nep-geo New Economics Papers
on Economic Geography
Issue of 2012‒03‒08
twenty-two papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Spatial Concentration in the Financial Industry By Palmberg, Johanna
  2. Testing for spatial location patterns of Bogotá’s small and medium size manufacturing firms (2006-2008) By Hernán Enríquez; Juan Tomás Sayago
  3. Determinantes del crecimiento regional por sector de la industria manufacturera en México, 1988-2008 By Mariana Pereira; Isidro Soloaga
  4. Club performance dynamics at Italian regional level By J.G. Brida; N. Garrido; Francesco Mureddu
  5. EXPLAINING TFP AT FIRM LEVEL IN ITALY. DOES LOCATION MATTER? By Francesco Aiello; Valeria Pupo; Fernanda Ricotta
  6. Are Remote Rural Workers Trapped in Low-Remunerated Non-Agricultural Jobs? Evidence from China By Chloe Duvivier; Shi Li; Mary-Françoise Renard
  7. Un Indicatore per la Lombardia e per le Province di Milano e Pavia (Nuova versione) By Donatella Baiardi; Carluccio Bianchi
  8. A Spatial Analysis of R&D: the Role of Industry Proximity By O.A. Carboni
  9. The size distribution across all “cities”: a unifying approach By Kristian Giesen; Jens Suedekum
  10. Convergencia interregional en dinámica de regimenes: el caso del Mercosur By Brida, Juan Gabriel; London, Silvia; Rojas, Mara
  11. Regional Differences in China's Urbanization and its Determinants By Nong Zhu; Xubei Luo; Heng-fu Zou
  12. Exploring the role of regional innovation systems and institutions in global innovation networks By Chaminade, Cristina
  13. Institutional conditions and innovation systems: on the impact of regional policy on firms in different sectors By Moodysson, Jerker; Zukauskaite, Elena
  14. Regional Appropriation of University-Based Knowledge and Technology for Economic Development By Audretsch, David B.; Leyden, Dennis P.; Link, Albert N.
  15. Do regions make a difference? Exploring the role of different regional innovation systems in global innovation networks in the ICT industry By Chaminade, Cristina; Plechero, Monica
  16. Local Public Goods Provision in the Post-Agricultural Tax Era in Rural China By Hiroshi Sato; Sai Ding
  17. Análisis de coeficientes de localización. El caso de la provincia de Córdoba. By Romero, Carlos Adrian; Mastronardi, Leonardo Javier; Faye, Magalí Julieta
  18. Estimación de matrices de insumo producto regionales mediante métodos indirectos. Una aplicación para la ciudad de Buenos Aires By Mastronardi, Leonardo Javier; Romero, Carlos Adrián
  19. Geography is not Destiny. Geography, Institutions and Literacy in England, 1837-1863 By Gregory Clark; Rowena Gray
  20. The Polarization of Employment in German Local Labor Markets By Charlotte Senftleben; Hanna Wielandt
  21. Effects of One-Sided Fiscal Decentralization on Environmental Efficiency of Chinese Provinces By Hang Xiong
  22. Escenarios para las regiones europeas y las provincias del Arco Latino By Affuso, Antonio; Camagni, Roberto; Capello, Roberta; Fratesi, Ugo

  1. By: Palmberg, Johanna (The Ratio Institute)
    Abstract: This paper investigates factors that determine the spatial concentration in the financial industry. Why does the financial industry have such a high spatial concentration? The theoretical framework is based on theories from regional economics, with a focus on agglomeration effects, externalities, and the regional clustering of an industry. The positive agglomeration effects arise from access to i) specialized labor, ii) specialized suppliers, and iii) knowledge dispersion (Marshall 1920). Jacobs (1961, 1969) contributes to a discussion of the role of cities (urban economies) in terms of innovations and entrepreneurship. The high degree of spatial concentration in the financial sector emphasizes the importance of local embeddedness, networks, face-to-face communication, knowledge spillovers, and spatial proximity for the organization of the financial industry. These factors accentuate the importance of local knowledge and the dispersion of knowledge, factors that have been thoroughly discussed and analyzed in the field of Austrian economics. Therefore, an Austrian view is included to examine the role of knowledge in the spatial concentration of financial centers. Scholars such as Hayek (1937; 1945) and Lachmann (1978 [1956]) contribute to understanding the use of knowledge in society.
    Keywords: Spatial Concentration; Financial Industries; Knowledge; Information; Face-to-face communication
    JEL: B26 B53 D53
    Date: 2012–02–28
  2. By: Hernán Enríquez; Juan Tomás Sayago
    Abstract: The purpose of this paper is to test the spatial patterns in small and medium size manufacturing firms (11 to 50 employees for small size firms and 51 to 200 for medium size firms) in Bogotá, Colombia, from 2006 to 2008. For this, the Ripley’s K(r) function distance based method is used in order to measure the firms´ spatial concentration, using level of employment and firm size as identification variables, for a sample of four ISIC digits industries located inside the urban perimeter. In this case, the K(r) function allows the reader to establish clustering agglomeration tendencies in each industry and additionally evaluate if dynamic spatial concentration, dispersion, or randomness between firms thru time exists. Evaluating location by firm size would indicate us trends of employment and predominant industry activity in the city, and its relation with other urban features.
    Date: 2011–12–22
  3. By: Mariana Pereira (El Colegio de México); Isidro Soloaga (El Colegio de México)
    Abstract: In the framework of agglomeration economies and the New Economic Geography, this article presents an analysis aimed at identifying the determinants of regional growth by sector of Mexico’s manufacturing industry. Among the main results are: i) In the long term, the main factor behind Mexico’s regional industrial growth are Jacobs externalities (urbanization economies) ii) Market conditions (wages) are the main short term factor behind this growth. iii) There is heterogeneity in the determinants of regional growth between technological intensity groups. Low technology sectors appear to be more sensitive to initial wages and, in terms of agglomeration economies, they show Jacobs externalities, while higher technology sectors exhibit Porter economies competition/specialization). iv) Once we control for market conditions, agglomeration economies and initial conditions, there are regions such as the South, the Center and the Gulf of Mexico that have a relative disadvantage for growth in sectors of medium-high technological intensity. Moreover, when the analysis is conducted at the metropolitan area level, there is only one out of fifty eight that shows a relative advantage for growth of this kind of industries. Relative advantages for low-tech sectors appear to be related to transportation and services infrastructure, while for high-tech sectors the main determinant is human capital stock.
    Keywords: agglomeration, regional growth, knowledge spillovers, dynamic externalities, Mexico
    JEL: R1
    Date: 2012–02
  4. By: J.G. Brida; N. Garrido; Francesco Mureddu
    Abstract: This paper analyze the dynamic economic performance of the Italian regions during the period 1970-2004. The measure of economic performance is given by the level and the growth rates of per capita GDP. Using the concept of economic regime, we introduce a notion of distance between the dynamical paths of the Italian regions. Afterwards, a Minimal Spanning Tree and a Hierarchical Tree are constructed from time series in order to assess the existence of groups of regions sharing similar economic performance. Two main clusters are identified, representing high performance and low performance regions, alongside other two small clusters displaying regions with similar dynamic behaviour. The high performance cluster comprises mainly regions from the north, showing the presence of agglomeration externalities. Turning to the evolution of clusters, we see a similar path until 1975, after which the two groups start to slightly diverge. Studying the evolution of each cluster’s diameter we find substantial convergence within the two groups. Splitting the sample into two periods (1975-1993 and 1994-2005) the hypothesis of two performance clubs is confirmed. The club shift of some regions hints a strong effect on regional economic dynamics of the Italian 1994 crisis. The final analysis of the distance between the two clusters show that in the first period (1975-1993) the distance between the two group was constant, while in the second one (1994-2005) it has increased.
    Keywords: economic convergence; economic dualism; hierarchical clustering
    JEL: C24 C14 L83
    Date: 2012
  5. By: Francesco Aiello; Valeria Pupo; Fernanda Ricotta (Dipartimento di Economia e Statistica, Università della Calabria)
    Abstract: This study analyses how firms' internal variables and regional factors affect Total Factor Productivity (TFP) of Italian manufacturing firms. Due to the hierarchical structure of our data, we employ a multilevel model that allows for a clear distinction between firm and region-specific effects. Results refer to 2004-2006 and show, as expected, the importance of firm-specific determinants of TFP. At the same time, they indicate that location matters, in the sense that the context where firms operate plays a crucial role in determining the level of TFP. In more detail, we find that the regional endowment of infrastructure, the efficiency of local administration and the investments in R&D exert a positive effect on firms' performance. We also argue that regional gaps in the endowment of these factors help to understand the dualistic nature of the Italian economy, where a wealthy North coexists with a less developed South.
    Keywords: Manufacturing Firms, Total Factor Productivity, Italian Regional Divide, Multilevel Models
    JEL: L60 R11 C31
    Date: 2012–02
  6. By: Chloe Duvivier (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I); Shi Li (School of Economics and Business Administration - School of Economics and Business Administration - Beijing Normal University); Mary-Françoise Renard (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: This paper analyzes the effect of urban proximity on rural non-agricultural wages. Using the 2002 Chinese Household Income Project data, we study the determinants of rural non-agricultural workers' hourly wages. We find strong evidence that rural workers close to cities benefit from higher hourly wages, indicating that there is a spatial differentiation in wages across rural areas. Specifically, workers living close to cities are paid about 15% more for one hour worked. This is true even after controlling for living costs, suggesting that urban proximity leads to higher non-agricultural wages in real terms. We also find that migration enables remote workers to partially compensate for lower local wages, suggesting that restrictions on migration hurt remote workers more than other workers.
    Keywords: Wages;Remoteness;regional labor market;China Codes
    Date: 2012–02–24
  7. By: Donatella Baiardi (Department of Economics and Quantitative Methods, University of Pavia); Carluccio Bianchi (Department of Economics and Quantitative Methods, University of Pavia)
    Abstract: This paper aims to construct a high-frequency coincident indicator of economic activity for Lombardy and for the provinces of Milan and Pavia, by using the dynamic factor model approach introduced by Stock e Watson (1998a e 1998b). The principal component analysis is first used to summarize the information contained in a large dataset in a limited number of common factors capable of capturing the main features of local business fluctuations. The EM (Expectation Maximization) algorithm then allows to compute the desired territorial indicators by taking into account the official annual data on regional GDP or provincial valueadded growth.
    Keywords: Coincident Economic Activity Indicators, Italian Regions, Diffusion Indexes
    JEL: E32 C32 C82
    Date: 2012–01
  8. By: O.A. Carboni
    Abstract: This paper employs individual firm data in order to check the existence of industry-spatial effects alongside other microeconomic determinants of R&D investment. Spatial proximity is defined by a measure of firms’ industry distance based on trade intensity between sectors. The spatial model specified here refers to the combined spatial autoregressive model with autoregressive disturbances (SARAR). In modelling the outcome for each location as dependent on a weighted average of the outcomes of other locations, outcomes are determined simultaneously. The results of the spatial two stage least square estimation suggest that in their R&D decision firms benefit from spillovers originating from neighbouring industries.
    Keywords: spatial weights; spatial dependence; spatial models; R&D
    JEL: O10 O31 R11 C31
    Date: 2012
  9. By: Kristian Giesen (University of Duisburg-Essen); Jens Suedekum (University of Duisburg-Essen)
    Abstract: In this paper we show that the double Pareto lognormal (DPLN) parameterization provides an excellent fit to the overall US city size distribution, regardless of whether “cities” are administratively defined Census places or economically defined area clusters. We then consider an economic model that combines scale-independent urban growth (Gibrat’s law) with endogenous city creation. City sizes converge to a DPLN distribution in this model, which is much better in line with the data than previous urban growth frameworks that predict a lognormal or a Pareto city size distribution (Zipf’s law).
    Keywords: Zipf’s law, Gibrat’s law, city size distributions, double Pareto-Lognormal
    JEL: R11 R12 O4
    Date: 2011
  10. By: Brida, Juan Gabriel; London, Silvia; Rojas, Mara
    Abstract: This paper analyses the regional convergence of sub-national states in the case of Mercosur from 1961 to 2005 by using a non-parametric techniques of clustering under the concept of regime of performance. That is, the convergence between two regions is established by the approximation of their dynamic of regimens. The best positioned Brazilian states show an interregional convergence process in dynamics of regimens towards the richest Argentinean regions and Uruguay; moreover Paraguay, the north part of Brazil and the historically underdevelopment regions of Argentina are in scenarios of low economic performance, reducing the intra-group distance but showing a divergence process in reference to the highest income group. Results exhibit evidence in favor to convergence clubs of performance.
    Keywords: economic performance; dynamic of regimens; convergence; clusters; Mercosur
    JEL: C14 O49 O54
    Date: 2012–02–24
  11. By: Nong Zhu (The World Bank); Xubei Luo (The World Bank); Heng-fu Zou (The World Bank)
    Date: 2012
  12. By: Chaminade, Cristina (CIRCLE, Lund University)
    Abstract: Using firm-level data collected through a survey and case studies in 2009-2010, this article systematically compares the patterns of globalization of innovation in regions with different institutional thickness. The paper shows that these patterns differ substantially across regions and discusses relationship between regions, institutional frameworks and different forms of globalization of innovation.
    Keywords: regional innovation systems; institutional thickness; global innovation networks; Europe; China; India; Brazil; South Africa
    JEL: F23 F59 O33
    Date: 2012–02–27
  13. By: Moodysson, Jerker (CIRCLE, Lund University); Zukauskaite, Elena (CIRCLE, Lund University)
    Abstract: This paper deals with institutional conditions in regional innovation systems; how institutions affect the organization of innovation activities among firms, and in what ways regional policy initiatives can be supportive. The analysis draws on data on innovation networks and activities in the life science, media, and food industries. The theoretical framework takes account of the ways in which regional policies are able to impact individuals’ and organizations’ action in relation to each other by being internalized. It is argued that such ability is decisive for the success or failure of the policy initiative. Three cases of regional policy targeting the promotion of innovation in different industries in Sweden are analyzed.
    Keywords: regional innovation systems; knowledge; institutions; innovation; policy
    JEL: O38 O52
    Date: 2012–02–27
  14. By: Audretsch, David B. (Indiana University); Leyden, Dennis P. (University of North Carolina at Greensboro, Department of Economics); Link, Albert N. (University of North Carolina at Greensboro, Department of Economics)
    Abstract: Economic development practitioners and scholars recognize the link between universities and regional economic development. It is predicated on the spillover of knowledge from universities to commercialization. The literature has focused on the supply side, which involves university research and technology transfer mechanisms. We examine the role played by the demand for university-based knowledge and university-developed technology. We identify links between businesses and the university as a key conduit facilitating the spillover of knowledge using data on the Department of Energy’s Small Business Innovation Research (SBIR) program. We provide supply-side evidence on university research relationships and how the use of knowledge and technologies that flow from a university impact economic growth. We identify the role that SBIR-funded businesses play in the spillover of knowledge from the creating organization to where that knowledge is used and commercialized. Our results suggest that knowledge is systematically transmitted through university-related research.
    Keywords: Economic development; Entrepreneurship; Innovation; Licensing; SBIR program; University research
    JEL: L26 O31 O34
    Date: 2012–02–23
  15. By: Chaminade, Cristina (CIRCLE, Lund University); Plechero, Monica (CIRCLE, Lund University)
    Abstract: The access to global innovation networks (GINs) has been extremely unequal across regions around the globe. While certain regions are considered knowledge hubs, able to link to global knowledge flow, other still remain marginalized, pointing out to the role of regional innovation systems in the emergence and development of GINs. Using firm-level data collected through a survey and case studies in 2009-2010, this article systematically compares the patterns of global networks in the ICT industry in a selection of European and non-European regions. Contrary to what we expected, the results show that GINs may emerge in regions which are neither too innovative nor institutionally thick (like Tier 1) nor too thin (like Tier 3).
    Keywords: globalization; innovation networks; regions; Europe; India China
    JEL: O32
    Date: 2012–02–27
  16. By: Hiroshi Sato; Sai Ding
    Abstract: This paper investigates regional differences in local public goods provision in rural area in the 2000s, using large village sample surveys (CHIP 2002 and 2007 surveys, a survey in Ningxia). Focuses are on changes in the coverage of public investment projects, regional differences in the determinants of public investment projects, and changes in the coverage of public services provided by village collectives. The main findings are as follows. First, we confirmed that coverage of public investment projects had increased in the 2000s. Second, in spite of concentration of fiscal administration into county level as one of the pillars of the reform of taxation and local fiscal system, administrative villages still played indispensable roles in local public goods provision. Third, we found that incentive of peasants, financial ability of villages, and incentive of local government affect location decision and budget structure of public investment projects and that direction and strength of such factors were different by regions.
    Keywords: Local Public goods, Village, Local Government, Rural China
    JEL: H2 H4 R5
    Date: 2012–02
  17. By: Romero, Carlos Adrian; Mastronardi, Leonardo Javier; Faye, Magalí Julieta
    Abstract: There is a regional input-output table for Córdoba, an Argentinian province, estimated by survey techniques. In this paper, non-survey techniques are tested, through the FLQ and ALFQ location quotients, using different values of δ, a parameter that appear in these formulas. The aim of this work is to measure the relative performance, in terms of the distance between the transactions estimated by the indirect methods and the real regional transactions (acquired by the direct methods). Consequently, a value of δ equals to 0.177 is the most accurate one, since it minimizes the standard deviation between the estimated matrix and the starting AFLQ´s. Besides, the production multipliers´ performance tests calculated on the AFLQ´s matrix, also find the value of this parameter (δ) in an interval between 0.15 and 0.18.
    Keywords: Regional input output model. Location quotients
    JEL: R58 D57 R15 C67
    Date: 2012–02–28
  18. By: Mastronardi, Leonardo Javier; Romero, Carlos Adrián
    Abstract: The input output analysis is used by a lot of cities with the objective to study interregional trade problems. We focused our work on Argentina, and we present a model with two regions: Buenos Aires city and the rest of the country. Buenos Aires does not have an Input Output Tables or a regional account system, so we have to estimate the model with non-survey and calibration techniques. Non-survey techniques are commonly used to model intraregional trade in a region. We used the AFLQ location quotient to estimate the trade in each region. Then we must to compute the regional imports/exports, and for this we based our work on calibration techniques. Biproportional adjustment (RAS) and cross entropy were the calibration techniques used to build the interregional input output model. In the presented case the work find that cross entropy could reply exactly the national input output tables, because it enforce additional constraints. If we look the results, RAS technique overestimate the Buenos Aires technical coefficients compared with cross entropy. There are not substantial differences on technical coefficients between RAS and cross entropy in the other region.
    Keywords: Matriz insumo-producto regional. RAS. Entropía. Coeficientes de localización
    JEL: R58 D57 R15 C67
    Date: 2012–02–29
  19. By: Gregory Clark (University of California, Davis); Rowena Gray (University of Essex)
    Abstract: Geography made rural society in the south-east of England unequal. Economies of scale in grain growing created a farmer elite and many landless labourers. In the pastoral north-west, in contrast, family farms dominated, with few hired labourers and modest income disparities. Engerman and Sokoloff (2012) argue that such differences in social structure between large plantations in the southern Americas, and family farming in the north, explain the rise of schooling in the north, and its absence in the south. We show, however, that rural literacy across England 1810-45 was not determined by geographically driven inequality. There were substantial differences in literacy by region, but driven by culture not geography. Geography is not destiny.
    Keywords: Comparative regional history, European education history, human capital development
    JEL: N93 N33 O15
    Date: 2012–02
  20. By: Charlotte Senftleben; Hanna Wielandt
    Abstract: This paper uses the task-based view of technological change to study employment and wage polarization at the level of local labor markets in Germany between 1979 and 2007. In order to directly relate technological change to subsequent employment trends, we exploit variation in the regional task structure which reflects a region’s potential of being affected by computerization. We build a measure of regional routine intensity to test whether there has been a reallocation from routine towards non-routine labor conditional on a region’s initial computerization potential. We find that routine intensive regions have witnessed a differential reallocation towards non-routine employment and an increase in low- and medium-skilled service occupations. Our results corroborate the predictions of the task-based framework and confirm previous evidence on employment polarization in Germany in the sense that employment growth deteriorates at the middle of the skill distribution relative to the lower and the upper tail of the distribution.
    Keywords: Job Tasks, Polarization, Technological Change, Service Occupations, Regional Labor Markets
    JEL: J24 J31 J62 O33 R23
    Date: 2012–02
  21. By: Hang Xiong (CERDI - Centre d'études et de recherches sur le developpement international - CNRS : UMR6587 - Université d'Auvergne - Clermont-Ferrand I)
    Abstract: China's actual fiscal decentralization is one-sided: while public expenditures are largely decentralized, fiscal revenues are recentralized after 1994. One critical consequence of the actual system is the creation of significant fiscal imbalances at sub-national level. This paper investigates empirically effects of fiscal imbalances on environmental performance of Chinese provinces. First, environmental efficiency scores of Chinese provinces are calculated with SFA for the period from 2005 to 2010. Then, these scores are regressed against two fiscal imbalance indicators in a second stage model. Finally, conditional EE scores are calculated. This paper finds that effects of fiscal imbalances on EE are nonlinear and conditional on economic development level. Fiscal imbalances are more detrimental to environment in less developed provinces. These results suggest that the one-sided fiscal decentralization in China may have regressive environmental effects and contribute to regional disparity in terms of sustainable development.
    Keywords: Chinese provinces;Decentralization; Environmental efficiency; SFA
    Date: 2012–02–21
  22. By: Affuso, Antonio; Camagni, Roberto; Capello, Roberta; Fratesi, Ugo
    Abstract: The paper is devoted to developing quantitative foresights on the three integrated scenarios presented in the previous chapter. In particular, a short summary of the methodological aspects of quantitative foresights is provided; and, especially, the empirical results obtained at regional and provincial level are described at length. The need for anticipatory and far-seeing economic visions has always induced economists to seek reliable methodologies with which to produce insights into what the future will look like. Among existing alternative methodological exercises, the distinction between forecasts and foresights is useful, and it helps specify the approach used in this book. In general, a forecast aims to obtain precise values of specific economic variables in the future, on the basis of extrapolations from a system of past socio-economic relations. Exactly because they extrapolate from past tendencies, forecasts yield the best results in a short-term perspective. The aim of a forecasting exercise is, in general, to achieve a quantitative value in a certain year, paying little attention to the intermediate path, or to the feedback and adjustment processes by which the end value is determined. Foresight is a radically different exercise. It is mostly qualitative in nature, and its aim is to provide an image of the future based on radical breaks, these being structural effects which destroy past tendencies. A new technological paradigm, new socio-cultural models, new political regimes are all examples of structural breaks in the elements regulating an economic system which give rise to completely new and radically different images of the future. A foresight is a possible, probable and sometimes desirable image of the future under the assumption that these events, or perhaps only one of them, will occur. Contrary to forecasts, foresights do not address the dynamic processes that will produce the final outcome; rather, they explore the general consistency of the final image by analysing all the adjustment processes that are likely to happen. In general, a foresight is built on an image of what the future will look like (explorative projections), but also of what the future should look like (desirable projections). Foresight provides insights into the future based on a structural and radical break with the past, and assuming in general a long-term perspective (usually decades).
    Keywords: Prospectivas cuantitativas; escala regional
    JEL: R00 R11
    Date: 2011

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