garrués Irurzun; Juan Antonio Rubio Mondéjar

  1. By: Paolo VENERI (Universit… Politecnica delle Marche, Dipartimento di Scienze Economiche e Sociali); David BURGALASSI (Universit… di Pisa, Dipartimento di Scienze Economiche)
    Abstract: This work is an investigation of how spatial structure affects labour productivity in Italian provinces. The analysis draws on agglomeration theories, and analyzes whether agglomeration benefits are dependent on the way activities are spatially organized within regions. Urban spatial structures have declined in terms of size, dispersion and polycentricity. Using instrumental variables and spatial econometric techniques, we assess the effects of spatial structure for the 103 Italian NUTS-3 regions. The findings include negative impacts of both polycentricity and dispersion and a positive impact of size.
    Keywords: Agglomeration externalities, Dispersion, Polycentricity, Productivity, Spatial structure
    JEL: R11 R12 R14
    Date: 2011–09
  2. By: Argentino Pessoa (CEF.UP, Faculdade de Economia, Universidade do Porto)
    Abstract: The literature on clustering has highlighted several advantages of industrial agglomerations. Persons and firms benefit from the production and innovation activities of neighbouring companies in the same and related industries. Considering such benefits, Michael Porter states that clustering is an important way for firms fulfilling their competitive advantages and for rising regional and national competitiveness. This justification has increasingly driven regional policy towards the cluster promotion. However, the cluster-support policy is in the middle of a controversy, since the traditional optimal-policy perspective recommends providing a subsidy to firms of clusters generating externalities, while Porter’s prescriptions recommend not choosing among clusters. So, we state that cluster policy is involved in a paradox: policy makers use the competitiveness rhetoric inspired in the competitive advantages of Porter but, in practice, they go on using the industrial targeting that was also criticized b Porter. This paper deals with this paradox presenting a model, which proves that despite the extensive amount of externalities is the traditional comparative advantage approach that must guide policy. This finding is congruent with the Porter’s policy prescriptions and has clear implications in regional policy.
    Keywords: clusters, dynamic and static externalities, knowledge spillovers, regional economic development, spatial agglomeration
    JEL: L1 O3 R1 R3 R12 R15 C67
    Date: 2011–10
  3. By: E. Marelli; R. Patuelli; M. Signorelli
    Abstract: In this paper we empirically assess the evolution for the EU regions of both employment and unemployment before and after the Global Crisis. After a review of the literature on the theories and key determinants of regional unemployment, we shall overview the main findings concerning the labour market impact of the Global Crisis. The empirical analysis will initially be carried out at the national level including all EU countries; subsequently, we shall focus on the EU regions (at the NUTS-2 level), in order to detect possible changes in the dispersion of regional unemployment rates after the crisis. Our econometric investigations aim to assess the effect, on labour market performance, of previous developments in regional labour markets time series, as well as the importance of structural characteristics of the labour markets, in terms of the sectoral specialization of the regional economies. In fact, the local industry mix may have played a crucial role in shaping labour market performance in response to the crisis. In addition, we consider further characteristics of the regional labour markets, by including indicators of the level of precarization of labour and of the share of long-term unemployed, as indicators of the efficiency of the local labour markets. From a methodological viewpoint, we exploit eigenvector decomposition-based spatial filtering techniques, which allow us to greatly reduce unobserved variable bias – a significant problem in cross-sectional models – by including indicators of latent unobserved spatial patterns. Finally, we render a geographical description of the heterogeneity influence of past labour market performance over the crisis period, showing that the past performance has a differentiated impact on recent labour market developments.
    JEL: C21 R12
    Date: 2011–09
  4. By: José Ernesto Amoros; Christian Felzensztein; Eli Gimmon
    Abstract: Governmental policies tend to support and boost entrepreneurship in peripheral regions in many countries. This research revives the debate about specific regional policies designed to foster local new business creation, and the entrepreneurial framework conditions needed at the regional level for emerging regions such as Latin America. We applied one of the Global Entrepreneurship Monitor’s methodologies, the National Experts Survey, to a sample of 695 key informants in Chile at eight regions of which six are classified as peripheral. Using nonparametric statistics we compared the differences between peripheral and core regions. The main results indicate that peripherally located entrepreneurship experts perceive their regions as in a worse position than centrally located experts in terms of finance access and physical infrastructure. On the other hand, the results indicate that peripheral entrepreneurship experts detect more market dynamism in their regions and surprisingly perceive general policy and government programs as supporting entrepreneurship although the Chilean government had not promoted many regional policies.
    Keywords: Entrepreneurship framework conditions, Regional policy, Global Entrepreneurship Monitor, Chile, Entrepreneurship
    JEL: L26 O18 R58
    Date: 2011–09
  5. By: Matthias Brachert; Alexander Kubis; Mirko Titze
    Abstract: This article analyses how regional employment growth in Germany is affected by related variety, unrelated variety and the functions a region performs in the production process. Following the related variety literature, we argue that regions benefit from the existence of related activities that facilitate economic development. However, we argue that the sole reliance of related variety on standard industrial classifications remains debatable. Hence, we offer estimations for establishing that conceptual progress can indeed be made when a focus for analysis goes beyond solely considering industries. We develop an industry-function based approach of related and unrelated variety. Our findings suggest that related variety only in combination with a high functional specialization of the region facilitates regional growth in Germany. Additionally, also unrelated variety per se fails to wield influences affecting development of regions. It is rather unrelated, but functionally proximate variety in the groups “White Collar” and “Blue Collar Workers” positively affects regional employment growth.
    Keywords: related variety, unrelated variety, regional functions, functional specialization
    JEL: D62 O18 R11 R12
    Date: 2011–10
  6. By: Wouter Vermeulen
    Abstract: <p>Should constraints on urban expansion be relaxed because of external agglomeration economies? In a system of heterogeneous cities, we demonstrate that second-best land use policy consists of a tax on city creation and a subsidy (tax) on urban development in cities in which the marginal-average productivity gap is above (below) average.</p><p>However, the implementation of this policy requires coordination at the system level. A tax on city creation does not raise welfare if development taxes are set decentrally by competitive urban developers, nor does correction of these taxes raise welfare if a tax on city creation is unavailable. In the resulting constrained optimal allocation, urban development is subsidized in all cities. The quantitative significance of these findings is explored in an application of our model.</p>
    JEL: R52 R12 R13
    Date: 2011–10
  7. By: Ralph Hippe (University of Tuebingen and University of Strasbourg); Joerg Baten (University of Tuebingen and CESifo)
    Date: 2011
  8. By: Paola Bertolini; Enrico Giovannetti; Francesco Pagliacci
    Abstract: Polycentrism is a common feature of European urban systems. Lately, the concept has assumed a more normative relevance and it has been often considered as a pre-requisite for a more sustainable and balanced development across Europe. However, the effects of polycentrism on other main European Strategies (such as the Lisbon Strategy, aimed at increasing European competitiveness and social cohesion) are not so clear. Therefore, the paper tries to highlight the relationships between a regional polycentric development and the achievement of the Lisbon Strategy’s targets. Referring to a sample of 75 regions belonging to France, Germany, Italy and Spain, we have first measured the extent of polycentrism, by estimating through OLS the slope of the rank-size distribution of cities within each region. Then, we have performed a principal component analysis (PCA) in order to highlight the main features characterising the performance of each region according to Lisbon Strategy’s targets. Looking at the correlations between the extent of polycentrism and the achievement of the Lisbon Strategy’s targets, we have found that the former is significantly correlated both with the spread of manufacture and with low investments in human capital and innovation.
    Keywords: the Lisbon Strategy, polycentrism, rank-size distribution, PCA
    JEL: O18 O52 R00 R10
    Date: 2011–09
  9. By: Hyytia, Nina
    Abstract: Further coordination and coherence of the EU funds and policies has been increasingly called for, implying that the territorial perspectives should be included as a major element in the future policies. In this paper, CAP modulation is considered in a framework of a regional development such that it compares the effects on modulation funds first, as they are allocated as income subsidies to farm related, diversified economic activities and second, as they are channeled from agriculture to increased regional investment demand. A rural-urban Social Accounting Matrix is used as a base year data for the CGE-model. The results suggest that transferring CAP payments from actual agriculture as income support to diversified activity does not promote rural development and economic activity measured at the regional level. Accordingly, traditional agriculture seems to be able to exploit the subsidies more efficiently. On the contrary, the investment shocks resulted in positive total impacts in terms of the gross regional domestic product and regional employment. However, the positive GDP impacts were greater in the urban area, thus suggesting possible agglomeration development.
    Keywords: Agricultural and Food Policy, Community/Rural/Urban Development,
    Date: 2011
  10. By: Kümpel, Arndt
    Abstract: The paper sketches the current ecological and economic context of sustainable regional development with focus on the imperative for change to a post carbon economy, the need for innovation within the learning system of public administration and policy challenges for securing system viability.
    Keywords: Sustainable regional development; innovation; state capacity
    JEL: O38 O43 B52
    Date: 2011–07–07
  11. By: Graubner, Marten; Balmann, Alfons; Sexton, Richard J.
    Abstract: Spatially dispersed production and processing, endemic for most agricultural or renewable resource markets, causes oligopsonistic competition. The possibility and use of spatial price discrimination in these markets is well documented. It is also well known that the location of processors relative to competitors crucially affects the intensity of competition. However, insights regarding the relation between spatial price discrimination and the spatial differentiation of firms are barely present because the simultaneous investigation of these issues is often intractable analytically. We use computational economics to study these problems under a general theoretical framework. For instance, we show whether and under which conditions firms choose to differentiate their locations and/or price strategies. Results are consistent with observations in agricultural markets.
    Keywords: spatial price competition, spatial differentiation, price discrimination, computational economics, Agribusiness,
    Date: 2011
  12. By: Mariano Kulish (Reserve Bank of Australia); Anthony Richards (Reserve Bank of Australia); Christian Gillitzer (Reserve Bank of Australia)
    Abstract: This paper studies determinants of some aspects of the structure of cities, including density and the price of land and housing. We use a version of the Alonso-Muth-Mills model, calibrated to broadly match some of the features of a representative large city. While the calibrated model omits many real-world features, it can nonetheless be used to explore the impact of factors such as: (i) the provision of transport infrastructure; (ii) zoning policies that limit housing density; (iii) frictions on the production of housing; and (iv) population size. The empirical section of the paper shows that the model is consistent with some empirical regularities for large Australian cities. The results of the paper draw attention to structural factors that may have contributed to developments in the Australian housing market in recent years.
    Keywords: housing; housing prices; land prices; zoning; land use
    JEL: R00 R52 R58
    Date: 2011–09
  13. By: Jinhwan Oh (International University of University)
    Abstract: Based on the spatially adapted Murphy, Shleifer, and Vishny (MSV) model, this paper reviews major concepts of the World Development Report 2009 - density, distance and division. It is argued that the concepts of poverty trap, and partial and complete industrialization in the model capture the stages of incipient (density), intermediate (distance), and advanced (division) urbanization, described in the report. In addition, the report explains the concepts of Critical Minimum Effort and the Critical Minimum Retreat through spatially blind, connective, and targeted policies, which are all appropriate policies for each stage of urbanization. Relevant Korean examples are provided.
    Keywords: Urbanization, Concentration, Congestion, Density, Distance, Division, Spatial Policies, Korea
    JEL: O14 O18 R11 R12
    Date: 2011–07
  14. By: Cardoso, Debora Freire; Teixeira, Erly Cardoso; Gurgel, Angelo Costa; Castro, Eduardo Rodrigues de
    Abstract: The objective of this paper is to evaluate the impact of government spending with the Interest Rates Equalization (IRE) policy on the economic growth of Brazilian regions. Additionally, it aims to measure the opportunity cost of the subsidy in relation to an alternative application in the transportation sector. The model, database, and software from the General Equilibrium Analysis Project of the Brazilian Economy (PAEG) are applied to the simulations. The result shows that the IRE policy provides economic growth in the Midwestern, Northeastern and Southern regions above the cost of the policy. Besides, in the Northern and Southeastern regions, there is a decrease in the GDP. For Brazil, the policy is cost-effective and offers a 34% rate of return. Furthermore, all regions benefit in terms of welfare. For the country, in terms of GDP or welfare, spending on the IRE has negative alternative rate of return when applied to the transportation sector. The IRE policy is efficient and contributes to reduce regional disparities.
    Keywords: Subsidies, economic growth, Brazilian regions, PAEG, Agricultural and Food Policy,
    Date: 2011
  15. 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: 2011
  16. By: Kazi Arif Uz Zaman (International University of Japan); Takahiro Akita (International University of Japan)
    Abstract: Using the 2005 Household Income and Expenditure Survey, this paper examined income inequality and poverty in Bangladesh with particular focus on their spatial dimensions. Since disparity among administrative divisions is small, inequalities within each administrative division, particularly urban inequality, need to be reduced. Since education appears to have played an important role in inequality, especially in urban areas, raising general educational level is essential. Since wages and salaries serve to have mitigated inequality, especially in urban areas, opportunities for formal income should be expanded. Though the effect may be small, transfer programs should be expanded to raise income among the poorest. In addition to raising general educational level, it is necessary to provide primary education throughout the country in order to mitigate poverty. It is imperative to raise agricultural productivity in both rural and urban sectors. Furthermore, non-agricultural activities should be promoted according to the pattern of comparative advantages.
    Keywords: Income Inequality, Poverty, Spatial Dimensions, Theil Index, Gini Coefficient, FGT Index, Bangladesh
    JEL: I3 O15 O18
    Date: 2011–10
  17. By: Josean Garrués Irurzun (Universidad de Granada. Department of Economic Theory and Economic History); Juan Antonio Rubio Mondéjar (Universidad de Granada. Department of Economic Theory and Economic History)
    Abstract: Trade flows, mobility of productive factors, development of the transport system and a common export base have been the criteria used when analyzing the processes of economic organization of the territory from a historical perspective. The purpose of this paper is to add a new explanatory variable, based on business relationships. To this end, social network tools have been applied to the promotors of corporations that were domiciled in Andalusia (a region in the south of Spain) between 1886 and 1959. The indicators obtained show that the Andalusian entrepreneurial space had advanced to regional economic integration
    Keywords: regional studies, entrepreneurship, social network, Business History
    JEL: R12 L14 D85 N94
    Date: 2011–09–15

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