nep-geo New Economics Papers
on Economic Geography
Issue of 2013‒12‒15
twenty papers chosen by
Andreas Koch
Institute for Applied Economic Research

  1. Modeling Knowledge Networks in Economic Geography: A Discussion of Four Empirical Strategies By Tom Broekel; Pierre-Alexandre Balland; Martijn Burger; Frank van Oort
  2. Do Inventors Talk to Strangers? On Proximity and Collaborative Knowledge Creation By Crescenzi, Riccardo; Nathan, Max; Rodríguez-Pose, Andrés
  3. Internal Geography, International Trade, and Regional Specialization By A. Kerem Coşar; Pablo D. Fajgelbaum
  4. Emerging market multinationals in the European Union – A location choice analysis By Hassan, Sohaib Shahzad; Jindra, Björn; Cantner, Uwe; Günther, Jutta
  5. Collision of lions and butterflies or mutual neglect - outside the Anglo-American domain, too? The publication and citation behaviour of economic geographers and geographical economists compared By Rolf Sternberg
  6. The Economic Performance of Clustered and Non Clustered Firms along the different Phases of the Cluster Life Cycle: The Portuguese Cork Industry Case By Amélia Branco; João Carlos Lopes
  7. Geographic Proximity and the Pro-trade Effect of Migration: State-level Evidence from Mexican Migrants in the United States By Michael Good
  8. High-Growth Firms: What is the Impact of Region-Specific Characteristics? By Patrícia Bogas; Natália Barbosa
  9. From smart specialisation to smart experimentation: Towards a new theoretical framework for EU regional policy By Benner, Maximilian
  10. Productive cities: Sorting, selection, and agglomeration By Kristian Behrens; Gilles Duranton; Frédéric Robert-Nicoud
  11. RETURNS TO LOCATION IN RETAIL: Investigating the relevance of market size and regional hierarchy By Öner, Özge
  12. Spatial Nexus in Crime and Unemployment in Times of Crisis: Evidence from Germany By Povilas Lastauskas; Eirini Tatsi
  13. Efficiency And Productivity Growth Across The Italian Regions: The Regional Divide Revisited By Pompei, Fabrizio
  14. Survival of the Fittest in Cities: Urbanisation and Inequality By Kristian Behrens; Frédéric Robert-Nicoud;
  15. The Influence of Diversity on the Formation, Survival and Growth of New Firms By Backman, Mikaela; Kohlhase, Janet
  16. ‘Small area estimates of Subjective Wellbeing: Spatial Microsimulation on the Australian Unity Wellbeing Index Survey’ By Itismita Mohanty; Robert Tanton; Yogi Vidyattama; Marcia Keegan; Robert Cummins
  17. Regional Economic Links in Latin America: lessons from Asia and challenges from the regional links of other BRICS By Renato Baumann
  18. A Spatial Analysis of Agricultural Land Prices in Bavaria By Feichtinger, Paul; Salhofer, Paul
  19. Intraregionale Unterschiede in der Carsharing-Nachfrage - eine GIS-basierte empirische Analyse By Andreas Braun; Volker Hochschild; Andreas Koch
  20. Kollektive Identitäten in Industrial Cultural Districts: Theoretische und konzeptionelle Überlegungen am Beispiel des Schmuckindustrieclusters in Pforzheim By Kosche, Robert

  1. By: Tom Broekel; Pierre-Alexandre Balland; Martijn Burger; Frank van Oort
    Abstract: The importance of network structures for the transmission of knowledge and the diffusion of technological change has been emphasized in economic geography. Since network structures drive the innovative and economic performance of actors in regional contexts, it is crucial to explain how networks form and evolve over time and how they facilitate inter-organizational learning and knowledge transfer. The analysis of relational dependent variables, however, requires specific statistical procedures. In this paper, we discuss four different models that have been used in economic geography to explain the spatial context of network structures and their dynamics. First, we review gravity models and their recent extensions and modifications to deal with the specific characteristics of networked relations. Second, we discuss the quadratic assignment procedure that has been developed in mathematical sociology for diminishing the bias induced by network dependencies. Third, we present exponential random graph models that not only allow dependence between observations, but also model such network dependencies explicitly. Finally, we deal with dynamic networks, by introducing stochastic actor oriented models. Strengths and weaknesses of the different approaches are discussed together with domains of applicability for the analysis of (knowledge) network structures and their dynamics.
    Keywords: Economic geography, knowledge networks, network models, quadratic assignment procedure, gravity model, exponential random graph model, stochastic actor-oriented model
    JEL: R11 O32 D85
    Date: 2013–12
  2. By: Crescenzi, Riccardo (London School of Economics); Nathan, Max (London School of Economics); Rodríguez-Pose, Andrés (London School of Economics)
    Abstract: This paper investigates how physical, organisational, institutional, cognitive, social, and ethnic proximities between inventors shape their collaboration decisions. Using a new panel of UK inventors and a novel identification strategy, this paper systematically explores the net effects of all these 'proximities' on co-patenting. The regression analysis allows us to identify the full effects of each proximity, both on choice of collaborator and on the underlying decision to collaborate. The results show that physical proximity is an important influence on collaboration, but is mediated by organisational and ethnic factors. Over time, physical proximity increases in salience. For multiple inventors, geographic proximity is, however, much less important than organisational, social, and ethnic links. For inventors as a whole, proximities are fundamentally complementary, while for multiple inventors they are substitutes.
    Keywords: innovation, patents, proximities, cities, regions, knowledge spillovers, collaboration, ethnicity
    JEL: O31 O33 R11 R23
    Date: 2013–12
  3. By: A. Kerem Coşar; Pablo D. Fajgelbaum
    Abstract: We introduce an internal geography to the canonical model of international trade driven by comparative advantages to study the regional effects of external economic integration. The model features a dual-economy structure, in which locations near international gates specialize in export-oriented sectors while more distant locations do not trade with the rest of the world. The theory rationalizes patterns of specialization, employment, and relative incomes observed in developing countries that opened up to trade. Our empirical analysis based on industry-level data from Chinese prefectures demonstrates that international trade is an important driver of industry location within China as the theory implies.
    JEL: F11 R12
    Date: 2013–12
  4. By: Hassan, Sohaib Shahzad; Jindra, Björn; Cantner, Uwe; Günther, Jutta
    Abstract: The European Union (EU) is one of the largest recipients of outward foreign direct investment (OFDI) from emerging economies. We apply a discrete choice model to analyze the location choice of emerging market firms in the EU27. In particular, we test to what extent these firms’ location choices are related to agglomeration economies and knowledge externalities because these have been suggested as potential sources for technological catching-up for emerging market firms. Our results indicate that emerging market firms’ location choices differ from the choices of other investors. Emerging market firms place, on average, a higher value on urbanization, diversification economies and sector-specific human resources. However, we find evidence for heterogeneity in the location choices of emerging market firms depending on the home region and the sector of investment.
    Keywords: Outward FDI, location choice, emerging economies, European Union, Spill-overs, Knowledge-seeking FDI
    JEL: F23
    Date: 2013–08–01
  5. By: Rolf Sternberg (Institute of Economic and Cultural Geography, Leibniz University, Hannover)
    Abstract: This paper compares the publication and citation behaviour of economic geogra- phers and geographical economists. Based on a unique data set and consciously limited to researchers in the German-speaking world, empirical analyses show more parallels than expected. Convergence of scholars from both disciplines over time can be observed, as younger papers are more similar to each other than older ones. Publication together with foreign scholars is also becoming more frequent. Joint publications of both disciplines are still a rare, but increasing phenomenon. There seems to be a cooperation dividend if the lion and the butterfly write joint articles.
    Keywords: publications, citations, economic geography, geographical economics
    JEL: Y80 R10
    Date: 2013–12–11
  6. By: Amélia Branco; João Carlos Lopes
    Abstract: This paper is about the relative economic performance of clustered and non-clustered companies in the different phases of the cluster life cycle. It starts with the explanation of a puzzling localization behaviour, namely that most of the Portuguese cork manufacturing firms are concentrated in Santa Maria da Feira, a small county in the north of the country, whereas the bulk of the cork is produced in the south (Alentejo and Ribatejo). The historical roots and past and path dependence of the trajectory of this cluster are examined, as well as the identification of its life cycle phases. A comparative analysis of the economic performance of firms localized in Santa Maria da Feira and in other regions of the country is then made, using labour productivity data for a long time span of several decades. This exercise is a quantitative illustration of the crucial importance of history for the understanding of cluster dynamics, as well as many other (evolutionary) economic phenomena.
    Keywords: Cork Industry, Cluster Life Cycle, Santa Maria da Feira, Portugal.
    JEL: R12 L73 N60 O14
    Date: 2013–12
  7. By: Michael Good
    Abstract: I estimate the effect that migrants have on international trade between states of current residence and states of origin. The pro-trade effect of migration has been thoroughly examined since the mid-1990s, connecting both destination countries with origin countries and destination sub-national divisions with origin countries, respectively. However, a recent emphasis on the importance of geographic proximity to the migration-trade link leads me to pose the questions of how localized the trade-enhancing effect of migrants actually may be and how proximity matters for this relationship. My analysis provides the first results as to the migration-trade nexus at the state level for both places of destination and origin, relying on a unique data set allowing the mapping of Mexican-born migrants' US states of residence to Mexican states of origin; this ensures a more precise measurement of both migrant networks and other potential determinants of international trade, including the distance and mass variables fundamental to the standard gravity model. In addition to an augmented gravity model, I employ generalized propensity scores in examining the potential of nonlinearities in the migration-trade relationship. Furthermore, I unmask the distinct levels of geographic proximity that a single migration estimate disguises, estimating statistically significant elasticities of exports to both in-state and neighboring-state migration. These figures are not only qualitatively but also quantitatively important, corresponding to partial contributions of $1984 (in-state) and $538 (neighboring-state) to annual exports between respective US and Mexican states associated with each average additional migrant.
    JEL: F1 F2 J6
    Date: 2013–12–08
  8. By: Patrícia Bogas (Universidade do Minho); Natália Barbosa (Universidade do Minho - NIPE)
    Abstract: This paper analyses high-growth firms in Portugal and aims at assessing the impact of region-specific characteristics on the probability of the firm being high-growth. Using a sample of active firms registered in the database Quadros de Pessoal between 2002 and 2006, the result suggest that high-growth firms is not a random phenomenon and that the region-specific characteristics determine significantly the probability of the firm being high-growth. In particular, industrial diversity, services agglomeration and diversity of employees qualifications in a region explain in a significantly way the probability of a firm being high-growth.
    Keywords: high-growth firms, region-specific characteristics
    Date: 2013
  9. By: Benner, Maximilian
    Abstract: The idea of smart specialisation has gained high prominence in the discourse about EU regional policy. In the coming program period from 2014 to 2020 it is expected to be a major pillar of EU structural funds. The notion of smart specialisation incorporates some basic principles of evolutionary economics and centers on the idea of an entrepreneurial discovery process of new trajectories on the regional level. It does not, however, sufficiently take into account the relevance of individual agents, their actions, and their relations with each other in the identification, creation, development, and destruction of technological and economic trajectories. For this, a focus on micro-level dynamics that provide the base for experimentation is needed. This paper suggests developing smart specialisation into smart experimentation, a concept that is anchored not only in evolutionary economics, but also in relational economic geography.
    Keywords: regional policy, structural policy, smart specialisation, clusters, EU structural funds
    JEL: O18 O25 O33 R11 R12 R58
    Date: 2013–12–02
  10. By: Kristian Behrens; Gilles Duranton; Frédéric Robert-Nicoud
    Abstract: Large cities produce more output per capita than small cities. This higher productivity may occur because more talented individuals sort into large cities, because large cities select more productive entrepreneurs and firms, or because of agglomeration economies. We develop a model of systems of cities that combines all three elements and suggests interesting complementarities between them. The model can replicate stylized facts about sorting, agglomeration, and selection in cities. It also generates Zipf’s law for cities under empirically plausible parameter values. Finally, it provides a useful framework within which to reinterpret extant empirical evidence. Large cities produce more output per capita than small cities. This higher productivity may occur because more talented individuals sort into large cities, because large cities select more productive entrepreneurs and firms, or because of agglomeration economies. We develop a model of systems of cities that combines all three elements and suggests interesting complementarities between them. The model can replicate stylized facts about sorting, agglomeration, and selection in cities. It also generates Zipf’s law for cities under empirically plausible parameter values. Finally, it provides a useful framework within which to reinterpret extant empirical evidence.
    Keywords: sorting, selection, agglomeration, urban premium, city size, Zipf’s law
    Date: 2013–11
  11. By: Öner, Özge (Jönköping International Business School, & Centre for Entrepreneurship and Spatial Economics)
    Abstract: This paper investigates returns to location in the retail sector and further analyzes the systematic variations across central and peripheral retail markets, as well as across different types of retailing activities. The empirical design utilizes individual level data, where the earnings of individuals working in the retail sector are used as a proxy for retail performance, which allows for a comparison across different types of retailing activities, although the sector as a whole is highly heterogeneous. In order to capture the urban-periphery interaction in retail markets, an accessible market potential measure is used, which allows for capturing the impact from potential demand in close proximity, in the region and from outside of the region separately. In the analysis, the impacts of spatial, store, and individual characteristics are analyzed for four types of retailing activities: food retailing, clothing, household retailing and specialized stores. The results are in line with previous theoretical arguments that rely on traditional location theories. There is a distinct variation between urban and peripheral retail markets, as well as between different types of retailing activities. Market size in close proximity is found to play an important role for stores selling goods for frequent purchase, whereas the relevant market extends beyond municipal borders for retailers selling goods for less frequent purchase. The competition effect is evident for non-central markets, driven from close proximity to large central markets.
    Keywords: Urban hierarchy; market accessibility; retail sector; location premium
    JEL: D31 E24 L81 P25
    Date: 2013–12–09
  12. By: Povilas Lastauskas; Eirini Tatsi
    Abstract: Space is important. The recent global financial crisis has vividly pointed to spatial patterns in economies’ reactions to the global economic shocks. This paper focuses on labor market responses and its interactions with criminal activities in a causal and spatial framework. We study the case of Germany as evidently this country’s economy has demonstrated resilience during the whirl of economic crisis. Our contribution is twofold: first, we lay down a parsimonious labor market model with search frictions, criminal opportunities, and, unlike earlier analyzes, productivity shocks which are important in explaining empirical regularity of criminal engagement. Second, we seek empirical support using data on the 402 German districts for 2009-2010, the years following the global financial crisis, in a setting that allows not only crime spatial multipliers but also inherent endogeneity of unemployment. Adverse income shocks clearly unfold a spatial nexus between unemployment and crime rates. More specifically, we find that youth unemployment plays a prominent role in explaining property crime, namely housing burglary. Our results are in line with previous research: neglecting endogeneity of unemployment understates its impact and employing the youth unemployment share instead of rate points to distinctive effects. The analysis offers important implications for countries that are currently undergoing fiscal consolidation and are experiencing high unemployment rates.
    Keywords: Crime, Unemployment, Spatial Econometrics, Economic Crisis
    JEL: C31 J64 K42 R10
    Date: 2013–09–12
  13. By: Pompei, Fabrizio
    Abstract: In this paper we study the efficiency and total factor productivity growth of Italian regions by implementing a bootstrap Data Envelopment Analysis method. This approach allows us to perform a sensitivity analysis of the efficiency scores at regional level, in which human capital is included besides traditional inputs. Higher levels of average years of schooling were important for efficiency and TFP growth in the Northern and Central regions. Conversely, the overall scarce human capital accumulation in Southern regions negatively affected their performances. However, both DEA and analysis of decomposition of productivity growth, conducted by means of Malmquist’s index, highlighted that also in Southern regions, in which the growth rate of human capital and TFP was remarkable, the contribution of the improvement in pure efficiency to economic growth was totally nonessential.
    Keywords: Italian regions, Productivity, Data Envelopment Analysis
    JEL: O3 O4 R11
    Date: 2013–12–09
  14. By: Kristian Behrens; Frédéric Robert-Nicoud;
    Abstract: We develop a framework that integrates natural advantage, agglomeration economies, and firm selection to explain why large cities are both more productive and more unequal than small towns. Our model highlights interesting complementarities among those factors and it matches a number of key stylised facts about cities. A larger city size increases productivity via a selection process, and higher urban productivity provides incentives for rural-urban migration. Tougher selection increases both the returns to skills and earnings inequality in cities. We numerically illustrate a multi-city version of the model and explore the formation of new cities, the growth of existing cities, and changes in income inequality.
    Keywords: city size, urbanisation, agglomeration, firm selection, income inequality
    Date: 2013–07
  15. By: Backman, Mikaela (Centre of Excellence for Science and Innovation Studies (CESIS), Jönköping International Business School, Centre for Entrepreneurship and Spatial Economics (CEnSE), & Royal Institute of Technology (KTH)); Kohlhase, Janet (University of Houston)
    Abstract: Our paper investigates how diversity of the labor force influences the rate of new firm formation and the performance of new firms in urban areas. A diversified labor force within the firm and in the external environment influences the formation, survival and growth of firms. We explore these issues with both aggregate data at the municipal level and individual data at the firm level for the years 1993-2010. We measure diversity using entropy measures that account for a wider range of differences than is typically used. Our empirical analysis finds a positive influence of diversity of the labor force on the rate of new firm formation at the municipal level. At the level of an individual firm, we find that the diversity of the firm’s labor force is positively associated with the survival and growth of new firms. Our results add to the literature on the workings of agglomeration economies through variations in human capital, information spillovers and innovation.
    Keywords: Diversity; labor force; education; occupation; industry; new firms; formation; survival; growth
    JEL: C31 C33 L25 L26 R10
    Date: 2013–12–09
  16. By: Itismita Mohanty (NATSEM, University of Canberra); Robert Tanton (NATSEM, University of Canberra); Yogi Vidyattama (NATSEM, University of Canberra); Marcia Keegan (NATSEM, University of Canberra); Robert Cummins (Deakin University)
    Abstract: Subjective wellbeing is an indicator of how satisfied a person is with their life. It is becoming accepted as an indicator of happiness and overall wellbeing. This paper uses spatial microsimulation methods to estimate small area subjective wellbeing (SWB) in Australia. The procedure uses the Australian Unity Wellbeing Index survey and the 2011 Census data to derive small area estimates of SWB. Validation of the results shows that high and normal levels of SWB compare well to another source of SWB for small areas in the Murray Darling Basin, but levels of low SWB are not predicted as well, possibly due to the effect of local factors not available for the modelling on reducing SWB. Aggregate estimates compare well to HILDA estimates of SWB at a State level. These estimates are now available from the Australian Urban Research Infrastructure Network (AURIN) at the University of Melbourne..
    Keywords: Wellbeing, Regional welfare, Spatial Microsimulation
    JEL: I31 R13 C63
    Date: 2013–12
  17. By: Renato Baumann
    Abstract: Since the early 1950s Latin American countries have made systematic efforts to foster regional transactions. Nevertheless, the indicators of relative importance of regional trade remain well below the corresponding figures in other regions. This paper argues that a process of integration should take into account the differences between what can be achieved by negotiating with closer neighbours and with geographically distant partners. Also, at present there is an increasing competition from Asian goods, which have negatively affected Latin American producers. Among the lessons from the recent Asian experience are the economic links among countries that have helped to improve competitiveness as well as to foster the degree of convergence of the GDP growth rates of the participating countries.
    Keywords: regional integration, productive complementarity, competitiveness and trade barriers
    Date: 2013–06
  18. By: Feichtinger, Paul; Salhofer, Paul
    Abstract: This paper empirically analyses a dataset of more than 11,000 agricultural land sales transactions between 1999 and 2007 in order to identify the factors influencing agricultural land prices in Bavaria. The authors confirm strong spatial relationships in their dataset, and conclude that neglecting this leads to biased estimates, especially if aggregated data are used. They therefore use a general spatial model combining a spatial lag and a spatial error model, and find that the price of a specific plot increases by 32 cents/m2 when average sales prices in surrounding areas increase by €1.Research results also confirm the strong influence of land quality, urban pressure and land market structure, and that the involvement of public authorities as seller or buyer increases sales prices. The authors find that the Fischler Reform did not considerably change the market and its determinants.
    Date: 2013–06
  19. By: Andreas Braun; Volker Hochschild; Andreas Koch
    Abstract: Carsharing has been growing significantly throughout the last years. However, the density of regional supply largely differs between urban and rural regions, between cities and also within cities and regions. Particularly the question of intraregional differences in the demand for carsharing is only sporadically researched so far. The present contribution thus addresses the question which factors determine the demand for carsharing on the subregional level of urban quarters. Grounded on a geographic information system (GIS) and comprehensive empirical data from the city of Tübingen, Germany, we explain the demand for carsharing taking into account different socio-demographic and structural factors. The paper shows that social characteristics of the population, particularly age and attitudes, are import determinants of the observable regional differences. Factors of a more structural nature, e.g. the diversity of land utilization or an environment favoring bicycles or pedestrians, which have been emphasized in the extant literature, are less influential in our models.
    Keywords: Carsharing, GIS, Regional Development, Mobility, Multiple Regression
    JEL: L91 R12 R41
    Date: 2013–12
  20. By: Kosche, Robert
    Abstract: Im Mittelpunkt des Beitrags steht die Rolle kollektiver Identitäten für die Entwicklung lokaler Designnetzwerke und der daraus resultierende Einfluss auf die Adaptionsfähigkeit von Industrial Cultural Districts, die auf ästhetisierte Produkte wie Möbel oder Schmuck spezialisiert sind. Diese häufig sehr traditionsreichen Typen industrieller Cluster bilden wichtige regionale Knotenpunkte in den weltweiten Netzwerken der Kreativindustrien, sind jedoch in den letzten Jahren von einem starken Wandel der wirtschaftlichen Rahmenbedingungen betroffen: Globale Konkurrenz und veränderte Konsumgewohnheiten verlangen von den lokalen Produzenten vermehrte Anstrengungen im Bereich der Produktdifferenzierung, u.a. durch eine stärkere Betonung ästhetischer Inhalte im Rahmen einer verstärkten Designorientierung. Da die Rolle von DesignerInnen in den traditionellen industriellen Clustern kleiner und mittlerer Unternehmen ein wenig erforschtes Feld ist, bleibt jedoch unklar, ob und wie DesignerInnen und Designprozesse stärker als bisher in die etablierten Wertschöpfungsketten von Unternehmen und unterstützenden Organisationen integriert werden können und welche Folgen dabei auftretende Probleme für die Entwicklungsfähigkeit der betroffenen Cluster letztendlich haben. ... -- The paper focuses on the effects of collective identities on local design networks and the resulting effects on the adaptability of industrial cultural districts, i.e. clusters that are specialized in aestheticized products, such as furniture or jewelry. These often very traditional, industrial clusters are important regional hubs in the global network of creative industries. However, in recent years they have been affected by strong changes in the economic environment: global competition and changing consumer habits require local producers to place increased efforts in the area of product differentiation, including a greater emphasis on aesthetic content in the context of an enhanced design orientation. Because the importance of designers in these traditional industrial clusters of small and medium businesses is a little explored field, it remains unclear whether and how designers and design-making can be integrated more closely into the established value chains of firms and supporting organizations. Furthermore, little is known about the consequences of lacking integration for cluster adaptability. ...
    Date: 2013

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