nep-geo New Economics Papers
on Economic Geography
Issue of 2012‒09‒09
thirteen papers chosen by
Vassilis Monastiriotis
London School of Economics

  1. Spatial Perspectives of Improving Competition in Lebanon By Eduardo A. Haddad
  2. Ethnic Networks and the Location Choice of Migrants in Europe By Nowotny, Klaus; Pennerstorfer, Dieter
  3. Too much of a good thing? On the growth effects of the EU's regional policy By Becker, Sascha O.; Egger, Peter H.; Von Ehrlich, Maximilian
  4. Sustainable Development and Guidance for Entrepreneurship in Unfavoured Regions: The Case of the Alentejo Region By Rui Fragoso
  5. Absorptive Capacity and the Growth and Investment Effects of Regional Transfers: Regression Discontinuity Design with Heterogeneous Treatment Effects By Becker, Sascha O; Egger, Peter H; Von Ehrlich, Maximilian
  6. Strategic interactions in public R&D across EU-15 countries: A spatial econometric analysis By Hakim Hammadou; Sonia Paty; Maria Savona
  7. The persistence of (subnational) fortune : geography, agglomeration, and institutions in the new world By Maloney, William F.; Caicedo, Felipe Valencia
  8. Simulating the Effects of Michigan's MEGA Tax Credit Program on Job Creation and Fiscal Benefits By Timothy J. Bartik; George A. Erickcek
  9. Tourism sector in Panama : regional economic impacts and the potential to benefit the poor By Klytchnikova, Irina; Dorosh, Paul
  10. Public housing units vs. housing vouchers: accessibility, local public goods, and welfare By Leung, Charles Ka Yui; Sarpca, Sinan; Yilmaz, Kuzey
  11. Personal Indebtedness, Spatial Effects and Crime By Stuart McIntyre; Donald Lacombe
  12. A Spatial Econometric Analysis of the Effect of Vertical Restraints and Branding on Retail Gasoline Pricing By Stephen Hogg; Stan Hurn; Stuart McDonald; Alicia Rambaldi
  13. Regional Policies, Firm Characteristics, and Exporting in the Indian State of Karnataka By Pradhan, Jaya Prakash; Zohair, Mohammad; Alagawadi, Mallikarjun V.

  1. By: Eduardo A. Haddad
    Abstract: This paper introduces the ARZ model – a fully operational spatial computable general equilibrium model for Lebanon – and its use for the analysis of place-based policies in Lebanon, in an attempt to bring additional insights to some of the proposals presented in the National Physical Master Plan of the Lebanese Territory. The ARZ model uses a similar approach to Haddad and Hewings (2005) to incorporate recent theoretical developments in the new economic geography. We apply the model to look at the ex ante potential spatial implications of an increase in domestic and international integration of Lebanese regions through reductions in trade costs.
    Keywords: Spatial CGE model; trade cost; spatial interaction; Lebanon; competition policies
    JEL: R11 R13 R15
    Date: 2012–08–11
  2. By: Nowotny, Klaus (University of Salzburg); Pennerstorfer, Dieter (Austrian Institute of Economic Research)
    Abstract: This paper analyzes the role of ethnic networks in the location decision of migrants to the EU at the regional level. Using a random parameters logit specification we find a substantially positive effect of ethnic networks on the location decision of migrants. Furthermore, we find evidence of spatial spillovers in the effect of ethnic networks. Analyzing the trade-off between potential income and network size, we find that migrants would require a sizable compensation for living in a region with a smaller ethnic network, especially when considering regions where only few previous migrants from the same country of origin are located.
    Keywords: network migration; ethnic networks; random parameters logit
    JEL: C35 F22 R23
    Date: 2012–09–03
  3. By: Becker, Sascha O. (University of Warwick); Egger, Peter H. (ETH Zurich); Von Ehrlich, Maximilian (ETH Zurich)
    Abstract: The European Union (EU) provides grants to disadvantaged regions of member states from two pools, the Structural Funds and the Cohesion Fund. The main goal of the associated transfers is to facilitate convergence of poor regions (in terms of per-capita income) to the EU average. We use data at the NUTS3 level from the last two EU budgetary periods (1994-99 and 2000-06) and generalized propensity score estimation to analyze to which extent the goal of fostering growth in the target regions was achieved with the funds provided and whether or not more transfers generated stronger growth effects. We find that, overall, EU transfers enable faster growth in the recipient regions as intended, but we estimate that in 36% of the recipient regions the transfer intensity exceeds the aggregate effciency maximizing level and in 18% of the regions a reduction of transfers would not even reduce their growth. We conclude that some reallocation of the funds across target regions would lead to higher aggregate growth in the EU and could generate even faster convergence than the current scheme does.
    Keywords: EU regional policy; Regional growth; Generalized; propensity score estimation; Quasi-randomized experiment
    Date: 2012
  4. By: Rui Fragoso (University of Évora. Management Department. ICAM/CEFAGE)
    Abstract: The unfavoured Portuguese regions have a level of life and economic growth rates lower than favoured regions, and the mean of European Union and hence have less entrepreneurial activities. The adoption of strategies of sustainable development driven by entrepreneurship phenomena could be a viable solution. Thus, the likely relationships between entrepreneurship and regional features were described, and sources of entrepreneurship opportunities for strategies based on the own regional resources and competitive advantages were identified. The paper concludes that for the Alentejo region region, some habitat variables should be reinforced for promoting entrepreneurship and sustainable development, and the main opportunities are related to the economic activities that belong to the regional productive profile of specialization.
    Keywords: Entrepreneurship; Sustainable development; strategic positioning; habitat variables.
    JEL: M1 M13 M2 M20
    Date: 2012
  5. By: Becker, Sascha O (University of Warwick); Egger, Peter H (ETH Zurich); Von Ehrlich, Maximilian (ETH Zurich)
    Abstract: Researchers often estimate average treatment eects of programs without investigating heterogeneity across units. Yet, individuals, rms, regions, or countries vary in their ability, e.g., to utilize transfers. We analyze Objec- tive 1 Structural Funds transfers of the European Commission to regions of EU member states below a certain income level by way of a regression dis- continuity design with systematically heterogeneous treatment eects. Only about 30% and 21% of the regions { those with sucient human capital and good-enough institutions { are able to turn transfers into faster per-capita income growth and per-capita investment. In general, the variance of the treatment effect is much bigger than its mean.
    Keywords: Regional transfers; Absorptive capacity; Heterogeneous local average treatment effects; Regression discontinuity design.
    Date: 2012
  6. By: Hakim Hammadou; Sonia Paty; Maria Savona
    Abstract: The aim of this paper is to test the presence of strategic interactions in government spending on Research and Development (R&D) among EU-15 countries. We add to the literature on public choice strategic interactions in general, and to work on R&D spending in particular. We take account of traditional and some overlooked factors related to countries' public R&D spending, including (i) the international context -- i.e. Lisbon strategy; (ii) country characteristics - the National System of Innovation, and more specifically national similarities in relation to (a) trade and economic size and (b) sectoral specialization. Sectoral specialization is likely to affect government spending, depending on the mechanisms of complementarity or substitution between public and private R&D. Using a spatial dynamic panel model in which spatial matrices are specified both in terms of traditional Euclidean distance, and sectoral specialization proximity, we confirm the existence of strategic interactions on R&D spending among European countries with similar economic size, international trade and sectoral structure. Unlike the results emerging from the literature on strategic interactions in public choice, geographic proximity seems not to affect interactions related to public spending on R&D.
    Keywords: Public spending strategic interactions, Public R&D expenditures, National Systems of Innovation, Complementarity public and private R&D, Spatial interactions, EU countries, spatial dynamic panel data
    Date: 2012–08–27
  7. By: Maloney, William F.; Caicedo, Felipe Valencia
    Abstract: Using subnational historical data, this paper establishes the within country persistence of economic activity in the New World over the last half millennium. The paper constructs a data set incorporating measures of pre-colonial population density, new measures of present regional per capita income and population, and a comprehensive set of locational fundamentals. These fundamentals are shown to have explanatory power: native populations throughout the hemisphere were found in more livable and productive places. It is then shown that high pre-colonial density areas tend to be dense today: population agglomerations persist. The data and historical evidence suggest this is due partly to locational fundamentals, but also to classic agglomeration effects: colonialists established settlements near existing native populations for reasons of labor, trade, knowledge and defense. Further, high density (historically prosperous) areas also tend to have higher incomes today, and largely due to agglomeration effects: fortune persists for the United States and most of Latin America. Finally extractive institutions, in this case, slavery, reduce persistence even if they do not overwhelm other forces in its favor.
    Keywords: Population Policies,Economic Theory&Research,Inequality,E-Business,Transport Economics Policy&Planning
    Date: 2012–09–01
  8. By: Timothy J. Bartik (W.E. Upjohn Institute for Employment Research); George A. Erickcek (W.E. Upjohn Institute for Employment Research)
    Abstract: This paper simulates job and fiscal impacts of Michigan’s MEGA tax credit program for job creation. Under plausible assumptions about how such credits affect business location decisions, the net costs per job created of the MEGA program are simulated to be of modest size. The job creation impacts of MEGA are simulated to be considerably larger than devoting similar dollar resources to general business tax cuts. The simulation methodology developed here is applicable to incentives in other states.
    Keywords: State and local economic development policy, tax incentives, fiscal impact analysis, labor market benefits, regional multipliers
    JEL: R11 R23 R28 R30 R58 H70
    Date: 2012–06
  9. By: Klytchnikova, Irina; Dorosh, Paul
    Abstract: Tourism is one of Latin America's fastest growing industries but the impact of tourism on the poor and the effects on lagging regions are under debate. Many studies have evaluated the growth impacts of the tourism sector but few have analyzed the impact of tourism on the economy and poverty at the subnational level in developing countries. As a country marked by a"dual economy,"Panama shares with other Latin American countries a fast growing, modern urban sector side by side with impoverished rural and peri-urban populations. Tourism has been growing in Panama and contributes at least 6 percent of gross domestic product. This paper presents the results of a top-down assessment of the impact of tourism spending on growth and poverty at the regional (province) level in Panama using a Social Accounting Matrix model. As revealed by this study, the tourism sector has large multiplier effects on the Panamanian economy and has the potential for significant benefits to the poor. But tourism's poverty benefits are neither automatic nor ubiquitous. They depend on where and how supply chains are structured and on the way tourists spend their money.
    Keywords: Cultural Policy,Cultural Heritage&Preservation,Tourism and Ecotourism,Transport Economics Policy&Planning,Accommodation&Tourism Industry
    Date: 2012–08–01
  10. By: Leung, Charles Ka Yui; Sarpca, Sinan; Yilmaz, Kuzey
    Abstract: We develop a general equilibrium model of residential choice and study the effects of two housing aid policies, public housing units and housing vouchers. Land is differentiated by both residential accessibility and local public goods, and the provision levels of local public goods are determined by property tax revenues and neighborhood compositions. Households differ in their incomes and preferences for local public goods. Housing aid policies are financed by general income taxes. We discuss how the location of public housing units is a fundamental policy variable, in addition to the numbers and sizes of units, and argue that vouchers not only cause less distortion for social welfare compared to public housing, but may also improve overall welfare.
    Keywords: Public housing; housing vouchers; housing policy; welfare; residential location choice; local public goods; endogenous sorting
    JEL: R10 H40 D60
    Date: 2012
  11. By: Stuart McIntyre (Department of Economics, University of Strathclyde); Donald Lacombe (Regional Research Institute, West Virginia University,)
    Abstract: There is a long and detailed history of attempts to understand what causes crime. One of the most prominent strands of this literature has sought to better understand the relationship between economic conditions and crime. Following Becker (1968), the economic argument is that in an attempt to maintain consumption in the face of unemployment, people may resort to sources of illicit income. In a similar manner, we might expect ex-ante, that increases in the level of personal indebtedness would be likely to provide similar incentives to engage in criminality. In this paper we seek to understand the spatial pattern of property and theft crimes using a range of socioeconomic variables, including data on the level of personal indebtedness.
    Keywords: Spatial Econometrics, Crime, Personal Debt, Economic Conditions
    JEL: R1 K42 C11 C21
    Date: 2012–05
  12. By: Stephen Hogg (UQ); Stan Hurn (QUT); Stuart McDonald (UQ); Alicia Rambaldi
    Abstract: This paper builds an econometric model of retail gas competition to explain the pricing decisions of retail outlets in terms of vertical management structures, input costs and the characteristics of the local market they operate within. The model is estimated using price data from retail outlets from the South-Eastern Queensland region in Australia, but the generic nature of the model means that the results will be of general interest. The results indicate that when the cost of crude oil and demographic variations across different localities are accounted for, branding (i.e. whether the retail outlet is affiliated with one of the major brand distributers - Shell, Caltex, Mobil or BP) has a statistically significant positive effect on prices at nearby retail outlets. Conversely, the presence of an independent (non-branded) retailer within a locality has the effect of lowering retail prices. Furthermore, the results of this research show that service stations participating in discount coupon schemes with the two major retail supermarket chains have the effect of largely off-setting the price increase derived from branding affiliation. While, branding effects are not fully cancelled out, the overall effect is that prices are still higher than if branding did not occur.
    Keywords: Retail Gasoline Pricing, Vertical Restraints, Shop-a-Docket Discount Scheme, Spatial Econometrics, Australia
    JEL: C21 L13
    Date: 2012–08–27
  13. By: Pradhan, Jaya Prakash; Zohair, Mohammad; Alagawadi, Mallikarjun V.
    Abstract: Karnataka is among pioneering Indian states to frame suitable policies aimed at encouraging local firms’ export activities. Promotion and facilitation of firms to look beyond national market was achieved by creating a strong enabling institutional framework, supporting expansion of productive capacity, and helping exporting firms gain access to required physical infrastructure. As a result of such policies, exports from the Indian state of Karnataka have been growing rapidly with contributing over half a quarter of Indian exports of commodities and software. The present study provides an overview of export trends and patterns of Karnataka in the backdrop of the state policy developments. It examines the relevance of various factors pertinent to the exports by Karnataka manufacturing firms and deduces implications for development policy of the state.
    Keywords: Export Policies; Exports; Karnataka; India
    JEL: F10 O24 O53
    Date: 2012–08–17

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