nep-geo New Economics Papers
on Economic Geography
Issue of 2013‒07‒15
eighteen papers chosen by
Andreas Koch
Institute for Applied Economic Research

  1. Proximity strategies in outsourcing relations: the role of geographical, cultural and relational proximity in the European automotive industry By Alexander SCHMITT; Johannes VAN BIESEBROECK
  2. Breaking Up Is Hard To Do: Why Firms Fragment Production Across Locations By Teresa C. Fort
  3. The Footloose Entrepreneur Model with 3 Regions By José Gaspar; Sofia Balbina Santos Dias de Castro; João Correia da Silva
  5. The Long Shadow of Port Infrastructure in Germany – Cause or Consequence of Regional Prosperity? By Philipp Breidenbach; Timo Mitze
  6. Measuring Cultural Diversity at a Regional Level By Dirk Dohse; Robert Gold
  7. A Bayesian Perspective to Analyze Branch Location Patterns in Spanish Banking By Alamá Sabater Luisa; Conesa Guillén David; Forte Deltell Anabel; Tortosa-Ausina Emili
  8. Kaldor's 1970 Regional Growth Model Revisited By A.P.Thirlwall
  9. Self-employment and Job Generation in Metropolitan Areas, 1969-2009 By André van Stel; Martin Carree; Emilio Congregado; Antonio Golpe
  10. Road Connectivity and the Border Effect: Evidence from Europe By Henrik Braconier; Mauro Pisu
  11. Microfinance Banks and Household Access to Finance By Brown, Martin; Guin, Benjamin; Kirschenmann, Karolin
  12. Clusters and the New Growth Path for Europe By Christian Ketels; Sergiy Protsiv
  13. Towards a General Theory of Mixed Zones: The Role of Congestion By Yuval Kantor; Piet Rietveld; Jos van Ommeren
  14. Long-run Economic Impacts of Thai Flooding: Geographical Simulation Analysis By Ikumo Isono; Satoru Kumagai
  15. Spatial Data Analysis in Stata: An Overview By Maurizio Pisati
  16. Introduction to spatial-autoregressive models using Stata By David Drukker
  17. xsmle—A Command to Estimate Spatial Panel Models in Stata By Federico Belotti; Gordon Hughes; Andrea Piano Mortari
  18. Spatial indices of residential segregation By Maurizio Pisati

  1. By: Alexander SCHMITT; Johannes VAN BIESEBROECK
    Abstract: Trends towards international fragmentation of production and modular process technologies have increased the importance of proximity in the supply chain of sophisticated manufactured goods. Using a rich and novel data set for the European automotive industry, we simultaneously evaluate the relative importance of geographical, cultural and relational proximity in sourcing strategies. The estimates indicate that each dimension provides an independent benefit and also which measures have the largest relative importance. We also find that the positive effects attributed to some measures reflect past relationships rather than predict new ones. In particular, co-location and a low cultural distance should be interpreted as outcomes of a sourcing strategy, not as predictors for sourcing success. We investigate to what extent firms from different countries follow different strategies and which choices suppliers can make to boost their attractiveness as outsourcing partner.
    Date: 2013–02
  2. By: Teresa C. Fort
    Abstract: This paper documents the relative importance of labor cost differences, distance to suppliers, and communication technology in a rm's domestic and foreign sourcing decisions. Using an original dataset of U.S. manufacturers' decisions to contract for manufacturing services, I show that domestic fragmentation: i) is far more prevalent than offshoring; ii) changes rms' opportunity cost to offshore; and iii) is facilitated by communication technology. In contrast, communication technology does not necessarily lead rms to offshore. Firms fragment production to access cheaper labor, and countries that offer signifcant labor cost savings tend not to have the technology infrastructure to support high-tech production.
    Keywords: fragmentation, offshoring, technology, contract manufacturing services
    JEL: F14 F23 L23
    Date: 2013–07
  3. By: José Gaspar (CEF.UP and Faculdade de Economia, Universidade do Porto); Sofia Balbina Santos Dias de Castro (CMUP e Faculdade de Economia, Universidade do Porto); João Correia da Silva (CEF.UP and Faculdade de Economia, Universidade do Porto)
    Abstract: We study a 3-region version of the Footloose Entrepreneur model by Forslid and Ottaviano (J Econ Geogr, 2003). We focus on the analysis of stability of three types of long-run equilibria: agglomeration, dispersion and partial dispersion. We find that the 3-region model exhibits more tendency for agglomeration and less tendency for dispersion than the 2-region model. We show numerical evidence suggesting that equilibria with partial dispersion are always unstable. We also discuss the existence and robustness of bifurcations in the 3-region model.
    Keywords: Core-Periphery, Footloose Entrepreneur, Three Regions
    JEL: R10 R12 R23
    Date: 2013–07
  4. By: Mary M. Kritz; Douglas T. Gurak; Min-Ah Lee
    Abstract: Immigrants have a markedly higher likelihood of migrating internally if they live in new estinations. This paper looks at why that pattern occurs and at how immigrants’ out-migration to new versus traditional destinations responds to their labor market economic and industrial structure, nativity origins and concentration, geographic region, and 1995 labor market type. Confidential data from the 2000 and 1990 decennial censuses are used for the analysis. Metropolitan and non-metropolitan areas are categorized into 741 local labor markets and classified as new or traditional based on their nativity concentrations of immigrants from the largest Asian, Caribbean and Latin American origins. The analysis showed that immigrants were less likely to migrate to new destinations if they lived in areas of higher nativity concentration, foreign-born population growth, and wages but more likely to make that move if they were professionals, agricultural or blue collar workers, highly educated, fluent in English, and lived in other new destinations. While most immigrants are more likely to migrate to new rather than traditional destinations that outcome differs sharply for immigrants from different origins and for some immigrants, particularly those from the Caribbean, the dispersal process to new destinations has barely started.
    Date: 2013–06
  5. By: Philipp Breidenbach; Timo Mitze
    Abstract: Transport infrastructure is viewed as an important determinant of regional growth and development. While this prediction especially holds from a theoretical perspective based on endogenous growth theories, from an empirical perspective it is not easy to verify this causal link, though. The main reason for this diffi culty is that it is hard to measure whether transport infrastructure is indeed the exogenous driver of regional development or whether it is rather an endogenous reflection of the higher transportation demand in prospering regions. In this paper, we analyse the long-run effect of port facilities on regional income levels in Germany. Since it is very likely that the “reversed causality” problem applies to our sample setting, we use an identification strategy that is based on exogenous longrun instruments. In particular, port facilities built before the industrial revolution (about 1850 in Germany) can be seen as an adequate instrument for current port infrastructure since they are exogenous to recent economic development. Using German regional data for 1991–2008, our results hint at a positive correlation between port locations and regional per capita GDP, but do not provide evidence for a causal relationship. For the regional variation of population levels as a more general indicator for agglomeration effects, the causal relationship running from port infrastructure provision to increasing population levels holds nonetheless.
    Keywords: Port infrastructure; regional income; causal effects; IV
    JEL: C26 R12 R40
    Date: 2013–07
  6. By: Dirk Dohse; Robert Gold
    Abstract: This paper discusses alternative measures of cultural diversity to be used in subsequent investigations of the impacts of cultural diversity on regional development in Europe. It derives indicators for the measurement of cultural diversity from the literature and describes possible adjustments and refinements. Finally, the discussed measures and weights are applied in order to provide a first descriptive overview of cultural diversity in in Europe at the regional (NUTS-2) level.
    Keywords: Regional development, cultural diversity, measurement issues
    JEL: M13 O18 R11
    Date: 2013–06
  7. By: Alamá Sabater Luisa (Jaume I Universtity); Conesa Guillén David (University of Valencia); Forte Deltell Anabel (Jaume I University); Tortosa-Ausina Emili (INSTITUTO VALENCIANO DE INVESTIGACIONES ECONÓMICAS (Ivie) UNIVERSITY JAUME I)
    Abstract: We analyze the determinants of bank branch location in Spain controlling for geography explicitly. After a long period of intense expansion, most savings banks are now involved in merger processes. However, given the contributions of this type of bank to combatting financial exclusion, this process might exacerbate the consequences of the crisis for some social groups. Related problems such as new banking regulation initiatives, or the current excess capacity in the sector, add further relevance to this problem. We address the issue from a Bayesian spatial perspective, which has several advantages over other methodologies used in previous studies. Specifically, the techniques we choose allow us to assess with some precision whether over-branching or under-branching have taken place. Results suggest that both phenomena exist in the Spanish banking sector, although implications for the three types of banks in the industry (commercial banks, savings banks, credit unions) differ.
    Keywords: Bank, Bayesian statistics, branch, municipality.
    JEL: G21 R10 C11
    Date: 2013–07
  8. By: A.P.Thirlwall
    Abstract: Kaldor's 1970 paper 'The Case for Regional Policies' was republished in the sixtieth anniversary volume of the Scottish Journal of Political Economy. This paper reflects on the model after more than forty years, and argues that even though it has been criticised for its deterministic nature, it has lost none of its relevance. It predates the ideas of so-called 'new' growth theory, and the new economic geography of Krugman, and provides at least a partial explanation of why growth rates and levels of per capita income between regions and between countries can continue to persist and even widen in contrast to the predictions of orthodox equilibrium theory.
    Keywords: Regional Growth; Kaldor; Uneven Development; Cumulative Causation
    JEL: O18 R11
    Date: 2013–07
  9. By: André van Stel; Martin Carree; Emilio Congregado; Antonio Golpe
    Abstract: Many regional development policy initiatives assume that entrepreneurial activities promote economic growth. Empirical research has presented rationale for this argument showing that small firms create proportionally more new jobs than large ones. However, little research has been performed on the issue of net job generation at the urban level, particularly when self-employment is considered as an indicator of entrepreneurial activities. This paper investigates to what extent U.S. metropolitan areas in the 1969-2009 period characterized by relatively high rates of self-employment also have shown relatively high rates of subsequent total employment growth. The analysis corrects for the influence of sectoral composition, wage level, educational attainment, presence of research universities and size of the metropolitan area to measure the extent to which the number and quality of self-employed in a region contribute to total employment growth. It finds the relationship between self-employment rates and subsequent total employment growth to be positive on average during the forty-year period but to weaken over time.
    Date: 2013–04–18
  10. By: Henrik Braconier; Mauro Pisu
    Abstract: Several studies have reported a large negative effect of national borders on the volume of trade. We provide new estimates of the border effect for continental Europe using road rather than great circle – or “as-crows-fly” – distance. Road distances for 48 180 European city pairs have been extracted from Bing Maps Routing Services. As our dataset also has information on travel time, we are able to consider costs related to time in addition to those depending on distance. We find that for the same great circle distance and the same city size, the road distance between two cities located in the same country is around 10% shorter than that between cities located in different ones. Travel speed is also higher between cities in the same country. We find that by using measures based on the actual road distance rather than the great circle distance, the negative effect of international borders on goods trade in a standard gravity equation is lowered by around 15%. Time-related trade costs account for an additional 10% reduction in the border effect. Overall these results point to the importance of road networks – and road transport policy in general – to enhance market integration.<P>La connectivité routière et l'effet frontière : données concernant l'Europe<BR>Plusieurs études font état d’un effet négatif très prononcé des frontières nationales sur le volume des échanges. Nous livrons de nouvelles estimations de l’effet frontière en Europe continentale en utilisant les distances routières au lieu des distances orthodromiques – c’est-à-dire « à vol d’oiseau ». Les distances routières de 48 180 paires de villes européennes sont issues du service de calcul d’itinéraires de Bing Cartes. Étant donné que notre ensemble de données comporte aussi des informations sur les temps de trajet, nous sommes en mesure de prendre en compte les coûts liés au temps, en plus de ceux qui dépendent de la distance. Nous constatons qu’à distance orthodromique et taille d’agglomération égales, la distance routière entre deux villes d’un même pays est inférieure de 10 % environ à celle qui sépare des villes situées dans des pays différents. De même, la distance est parcourue plus rapidement lorsque les villes se trouvent dans le même pays. Nous observons qu’en utilisant des mesures établies sur la distance routière effective, plutôt que sur la distance orthodromique, l’effet négatif des frontières internationales sur les échanges de marchandises dans une équation de gravité standard diminue d’environ 15 %. Les coûts des échanges liés à la durée des trajets sont à l’origine d’une réduction supplémentaire de 10 % de l’effet frontière. Dans l’ensemble, ces résultats font ressortir l’importance des réseaux routiers – et de la politique du transport routier en général – pour renforcer l’intégration des marchés.
    Keywords: international trade, distance, gravity, road transport, travel time, transport routier, échanges internationaux, distance, temps de trajet, gravité
    JEL: F14 F15 R49
    Date: 2013–07–01
  11. By: Brown, Martin; Guin, Benjamin; Kirschenmann, Karolin
    Abstract: We examine how the expansion of the branch network of a microfinance bank between 2006 and 2010 in South-East Europe has affected the use of bank accounts by households in the region. Our analysis is based on survey data reporting the use of bank accounts, socioeconomic characteristics and geographic location of 8,000 households in four countries. We geocode the location of each household and match this data with branch location information for the major microfinance bank in the region, ProCredit Bank, as well as for a large retail bank in each country. We report three key results: First, in locations where ProCredit opened a new branch between 2006 and 2010 the share of households with a bank account increased more than in locations where it did not open a new branch. Second, a new ProCredit branch leads to a stronger increase in the use of bank accounts among low- and middle-income households than among high-income households. Third, we find that ProCredit not only opens branches in areas with high economic activity, but also in areas where average household incomes are low. Overall our results suggest that microfinance banks do expand the frontier of finance as compared to ordinary retail banks.
    Keywords: Access to finance, Microfinance, Bank-ownership, Mission drift.
    JEL: G21 L2 O16 P34
    Date: 2013–02
  12. By: Christian Ketels; Sergiy Protsiv
    Abstract: This paper outlines elements of a conceptual framework that clarifies the role that clusters play relative to government policies and actions of individual companies in supporting the emergence of 'High Road'-strategies that lead to better New Growth Path-related outcomes. It then focuses on creating a new set of data that can start shedding light on the empirical relevance of this framework. The first main section of the paper draws on a new set of employment and wage data across European clusters. The data is used to analyze whether cluster presence is significantly correlated with higher wages, which as an indicator of higher productivity, are likely to signal the presence of 'High Road'-strategies. We then take a closer look at the scale of the relationship relative to location-specific and other effects. We find cluster presence to be significantly related to higher wages, with the effect being moderate but meaningful. This suggest that cluster presence enhances the ability of economic activities to deliver high performance, but is unlikely to be able to substitute weak business environment conditions. The second section then deploys a wide range of regional performance data collected for the European Competitiveness Index and the European Cluster Observatory. We create indicators for New Growth Path performance and its main dimensions, and classify European regions by their performance patterns. This provides critical insights into the compatibility of the different economics, social, and ecological objectives pursued. We then relate these outcomes to the presence of strong cluster portfolios and strong business environment conditions. Both are most strongly associated with stronger economic outcomes, with lower impact on other dimensions of the New Growth Path. The third section creates a new dataset of cluster initiative intensity at the regional and cluster category-level. It also classifies close to 1000 cluster initiatives in Europe by their engagement in New Growth Path-related activities. We then deploy this data to test the impact of cluster initiatives on regional New Growth Path-performance. Overall, we find evidence consistent with clusters playing a role in making 'High Road'-strategies more likely to emerge. We also find evidence that European regions differ in their strategies towards these goals, with some being able to pursue all three dimensions in parallel. Cluster initiatives widely engage in New Growth Path-related activities, indicating their potential as a tool in mobilizing joint action in these areas.
    Keywords: Clusters, competitiveness, economic growth path, economic strategy, European economic policy, globalisation, industrial policy, new technologies, SMEs
    JEL: D04 L16 L52 R58
    Date: 2013–07
  13. By: Yuval Kantor (VU University); Piet Rietveld (VU University); Jos van Ommeren (VU University)
    Abstract: Mixed commercial and residential land use is observed in most cities around the world. This is in contrast to a myriad of bid rent models, which predict that mixed land use does not occur. The main exception are the models by Fujita and Ogawa (1982) and Lucas and Rossi-Hansberg (2002) that predict the presence of a very restrictive type of mixed land use. The latter study derives the equilibrium distribution of residential and commercial land uses while allowing for endogenous agglomeration externalities. We extend this model by introducing a traffic congestion externality. We show that congestion induces a general type of mixed land use zone, which is comparable to the type of zone assumed in the model of Wheaton (2004). The interplay between these externalities is then demonstrated, as reduced congestion leads to commercial concentration and agglomeration gains.
    Keywords: land use, congestion, agglomeration, externalities
    JEL: R13
    Date: 2013–06–20
  14. By: Ikumo Isono (Economic Research Institute for ASEAN and East Asia); Satoru Kumagai (Institute of Developing Economies, Japan External Trade Organization (IDEJETRO))
    Abstract: We discuss the long-run economic impact of natural disasters on the countries concerned by examining the case of Thai flooding in 2011. If the damage caused by disasters is really serious, industries will move out from the countries in question, and this outflow leads to a negative impact on the national economies in the long run. By using IDE/ERIA-GSM and utilizing short-run forecast for the basic setting, we estimate the seriousness of the flooding in terms of the long-term economic performance. Simulation results show that negative long-run impacts of the flood will be moderate, because many companies’ first reaction to the flood was to seek possible relocation of their production sites within Thailand
    Keywords: Thailand, flood, new economic geography, computable general equilibrium models, disaster management
    JEL: O53 Q54 R13
    Date: 2013–07
  15. By: Maurizio Pisati (Università degli Studi di Milano-Bicocca)
    Date: 2013–07–09
  16. By: David Drukker (StataCorp)
    Abstract: This session offers an introduction to spatial econometrics using some user-written Stata commands. I will discuss the estimation and interpretation of the parameters in the cross-sectional spatial-autoregressive model. Data management issues pertaining to spatial-weighting matrices used in the analysis will also be addressed.
    Date: 2013–07–08
  17. By: Federico Belotti (University of Rome "Tor Vergata"); Gordon Hughes (University of Edinburgh); Andrea Piano Mortari (University of Rome "Tor Vergata")
    Abstract: Econometricians have begun to devote more attention to spatial interactions when carrying out applied econometric studies. The new command we are presenting, xsmle, fits fixed- and random-effects spatial models for balanced panel data for a wide range of specifications: the spatial autoregressive model, spatial error model, spatial Durbin model, spatial autoregressive model with autoregressive disturbances, and generalized spatial random effect model with or without a dynamic component. Different weighting matrices may be specified for different components of the models and both Stata matrices and spmat objects are allowed. Furthermore, xsmle calculates direct, indirect, and total effects according to Lesage (2008), implements Lee and Yu (2010) data transformation for fixed-effects models, and may be used with mi prefix when the panel is unbalanced.
    Date: 2013–07–03
  18. By: Maurizio Pisati (Università degli Studi di Milano-Bicocca)
    Date: 2013–07–08

This nep-geo issue is ©2013 by Andreas Koch. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
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