nep-geo New Economics Papers
on Economic Geography
Issue of 2012‒03‒28
nineteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Identifying Clusters within R&D Intensive Industries Using Local Spatial Methods By Reinhold Kosfeld; Jorgen Lauridsen
  2. A typology of distance-based measures of spatial concentration By Eric Marcon; Florence Puech
  3. Knowledge and diversity of innovation systems: a comparative analysis of European regions By Christophe CARRINCAZEAUX (GREThA, CNRS, UMR 5113); Frédéric GASCHET (GREThA, CNRS, UMR 5113)
  4. The Regional Distribution of Public Employment: Theory and Evidence By Sebastian G. Kessing; Chiara Strozzi
  5. Determinants of Banking System Fragility: A Regional Perspective By Degryse, Hans; Elahi, Muhammad Ather; Penas, Maria Fabiana
  6. Are Spatial Networks of Firms Random? Evidence from Vietnam By Howard, Emma; Carol, Newman; Thijssen, Jacco
  7. Labor Differentiation and Agglomeration in General Equilibrium By Berliant, Marcus; Zenou, Yves
  8. Infrastructure and regional growth in the European Union By Crescenzi, Riccardo; Rodríguez-Pose, Andrés
  9. Territorial strategic planning as a support instrument for regional and local development: a comparative analysis between Lisbon and Barcelona metropolitan areas By Marques, Bruno Pereira
  10. Dynamic Opportunity-Based Multipurpose Accessibility Indicators in California By Dalal, Pamela; Chen, Yali; Ravulaparthy, Srinath; Goulias, Konstadinos G.
  11. A panel data modelling of agglomeration and growth: cross-country evidence By Leitão, Nuno Carlos
  12. On the Road: Access to Transportation Infrastructure and Economic Growth in China By Banerjee, Abhijit; Duflo, Esther; Qian, Nancy
  13. Spatial Competition and market Share: An Application to Motion Pictures. By Darlene C. Chisolm; George Norman
  14. Concentration of economic activity: Inequality-based measures By Olga Alonso-Villar; Coral del Río
  15. Well-Being in Germany: What Explains the Regional Variation? By Johannes Vatter
  16. Price competition in the spatial real estate market: Allies or rivals? By Iwata, Shinichiro; Sumita, Kazuto; Fujisawa, Mieko
  17. Municipal mergers and special provisions of local council members in Japan By Hirota, Haruaki; Yunoue, Hideo
  18. The causal effects of an industrial policy By Criscuolo, Chiara; Martin, Ralf; Overman, Henry G; Van Reenen, John
  19. The Efficiency of States and Cities: Is There a Case for Public Land Leasing and Sales to Finance India.s Cities? By Sridhar, Kala Seetharam

  1. By: Reinhold Kosfeld (University of Kassel); Jorgen Lauridsen (Southern University of Denmark)
    Abstract: More recently, there has been a renewed interest in cluster policies for supporting industrial and regional development. By virtue of the linkage between growth and innovation, R&D intensive industries play a crucial role in cluster development strategies. Empirical cluster research has to contribute to the understanding the process of cluster formation. Some experiences with the use of local spatial methods like local Moran’s Ii and Getis-Ord Gi tests in pattern recognition are already available. However, up to now the utilisation of spatial scan techniques in detecting economic clusters is largely ignored (Kang, 2010). In this paper, the performance of the above-mentioned local spatial methods in identifying German R&D clusters is studied. Differences in cluster detection across the tests are traced. In particular, the contribution of Kulldorff’s spatial scan test in detecting industry clusters is critically assessed.
    Keywords: Spatial Clusters, R&D Intensive Industries, Local Spatial Methods, Spatial Scan Test
    JEL: R12 R15
    Date: 2012
  2. By: Eric Marcon (ECOFOG - Ecologie des forêts de Guyane - CIRAD : UMR93 - CNRS : UMR2728 - INRA : UMR0745 - Université des Antilles et de Guyane - AgroParisTech); Florence Puech (LET - Laboratoire d'économie des transports - CNRS : UMR5593 - Université Lumière - Lyon II - Ecole Nationale des Travaux Publics de l'Etat)
    Abstract: Over the last decade, distance-based methods have been introduced and then improved in the field of spatial economics to gauge the geographic concentration of activities. There is a growing literature on this theme including new tools, discussions on specific properties and various applica-tions. However no typology of distance-based methods exists. This paper fills this gap. The proposed classification helps understanding all properties of distance-based methods and proves that they are variations on the same framework.
    Keywords: Spatial concentration ; Aggregation ; Point patterns Agglomeration ; Economic geography
    Date: 2012
  3. By: Christophe CARRINCAZEAUX (GREThA, CNRS, UMR 5113); Frédéric GASCHET (GREThA, CNRS, UMR 5113)
    Abstract: This article aims at assessing the diversity of regional innovation systems and their economic performances within Europe. We propose to adapt the Social Systems of Innovation and Production (SSIP) framework developed by Amable, Barré and Boyer (1997) at the regional level by identifying specific arrangements of each part of the innovation and production system. A key feature of this approach is the concept of complementary institutions, allowing a limited number of viable and stable configurations to be identified. Three key features of European regions are investigated using this framework: the diversity of regional SSIPs, the interplay of regional and national determinants of such systems, and the impact of SSIPs on regional performance. We identify a typology of regional configurations resulting from the combination of scientific, technological, educational and industrial indicators, using multivariate data analysis. We then test the existence of specific regional growth regimes. The results highlight a persistently high level of diversity of regional configurations, notably among knowledge intensive regions, but also show that national institutional settings remain of fundamental importance in shaping a number of regional configurations. A final conclusion relates to the weak correlation observed between the structural characteristics of regions and their performances over the 2003-2007 period: regional performance remains primarily shaped by national trends. Overall, the paper questions the regional dimension of these “systems”.
    Keywords: Regional innovation systems, knowledge, regional growth, institutions
    JEL: R11 O43 O18
    Date: 2012
  4. By: Sebastian G. Kessing; Chiara Strozzi
    Abstract: We analyze the optimal regional pattern of public employment in an information constrained second-best redistribution policy showing that regionally differentiated public employment can serve as an expenditure side tagging device, bypassing or relaxing the equity-effciency trade-off. The optimal pattern exhibits higher levels of public employment in low productivity regions and is more pronounced the higher is the degree of regional inequality within the country. Empirically, using a panel of European regions from 1995-2007, we found evidence that public employment is systematically higher in low productivity regions. The latter effect is stronger in countries with higher levels of regional inequality.
    Keywords: Public employment, redistribution, regional inequality, European regions
    JEL: H11 J45 R12
    Date: 2012–03
  5. By: Degryse, Hans; Elahi, Muhammad Ather; Penas, Maria Fabiana
    Abstract: Banking systems are fragile not only within one country but also within and across regions. We study the role of regional banking system characteristics for regional banking system fragility. We find that regional banking system fragility reduces when banks in the region jointly hold more liquid assets, are better capitalized, and when regional banking systems are more competitive. For Asia and Latin-America, a greater presence of foreign banks also reduces regional banking fragility. We further investigate the possibility of contagion within and across regions. Within region banking contagion is important in all regions but it is substantially lower in the developed regions compared to emerging market regions. For cross-regional contagion, we find that the contagion effects of Europe and the US on Asia and Latin America are significantly higher compared to the effect of Asia and Latin America among themselves. Finally, the impact of cross-regional contagion is attenuated when the host region has a more liquid and more capitalized banking sector.
    Keywords: banking system stability; cross-regional contagion; financial integration
    JEL: G15 G20 G29
    Date: 2012–02
  6. By: Howard, Emma; Carol, Newman; Thijssen, Jacco
    Abstract: We present a new approach for the empirical investigation of agglomeration patterns. We examine the clustering of manufacturing firms by identifying patterns of spatial network formation that deviate from randomly generated networks. Using firm-level panel data from Vietnam we calculate transitivity, a measure to determine the strength of clustering of manufacturing firms. We then test whether the observed clustering of firms is greater than that of a randomly generated network. Our findings suggest that the extent of clustering is over and above that which can be attributed to the legal and regulatory framework, economic zoning, or population patterns.
    Keywords: clustering, network formation, manufacturing firms, Vietnam
    Date: 2011
  7. By: Berliant, Marcus; Zenou, Yves
    Abstract: The aim of this paper is to explore the structure of cities as a function of labor differentiation, gains to trade, a fixed cost for constructing the transportation network, a variable cost of commodity transport, and the commuting costs of consumers. Firms use different types of labor to produce different outputs. Locations of all agents are endogenous as are prices and quantities. This is among the first papers to apply smooth economy techniques to urban economics. Existence of equilibrium and its determinacy properties depend crucially on the relative numbers of outputs, types of labor and firms. More differentiated labor implies more equilibria. We provide tight lower bounds on labor differentiation for existence of equilibrium. If these sufficient conditions are satisfied, then generically there is a continuum of equilibria for given parameter values. Finally, an equilibrium allocation is not necessarily Pareto optimal in this model.
    Keywords: city structure; general equilibrium; heterogeneous labour; transportation network
    JEL: D51 R14
    Date: 2012–02
  8. By: Crescenzi, Riccardo; Rodríguez-Pose, Andrés
    Abstract: Transport infrastructure has represented one of the cornerstones of development and cohesion strategies in the European Union (EU) and elsewhere in the world. However, despite the considerable funds devoted to it, its impact remains controversial. This paper revisits the question of to what extent transport infrastructure endowment -- proxied by regional motorways -- has contributed to regional growth in the EU between 1990 and 2004. It analyses infrastructure in relationship to other factors which may condition economic growth, such as innovation, migration, and the local ‘social filter’, taking also into account the geographical component of intervention in transport infrastructure and innovation. The results of the two-way fixed-effect (static) and GMM-diff (dynamic) panel data regressions indicate that infrastructure endowment is a relatively poor predictor of economic growth and that regional growth in the EU results from a combination of an adequate ‘social filter’, good innovation capacity, both in the region and in neighbouring areas, and a region's capacity to attract migrants. The meagre returns of infrastructure endowment on economic growth raises interesting questions about the opportunity costs of further infrastructure investments across most of Western Europe.
    Keywords: Economic growth; European Union; Infrastructure; Innovation; Regions; Spillovers
    JEL: R11 R12 R42 R58
    Date: 2012–03
  9. By: Marques, Bruno Pereira
    Abstract: The present work has the purpose of making a comparative analysis of local development processes at a metropolitan scale, territories whose administrative and institutional limits do not always match with their political and economic identity and are inserted in global processes of socioeconomic transformation. The main purpose of this work is to analyze and understand the competitive advantages that the local and metropolitan political powers have over the Central State in what may concern the creation of favorable measures for companies’ productivity and competitiveness; analyze new forms of democratic political participation, namely around the so-called Territorial Governance. In terms of Territorial Strategic Planning, the focus has been, frequently, in the realization of great cultural and sport events and in urban rehabilitation. In this sense, the perspective will be more centered in the analysis of processes that lead to Local Development Initiatives in the fields of Education, Professional Formation or support for Entrepreneurship, rather then more “traditionalist” analysis. Given the nature of the present work, a Master Degree Project Work, the practical component will be postponed for future Doctoral studies. Nevertheless, we have the intention of testing some hypothesis, more in Lisbon Metropolitan Area, then Barcelona Metropolitan Area, namely throughout statistical data analysis and interviews to local actors.
    Keywords: Barcelona; Lisbon; Metropolitan Areas; Regional and Local Development; Territorial Strategic Planning
    JEL: R58 R1
    Date: 2011
  10. By: Dalal, Pamela; Chen, Yali; Ravulaparthy, Srinath; Goulias, Konstadinos G.
    Abstract: Accessibility, defined as the ease (or difficulty) with which activity opportunities can be reached from a given location, can be measured using the cumulative amount of opportunities from an origin within a given amount of travel time. These indicators can be used in regional planning and modeling efforts that aim to integrate land use with travel demand and an attempt should be made to compute at the smallest geographical area. The primary objective of this paper is to illustrate the creation of realistic space-sensitive and time-sensitive fine spatial level accessibility indicators that attempt to track availability of opportunities. These indicators support the development of the Southern California Association of Governments activity-based travel demand forecasting model that aims at a second by-second and parcel-by-parcel modeling and simulation. They also provide the base information for mapping opportunities of access to fifteen different types of industries at different periods during a day. The indicators and their maps are defined for the entire region using largely available data to show the polycentric structure of the region and to illustrate the method as a generator of choice sets in discrete choice models.
    Keywords: hierarchical spatial choice, spatial cluster analysis, multi-scale representation, Urban Studies and Planning
    Date: 2011–09–01
  11. By: Leitão, Nuno Carlos
    Abstract: This manuscript analysis the relationships between urban agglomeration and economic growth. We apply a static and dynamic panel data approach from European Union (EU-27), the United States, Japan, New Zealand and Mexico for the period 1990 to 2008. The results show that growth is highly correlated with urban agglomeration. The econometric models evidence that international trade is an important vehicle to expand the economic growth. The models also indicate that human capital promotes the economic growth.
    Keywords: economic growth; urban agglomeration and panel data approach
    JEL: R12 R11 O4
    Date: 2012–03–20
  12. By: Banerjee, Abhijit; Duflo, Esther; Qian, Nancy
    Abstract: This paper estimates the effect of access to transportation networks on regional economic outcomes in China over a twenty-period of rapid income growth. It addresses the problem of the endogenous placement of networks by exploiting the fact that these networks tend to connect historical cities. Our results show that proximity to transportation networks have a moderate positive causal effect on per capita GDP levels across sectors, but no effect on per capita GDP growth. We provide a simple theoretical framework with empirically testable predictions to interpret our results. We argue that our results are consistent with factor mobility playing an important role in determining the economic benefits of infrastructure development.
    Keywords: firms; growth; inequality; infrastructure
    JEL: D2 O4 R4
    Date: 2012–03
  13. By: Darlene C. Chisolm; George Norman
    Abstract: This paper presents an empirical assessment of movie theatre attendance in two major metropolitan markets and provides strong support for the importance of spatial characteristics in determing attendance. We consider the hypothesis that attendance at particular movie theatres reflects a tension between two effects: a negative competion effect and a positive agglomeration effect. We find evidence that the competition effect dominates. Further, we identify a pattern of systematic spatial decay in the impact of this effect on demand.
    JEL: L11 D43 L82
    Date: 2011
  14. By: Olga Alonso-Villar; Coral del Río
    Abstract: This paper reflects about the invariance property that regional economics is implicitly assuming when “relative” inequality measures, such as the Gini index, are used to quantify the geographic concentration of economic activity. In addition, it proposes a new concentration measure that is based on an “absolute” inequality index. The properties of this variance-type index are analyzed. An “absolute” employment Lorenz curve is also proposed to measure concentration, the dominance criterion of which is consistent with this new index. Finally, the usefulness of the new measures is illustrated by using manufacturing employment data in Spain.
    Keywords: Inequality measures; Geographic concentration; Axioms
    JEL: R12 D63
    Date: 2010–11
  15. By: Johannes Vatter
    Abstract: This paper examines regional differences in subjective well-being (SWB) in Germany. Inferential statistics indicate a diminishing but still significant gap between East and West Germany, but also differing levels of SWB within both parts. The observed regional pattern of life satisfaction reflects macroeconomic fundamentals, where labor market conditions play a dominant role. Differing levels of GDP and economic growth have contributed rather indirectly to regional well-being such that the years since the German reunification can be considered as a period of joyless growth. In total, approximately half of "satisfaction gap" between East and West Germany can be attributed to differing macroeconomic conditions. Moreover, the effects of unemployment and income differ in size between regions such that one can assume increasing marginal disutility of unemployment. The comparably high levels of life satisfaction in Northern Germany are driven mostly by couples and go along with significantly higher fertility rates. Overall, we conclude that comparisons of SWB within a single country provide valid information.
    Keywords: Subjective well-being, regional disparities, unemployment, economic growth, fertility rate
    JEL: R10 I31
    Date: 2012
  16. By: Iwata, Shinichiro; Sumita, Kazuto; Fujisawa, Mieko
    Abstract: This paper examines real estate pricing featuring the price response curve, both theoretically and empirically. The Bertrand model with differentiated products suggests that the price response of real estate may differ when properties in the vicinity are priced by an affiliated firm or one's own firm. This is because the firm can maintain the collusive state if real estate prices in the neighborhood are priced by allies, whereas it loses it if prices are priced by rivals. To examine this prediction, a spatial autoregressive model with autoregressive and heteroskedastic disturbances, including a share of allies in the vicinity, is estimated using data on the residential condominium market in central Tokyo. Empirical results provide support for the model prediction.
    Keywords: Real estate prices; Strategic pricing; Spatial econometrics
    JEL: D21 L85 C31 D43 R31
    Date: 2012–03
  17. By: Hirota, Haruaki; Yunoue, Hideo
    Abstract: The number of municipalities in Japan has decreased from 3,232 in 1999 to 1,820 in 2006 because of municipal mergers, called Heisei-no-Daigappei. This paper estimates the political choices of local council members in Japan’s municipal mergers. In Japan, being a local council member is a full-time job. The local council has “veto powers” over local administration. Since the wage for a local council member is quite high, council members like to keep their seats. The jobs of local council members are affected by municipal mergers, as preferential treatment and penalties are delivered by the central government to the local government in municipal mergers. In our results, merged municipalities apply “Special Provisions” for local council members because of the size of the municipality. The choice of municipality is also affected by the national government’s political power. In addition, Special Provisions lead to additional fiscal burdens. These fiscal burdens will transfer to the whole country because “the Local Allocation Tax grants system” (abbreviated as LAT grants), a national grants system, works well in Japan. The municipalities that choose the Special Provisions exploit the benefits from other municipalities without any additional costs. Our results show that the central government induces the free-rider problem in Japan.
    Keywords: municipal mergers; local council size; intergovernmental relations; free riding
    JEL: H77 H11 D72
    Date: 2011–04–29
  18. By: Criscuolo, Chiara; Martin, Ralf; Overman, Henry G; Van Reenen, John
    Abstract: Business support policies designed to raise productivity and employment are common worldwide, but rigorous micro-econometric evaluation of their causal effects is rare. We exploit multiple changes in the area-specific eligibility criteria for a major program to support manufacturing jobs ('Regional Selective Assistance'). Area eligibility is governed by pan-European state aid rules which change every seven years and we use these rule changes to construct instrumental variables for program participation. We match two decades of UK panel data on the population of firms to all program participants. IV estimates find positive program treatment effect on employment, investment and net entry but not on TFP. OLS underestimates program effects because the policy targets underperforming plants and areas. The treatment effect is confined to smaller firms with no effect for larger firms (e.g. over 150 employees). We also find the policy raises area level manufacturing employment mainly through significantly reducing unemployment. The positive program effect is not due to substitution between plants in the same area or between eligible and ineligible areas nearby. We estimate that 'cost per job' of the program was only $6,300 suggesting that in some respects investment subsidies can be cost effective.
    Keywords: employment; industrial policy; investment; productivity; regional policy
    JEL: H25 L52 L53 O47
    Date: 2012–02
  19. By: Sridhar, Kala Seetharam
    Abstract: In this study an attempt has been made to assess the potential of land as a municipal financing tool in four Indian cities, to enable better public service delivery and attainment of the MDGs. The institutional arrangements for land use are fragmented in India.s cities between the urban development authorities, which are state agencies, and the cities. To determine whether or not transfer of revenues from land to cities from the para-statal entities is justified, stochastic frontier analysis is used to determine the efficiency of Indian cities and the Indian states. The efficiency of service provision is examined taking the case of roads.
    Keywords: land lease, efficiency of cities, India, urban infrastructure finance, stochastic frontier analysis
    Date: 2011

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