nep-geo New Economics Papers
on Economic Geography
Issue of 2014‒01‒17
fifteen papers chosen by
Andreas Koch
Institute for Applied Economic Research

  1. Spatial Patterns and Size Distributions of Cities By Wen-Tai Hsu; Tomoya Mori; Tony E. Smith
  2. Do Inventors Talk to Strangers? On Proximity and Collaborative Knowledge Creation By Riccardo Crescenzi; Max Nathan; Andrés Rodríguez-Pose
  3. Heterogeneous Agglomeration By Giulia Faggio; Olmo Silva; William C. Strange
  4. Geographical Indication Regulation and Intra-Trade in the European Union By Zakaria Sorgho; Bruno Larue
  5. Spatial Takeoff in the First Industrial Revolution By Alex Trew
  6. Origin of FDI and domestic productivity spillovers: does European FDI have a ‘productivity advantage’ in the ENP countries? By Vassilis Monastiriotis
  7. Can the periphery achieve core? The case of the automobile components industry in Spain By Lampón, Jesús F.; Lago-Peñas, Santiago; Cabanelas, Pablo
  8. Connecting Local Producers in Developing Countries to Regional and Global Value Chains: Update By Penny Bamber; Karina Fernandez-Stark; Gary Gereffi; Andrew Guinn
  9. The French cluster policy and the R&D spending of SME and intermediate-sized enterprises By C. BELLÉGO; V. DORTET-BERNADET
  10. Inefficient equilibrium unemployment in a duocentric economy with matching frictions By Etienne LEHMANN; Paola L. MONTERO LEDEZMA; Bruno VAN DER LINDEN
  11. About predictions in spatial autoregressive models: Optimal and almost optimal strategies By Thomas-Agnan, Christine
  12. Simultaneity in the Multivariate Count Data Autoregressive Model By Brännäs, Kurt
  14. Long term impact of a major infrastructure project: the port of Gioia Tauro By Mario Genco; Emanuela Sirtori; Silvia Vignetti
  15. xsmle: a Stata command for spatial panel-data models estimation By Federico Belotti; Gordon Hughes; Andrea Piano Mortari

  1. By: Wen-Tai Hsu (School of Economics, Singapore Management University); Tomoya Mori (Institute of Economic Research, Kyoto University); Tony E. Smith (Department of Electrical and Systems Engineering, University of Pennsylvania)
    Abstract: City size distributions are known to be well approximated by power laws across many countries. One popular explanation for such power-law regularities is in terms of random growth processes, where power laws arise asymptotically from the assumption of iid growth rates among all cities within a given country. But this assumption has additional consequences. Since all subsets of cities have the same statistical properties, each subset must exhibit essentially the same power law. Moreover, this common power law (CPL) property must hold regardless of the spatial relations among cities. Using data from the US, this paper shows first that spatial partitions of cities based on geographical proximity are significantly more consistent with the CPL property than are random partitions. It is then shown that this significance becomes even stronger when proximity among cities is measured in terms of trade linkages rather than simple geographical distance. These results provide compelling evidence that spatial relations between cities do indeed matter for city-size distributions. Further analysis shows that these results hinge on the natural “spacing out” property of city patterns in which larger cities tend to be widely spaced apart with smaller cities organized around them.
    Keywords: power law, Zipf’s law, random growth, space, geography, Voronoi partition, economic region
    JEL: C49 L60 R12 R14
    Date: 2014–01
  2. By: Riccardo Crescenzi; Max Nathan; Andrés Rodríguez-Pose
    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: 2014–01
  3. By: Giulia Faggio; Olmo Silva; William C. Strange
    Abstract: Many prior treatments of agglomeration either explicitly or implicitly suppose that all industries agglomerate for the same reasons, with traditional Marshallian (1890) factors affecting all industries similarly. An important instance of this approach is the extrapolation of the agglomeration experience of one key sector or cluster to the larger economy. Another is the pooling of data to look at common tendencies in agglomeration. This paper uses UK establishment level data on coagglomeration to document heterogeneity across industries in the microfoundations of agglomeration economies. The pattern of heterogeneity that we document is consistent with both traditional Marshallian theories and with alternative approaches that emphasize the adaptive and organizational aspects of agglomeration. *Disclaimer: This work was based on data from the Business Structure Database and the Quarterly UK Labour Force Survey, produced by the Office for National Statistics (ONS) and supplied by the Secure Data Service at the UK Data Archive. The data are Crown Copyright and reproduced with the permission of the controller of HMSO and Queen's Printer for Scotland. The use of the data in this work does not imply the endorsement of ONS or the Secure Data Service at the UK Data Archive in relation to the interpretation or analysis of the data. This work uses research datasets which may not exactly reproduce National Statistics aggregates.
    Keywords: Agglomeration, microfoundations, heterogeneity, clusters
    JEL: R00 R28
    Date: 2014–01
  4. By: Zakaria Sorgho; Bruno Larue
    Abstract: Protection of indications of geographical origin (GIs) can reduce information asymmetry between producers and consumers, and potentially enhance trade. However, GIs can also possibly divert trade. We rely on panel data about agri-food trade among the 27 countries of the European Union to investigate these issues using variations of estimators proposed by Head and Mayer (2000) and Santos Silva and Tenreyro (2006). Our findings suggest that the protection of GIs creates trade when the importing and exporting countries have GI-protected products. There is also empirical evidence regarding a trade-diverting effect when the importing country does not have GIs and a border enlargement effect arising from European GI-protection.
    Keywords: Geographical Indications, European Union, Agri-Food Trade, Gravity Model
    JEL: F14 Q18
    Date: 2014
  5. By: Alex Trew (University of St Andrews)
    Abstract: Using the framework of Desmet and Rossi-Hansberg (forthcoming), we present a model of spatial takeoff that is calibrated using spatially-disaggregated occupational data for England in c.1710. The model predicts changes in the spatial distribution of agricultural and manufacturing employment which match data for c.1817 and 1861. The model also matches a number of aggregate changes that characterise the first industrial revolution. Using counterfactual geographical distributions, we show that the initial concentration of productivity can matter for whether and when an industrial takeoff occurs. Subsidies to innovation in either sector can bring forward the date of takeoff while subsidies to the use of land by manufacturing firms can significantly delay a takeoff because it decreases spatial concentration of activity.
    Keywords: Endogenous growth, first industrial revolution, economic geography, structural change.
    JEL: O11 O18 O33 N13 N93 R12
    Date: 2014–01–01
  6. By: Vassilis Monastiriotis
    Abstract: The process of approximation between the EU and its ‘eastern neighbourhood’ has created conditions for deepening economic interactions and market integration, giving to the EU –and to EU businesses– an elevated role in the process of economic modernisation and transition in the neighbourhood countries. This raises the question as to whether European business activity in these countries produces indeed measureable economic advantages both in absolute and in relative terms (e.g., compared to business activity from other parts of the world). Similarly, a question arises as to whether European business activity reduces or amplifies spatial imbalances within the partner countries. This paper examines these issues for the case of capital flows (foreign ownership) and the related productivity spillovers, using firm-level data from the Business Environment and Enterprise Performance Survey (BEEPS) covering 28 transition countries over the period 2002-2009. We estimate the direct and intra-industry productivity effects of foreign ownership and examine how these differ across regional blocks (CEE, SEE and ENP), according to the origin of the foreign investor (EU versus non-EU), across geographical scales (pure industry versus regional spillovers) and for different types of locations (capital-city regions versus the rest). Our results suggest that FDI of EU origin plays a distinctive role in the countries concerned helping raise domestic productivity significantly more than investments from outside the EU. However, this process appears to operate in a spatially selective manner, thus enhancing regional disparities and spatial imbalances. This, then, assigns a particular responsibility for EU policy, as it continues to promote economic integration (and FDI flows) to its eastern neighbourhood, to devise interventions that will help redress these problems.
    JEL: Z00
    Date: 2014–01
  7. By: Lampón, Jesús F.; Lago-Peñas, Santiago; Cabanelas, Pablo
    Abstract: The paper analyses changes experienced by Spain, as a European Peripheral region, in the spatial concentration of value-added and high-skill activities, and generation of technology in the automobile components industry. The analysis of plants set up (investments) and relocated (divestments) by multinationals (MNEs) between 2001 and 2010 show that Spain is no longer a place for labour-intensive activities and standardized processes using simple technologies in comparison to other peripheral regions. However, the continuing majority presence of foreign-owned companies is limiting decision power for generating and transferring technology, concentrating it mainly in those which Spanish MNEs have specialised
    Keywords: production geography, relocation, automobile components industry, periphery, multinationals
    JEL: F20 F23 L23 O3 O33
    Date: 2013–10–31
  8. By: Penny Bamber; Karina Fernandez-Stark; Gary Gereffi; Andrew Guinn
    Abstract: This report analyzes the specific factors that affect the competitiveness of developing countries in global value chains (GVCs), and how these factors differ across four major economic sectors: agriculture, extractive industries, manufacturing and offshore services. Although integration into GVCs allows firms in developing countries to participate in international trade without developing the full range of capabilities required to produce a product or service, it will not automatically translate into positive development gains from trade without the appropriate policies to build productive capacity and ensure inclusive growth and upgrading capabilities. In order to inform these policies, it is necessary to identify the various local factors that affected the capacity of developing countries to meet GVC and RVC requirements, including their productive capacity, infrastructure and services, the business environment, trade and investment policies and industry institutionalization. The report identifies the need for further data and analysis in many areas, in particular the trade-related policy implications of TiVA-GVCs for developing countries, including emerging economies. This would provide a starting point for the discussion of the domestic policies and actions needed to promote and support developing countries’ beneficial participation in value chains and inform aid for trade interventions promoting effective integration into markets via GVCs.
    Keywords: competitiveness, productive capacity, trade integration, inclusive growth, developing countries, global and regional value chains
    JEL: F13 F15 F16 F21 F23 F35
    Date: 2014–01–08
  9. By: C. BELLÉGO (Insee); V. DORTET-BERNADET (Insee)
    Abstract: The French cluster policy Pôles de compétitivité has been launched in 2004 to foster collaborations between firms, research institutions, and training institutions. Many firms taking part in these clusters have obtained subsidies to finance R&D collaborative projects involving other firms and research institutions. This study analyzes the effects of taking part in a Pôle de compétitivité on the activity of firms. The effects are estimated by matching firms taking part in clusters to similar firms that remained out of the policy. This method only permits to estimate an effect for SME and intermediate-sized enterprises that spend less than 16 million euros in R&D per year, that are at least two years old, and that already realized R&D before taking part in a cluster. Firms participating in a Pôle de compétitivité would have increased their total R&D expenditures. Not all firms have taken part in a subsidized project, but they would have received more subsidies on average. These firms would have also benefited from higher amounts of Research tax credit (Crédit Impôt Recherche CIR) but overall we do not find any evidence of crowding out effect : public funds do not substitute private R&D. The effect seems to be additive : firms would add the amount of subsidies and tax credit to their private budget. Higher R&D spending is realized through an increase in investment and employment devoted to R&D. By cons, there is no significant short-term effect on the turnover and the number of patents. While cluster participation seems to increase R&D spending, it has not been possible to precisely disentangle the role played by the clusters and the role played by CIR, which has strongly reduced the cost of R&D at the end of the period of interest.
    Keywords: R&D, cluster policy, public policy evaluation, matching
    JEL: O38 O31 H25 C23
    Date: 2013
  10. By: Etienne LEHMANN (CRED (TEPP) University Panthéon-Assas Paris 2 and CREST); Paola L. MONTERO LEDEZMA (Stockholm University and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES)); Bruno VAN DER LINDEN (FNRS and UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: This article examines unemployment disparities and efficiency in a densely populated economy with two job centers and workers distributed between them. We introduce commuting costs and search-matching frictions to deal with the spatial mismatch between workers and firms. In equilibrium, there exists a unique threshold location where job-seekers are indifferent between job centers. In a decentralized economy job-seekers do not internalize a composition externality they impose on all the unemployed. Their decisions over job-search is thus typically not optimal and hence the equilibrium unemployment rates are inefficient. We calibrate the model for Los Angeles and Chicago Metropolitan Statistical Areas. Simulations exercises suggest that changes in the workforce distribution have non-negligible effects on unemployment rates, wages and net output.
    Keywords: Spatial mismatch, commuting, urban unemployment, externality, United States
    JEL: J64 R13 R23
    Date: 2013–12–10
  11. By: Thomas-Agnan, Christine
    Abstract: We address the problem of prediction in the classical spatial autoregressive lag model for areal data. In contrast with the spatial econometrics literature, the geostatistical literature has devoted much attention to prediction using the Best Linear Unbiased Prediction approach. From the methodological point of view, we explore the limits of the extension of BLUP formulas in the context of the spatial autoregressive lag models for in sample prediction as well as out-of-sample prediction simultaneously at several sites. We propose a more tractable “almost best” alternative. From an empirical perspective, we present data-based simulations to compare the efficiency of the classical formulas with the best and almost best predictions.
    Keywords: Spatial simultaneous autoregressive models, out of sample prediction,best linear unbiased prediction
    Date: 2013–12–18
  12. By: Brännäs, Kurt (Department of Economics, Umeå School of Business and Economics)
    Abstract: This short paper proposes a simultaneous equations model formulation for time series of count data. Some of the basic moment properties of the model are obtained. The inclusion of real valued exogenous variables is suggested to be through the parameters of the model. Some remarks on the application of the model to spatial data are made. Instrumental variable and generalized method of moments estimators of the structural form parameters are also discussed.
    Keywords: Integer-valued; Spatial; INAR; Interdependence; Properties; Estimation
    JEL: C35 C36 C39 C51
    Date: 2014–01–07
  13. By: Maletic, Radojka; Popovic, Blazenka
    Abstract: Due to the different geo-morphological, climatic, economic and social factors, Serbia represents a very heterogeneous area with specific historical legacies that are hard to overcome. Therefore, the regional specificities represent a starting point for planning the development of the economy as a whole, and of the agribusiness in particular. It is important to properly identify the regional peculiarities of agriculture in order to contribute to the agricultural development of Serbia as a whole. First of all, the attention should be placed to overcome the problems of underdeveloped areas that would contribute to a more stable and harmonious development of agriculture in Serbia. Balanced regional development policies should encourage better use of natural resources, especially in lagging behind areas. Spatial planning is a tool to create quality changes, especially in rural areas, linking different sectors (agriculture, food processing, tourism, environmental protection, etc.). The achievement of set objectives is highly dependent on the level of development of small and medium enterprises (SMEs) in agribusiness. Agribusiness is particularly interesting field for the development of SMEs as it is a complex area that involves the production and processing of agricultural and food products. Therefore, by using the appropriate mathematical and statistical methods, evaluation of the operational efficiency of SMEs in agribusiness in districts of Serbia was performed, in order to address the deficiencies and improvement opportunities in business in some areas.
    Keywords: Ranking of district, SME, DEA analysis, operational efficiency, Agribusiness, International Development, C38, L26, O13, R11,
    Date: 2013–09
  14. By: Mario Genco (CSIL Centre for Industrial Studies); Emanuela Sirtori (CSIL Centre for Industrial Studies); Silvia Vignetti (CSIL Centre for Industrial Studies)
    Abstract: This paper illustrates the story of the Port of Gioia Tauro, a major infrastructure investment co-financed by the European Regional Development Fund in the period 1994-1998, but whose origin dates back to the beginning of the 1970s. It draws from a recent ex-post evaluation carried out for the European Commission on a sample of ten major infrastructures in the Transport and Environment sectors aimed at assessing the long term effects produced by the project and interpreting the key determinants of the observed performance. The analysis shows an emblematic story of great business success and unexploited potential for local development: the overall assessment of the economic impact of the project is mixed, stressing the multi-faceted dimensions of development plans. In particular, the paper discusses to what extent factors such as governance, managerial response and social acceptability can be key determinants of long term effects of a large infrastructure project, more than forecasting capacity or project technical design. It also offers a pilot case testing an innovative evaluation exercise combining cost-benefit analysis with qualitative assessment and adopting a long-run perspective (30 years), which extends into both the past and the future, and requires a mix of retrospective and prospective analysis.
    Keywords: Regional development, transport infrastructure, ex-post evaluation
    JEL: H54 O18 R58
    Date: 2013–06–28
  15. By: Federico Belotti (CEIS, Università degli Studi di Roma "Tor Vergata"); Gordon Hughes (University of Edinburgh); Andrea Piano Mortari (CEIS, Università degli Studi di Roma "Tor Vergata")
    Abstract: This paper presents xsmle, a new Stata command for the estimation of spatial panel-data models. xsmle fits a spatial autoregressive model, a spatial error model, and a spatial Durbin model with fixed or random effects and with or without a dynamic component. Moreover, xsmle estimates the fixed-effects spatial autoregressive model with autoregressive disturbances and the generalized spatial random-effects model. Different weighting matrices may be specified when appropriate, and both Stata matrices and spmat objects are allowed. Of special note is that xsmle computes direct, indirect, and total effects according to Lesage (2008), implements Lee and Yu's (2010) data trasformation for fixed-effects models, performs a robust Hausman test, and may be used with the mi prefix when the panel is unbalanced.
    Date: 2013–11–01

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