nep-geo New Economics Papers
on Economic Geography
Issue of 2014‒06‒02
sixteen papers chosen by
Andreas Koch
Institute for Applied Economic Research

  1. Technological Progress and Economic Geography By Tabuchi, Takatoshi; Thisse, Jacques-François; Zhu, Xiwei
  2. Do inventors talk to strangers? On proximity and collaborative knowledge creation By Crescenzi, Riccardo; Nathan, Max; Rodríguez-Pose, Andrés
  3. Are clusters more resilient in crises? Evidence from French exporters in 2008-2009 By Martin, Philippe; Mayer, Thierry; Mayneris, Florian
  4. Government quality and spatial inequality: A cross-country analysis By Ezcurra, Roberto; Rodríguez-Pose, Andrés
  5. Why are some regions more innovative than others? The role of firm size diversity By Agrawal, Ajay; Cockburn, Iain M; Galasso, Alberto; Oettl, Alexander
  6. Regional inequalities in the impact of broadband on productivity: Evidence from Brazil By Jung, Juan
  7. Firm heterogeneity in productivity across Europe. What explains what? By Aiello, Francesco; Ricotta, Fernanda
  8. Regions are not countries: a new approach to the border effect By Comerford, David; Rodríguez Mora, José Vicente
  9. The Brasília Experiment: Road Access and the Spatial Pattern of Long-term Local Development in Brazil By Bird, Julia; Straub, Stéphane
  10. Coal and the European Industrial Revolution By Fernihough, Alan; O'Rourke, Kevin Hjortshøj
  11. Where do new firms locate? The effects of agglomeration on the formation and scale of operations of new firms in Punjab By Haroon, Maryiam; Chaudhry, Azam
  12. Cluster Policies and Firm Selection: Evidence from France By Lionel Fontagné; Pamina Koenig; Florian Mayneris; Sandra Poncet
  13. Resetting the Urban Network: 117-2012 By Michaels, Guy; Rauch, Ferdinand
  14. Public investment and regional politics: The case of Turkey By Muysken J.; Crombrugghe D.P.I. de; Celbis M.G.
  15. Spatial dependence in (origin-destination) air passenger flows By Doucet, Romain; Margaretic, Paula; Thomas-Agnan, Christine; Villotta, Quentin
  16. A convergência espacial do conhecimento em Portugal By Guerreiro, Gertrudes; Caleiro, António

  1. By: Tabuchi, Takatoshi; Thisse, Jacques-François; Zhu, Xiwei
    Abstract: New economic geography focuses on the impact of falling transport costs on the spatial distribution of activities. However, it disregards the role of technological innovations, which are central to modern economic growth, as well as the role of migration costs, which are a strong impediment to moving. We show that this neglect is unwarranted. Regardless of the level of transport costs, rising labor productivity fosters the agglomeration of activities, whereas falling transport costs do not affect the location of activities. When labor is heterogeneous, the number of workers residing in the more productive region increases by decreasing order of productive efficiency when labor productivity rises.
    Keywords: labor heterogeneity; labor productivity; migration costs; new economic geography; technological progress
    JEL: J61 R12
    Date: 2014–03
  2. By: Crescenzi, Riccardo; Nathan, Max; Rodríguez-Pose, Andrés
    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: Collaboration; Ethnicity; Innovation; Knowledge spillovers; Patents; Proximities; Regions
    JEL: O31 O33 R11 R23
    Date: 2013–12
  3. By: Martin, Philippe; Mayer, Thierry; Mayneris, Florian
    Abstract: Clusters have already been extensively shown to favor firm-level economic performance (productivity, exports, innovation etc.). However, little is known about the capacity of firms in clusters to resist economic shocks. In this paper, we analyze whether firms that agglomerate in clusters and firms that have been selected to benefit from the "competitiveness cluster'' industrial policy, implemented in France in 2005, have performed better on export markets during the recent economic turmoil. We show that, on average, both agglomeration and the cluster policy are associated with a higher survival probability of firms on export markets, and conditioning on survival, a higher growth rate of their exports. However, these effects are not stronger during the 2008-2009 crisis; if anything, the opposite is true. We then show that this weaker resilience of competitiveness cluster firms is probably due to the fact that firms in clusters are more dependent on the fate of the ``leader'', i.e. the largest exporter in the cluster.
    Keywords: clusters; competitiveness clusters; crisis; exports; resilience
    JEL: F1 R10 R11 R12 R15
    Date: 2013–09
  4. By: Ezcurra, Roberto; Rodríguez-Pose, Andrés
    Abstract: This paper examines the relationship between government quality and spatial inequality across 46 countries over the period 1996-2006. The results of the analysis point to the existence of a negative and significant association between government quality and the magnitude of regional disparities. Countries with better quality of government register lower levels of spatial inequality. This finding is robust to the inclusion in the analysis of additional explanatory variables that may affect both regional disparities and governance outcomes. The observed link between government quality and spatial inequality is confirmed by various robustness tests.
    Keywords: government quality; spatial inequality
    JEL: H11 R12
    Date: 2013–11
  5. By: Agrawal, Ajay; Cockburn, Iain M; Galasso, Alberto; Oettl, Alexander
    Abstract: Large firms spawn spin-outs caused by innovations deemed unrelated to the firm's overall business. Small firms generate demand for specialized services that lower entry costs for others. We study the interplay of these two localized externalities and their impact on regional innovation. We examine MSA-level patent data during the period 1975-2000 and find that innovation output is higher in regions where large and small firms coexist. The finding is robust to across-region as well as within-region analysis and the effect is stronger in certain subsamples in a manner that is consistent with our explanation.
    Keywords: cities; externalities; firm size diversity; innovation; patents; spin-outs
    JEL: L16 O18 O47
    Date: 2013–12
  6. By: Jung, Juan
    Abstract: The aim of this paper is to perform an analysis of the impact of broadband on regional productivity in Brazil. The possibility of performing a regional approach, instead of the usual country-level analysis, constitutes an opportunity to decode the economic impact of broadband at territories which share a common institutional and regulatory framework as are the regions inside a same country. The main focus of this paper is to find out if the economic impact of broadband is uniform across all territories of the country. Results suggest that the impact of broadband on productivity is not uniform across regions, and seems to be yielding higher productivity gains for less developed regions, a result which is robust after controlling for differences in quality, network effects, human capital, sectorial composition, urbanism and the age of the workforce. Another important result verified in this paper is that faster download speed and critical mass to account for network externalities enhance of the economic impact of broadband. The fact that most underdeveloped regions in Brazil seem to be benefiting more from broadband may suggest that broadband can constitute a factor favoring regional cohesion in Brazil, although further research will be needed to confirm that asseveration.
    Keywords: Broadband, Information and Communication Technologies, Regional Productivity
    JEL: O33 O47 R11
    Date: 2014–05–23
  7. By: Aiello, Francesco; Ricotta, Fernanda
    Abstract: This paper analyses the TFP heterogeneity of a sample of manufacturing firms operating in seven EU countries (Austria, France, Germany, Hungary, Italy, Spain and UK). TFP data refer to 2008. The empirical setting is based on the multilevel modelling which provides two main results. Firstly, we show that TFP heterogeneity is largely due to firm-specific features (85% of TFP variability in the empty-model). Interestingly, we find that some key-drivers of TFP (size, family-management, group membership, innovations and human capital) influence heterogeneity in productivity with the expect sign, but do not, on the whole, absorb much of firm-TFP variance, implying that differences in productivity are due to sizable yet unobservable firm characteristics. Secondly, as far the role of localization is concerned, we demonstrate that country-effect is more influential than region-effect in explaining individual productivity. Net of the country-effect, the localisation in different European regions explains about 5% of TFP firm heterogeneity. When considering the case of three individual countries (France, Italy and Spain), location in different regions explains 4.7% of TFP heterogeneity in Italy, while this proportion is lower (2.9%) in France and higher (7.6%) in Spain.
    Keywords: TFP heterogeneity, firm-behavior, localization, European countries, multilevel model
    JEL: C30 D22 D24 L60 R11 R15
    Date: 2014–05–26
  8. By: Comerford, David; Rodríguez Mora, José Vicente
    Abstract: We use a version of the Melitz (2003) model to calibrate the magnitude and impact of the border effect, the well-known empirical regularity that trade is much lower across a national border than would otherwise be expected. We calibrate total bilateral trade frictions as a parameter and show that frictions between nation states are systematically higher than those between sub-national states or regions. Using plausible counterfactual analysis, we assess the costs of independence for Scotland, Catalonia, & the Basque Country: the intellectual experiment that is performed is to suppose that the region on independence takes on the calibrated frictions of a counterfactual independent country. If the main change that comes with the independence of regions of larger countries is that their border with their former union partner comes to resemble a normal country border, then the trade costs of the break-up of countries into smaller states (even within the EU) are significant. The border effects associated with membership of the European Union or otherwise, are much lower than the border effect differences between countries and regions. As an illustration of this we produce a potential quantification of the trade costs of a British exit from the EU. Conversely, the potential gains from the European Union achieving the sort of integration seen within a nation state, a United States of Europe, are very large.
    Keywords: Border effect; independence; trade
    JEL: F15 R13
    Date: 2014–05
  9. By: Bird, Julia; Straub, Stéphane
    Abstract: This paper studies the impact of the rapid expansion of the Brazilian road network, which occurred from the 1960s to the 2000s, on the growth and spatial allocation of population and economic activity across the country's municipalities. It addresses the problem of endogeneity in infrastructure location by using an original empirical strategy, based on the "historical natural experiment" constituted by the creation of the new federal capital city Brasília in 1960. The results reveal a dual pattern, with improved transport connections increasing concentration of economic activity and population around the main centers in the South of the country, while spurring the emergence of secondary economic centers in the less developed North, in line with predictions in terms of agglomeration economies. Over the period, roads are shown to account for half of pcGDP growth and to spur a signifficant decrease in spatial inequality.
    Keywords: Transport costs, Infrastructure, Roads, Brazil
    JEL: F15 N76 N96 O18 R11 R12 R40
    Date: 2014–05
  10. By: Fernihough, Alan; O'Rourke, Kevin Hjortshøj
    Abstract: We examine the importance of geographical proximity to coal as a factor underpinning comparative European economic development during the Industrial Revolution. Our analysis exploits geographical variation in city and coalfield locations, alongside temporal variation in the availability of coal-powered technologies, to quantify the effect of coal availability on historic city population sizes. Since we suspect that our coal measure could be endogenous, we use a geologically derived measure as an instrumental variable: proximity to rock strata from the Carboniferous era. Consistent with traditional historical accounts of the Industrial Revolution, we find that coal had a strong influence on city population size from 1800 onward. Counterfactual estimates of city population sizes indicate that our estimated coal effect explains at least 60% of the growth in European city populations from 1750 to 1900. This result is robust to a number of alternative modelling assumptions regarding missing historical population data, spatially lagged effects, and the exclusion of the United Kingdom from the estimation sample.
    Keywords: Coal; Geography; Historical Population; Industrial Revolution
    JEL: J10 N13 N53 O13 O14
    Date: 2014–02
  11. By: Haroon, Maryiam; Chaudhry, Azam
    Abstract: The formation of new firms is an important determinant of economic development and the industrial organization literature highlights agglomeration as one of the main factors affecting the formation and scale of operations of new firms. This paper is one of the first to use developing country data to estimate the impact of localization (the benefits accruing to firms that choose to locate in a specific region within a specific industry) and urbanization (the benefits accruing to firms located close to each other regardless of the type of industry to which they belong) on new firms' formation and scale of operations. Our findings reveal that agglomeration measured through density of employment has a significant impact on the formation of new firms and on their scale of operations in Punjab. --
    Keywords: agglomeration,firms,localization,urbanization
    JEL: L1 L2
    Date: 2014
  12. By: Lionel Fontagné (CEPII - Centre d'Etudes Prospectives et d'Informations Internationales - Centre d'analyse stratégique, EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, Department of Economics - European University Institute); Pamina Koenig (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, PSE - Paris-Jourdan Sciences Economiques - CNRS : UMR8545 - École des Hautes Études en Sciences Sociales (EHESS) - École des Ponts ParisTech (ENPC) - École normale supérieure [ENS] - Paris - Institut national de la recherche agronomique (INRA)); Florian Mayneris (UCL - Université Catholique de Louvain - Université Catholique de Louvain (UCL) - Belgique, CORE - Center of Operation Research and Econometrics [Louvain] - Université Catholique de Louvain (UCL) - Belgique); Sandra Poncet (EEP-PSE - Ecole d'Économie de Paris - Paris School of Economics - Ecole d'Économie de Paris, CES - Centre d'économie de la Sorbonne - CNRS : UMR8174 - Université Paris I - Panthéon-Sorbonne)
    Abstract: In this paper, we shed light on the selection of the benefi ciaries from the French competitiveness cluster policy which was launched in 2005 and extended to 2012. We disentangle the selection and self-selection eff ects, as emphasized in the theoretical literature on regional and industrial policy. Our main conclusion is that winners were (self-)selected at both steps of the procedure, and that this holds for the three cluster types: worldwide clusters , potentially worldwide clusters and national clusters . We thus provide a methodology which allows us to contrast the e ffective outcomes of the selection process and the official objectives of cluster policies in terms of targeting, and which thus helps in their econometric evaluation.
    Keywords: Competitiveness, clusters, international trade, fi rm selection
    Date: 2013–12–09
  13. By: Michaels, Guy; Rauch, Ferdinand
    Abstract: Do locational fundamentals such as coastlines and rivers determine town locations, or can historical events trap towns in unfavorable locations for centuries? We examine the effects on town locations of the collapse of the Western Roman Empire, which temporarily ended urbanization in Britain, but not in France. As urbanization recovered, medieval towns were more often found in Roman-era town locations in France than in Britain, and this difference still persists today. The resetting of Britain's urban network gave it better access to naturally navigable waterways when this was important, while many French towns remained without such access.
    Keywords: Economic Geography; Economic History; Path Dependence; Transportation
    JEL: N93 O18 R11
    Date: 2013–11
  14. By: Muysken J.; Crombrugghe D.P.I. de; Celbis M.G. (UNU-MERIT)
    Abstract: The determinants of the regional allocation of transportation and communication investments are analysed for the twenty-six statistical regions of Turkey for the years 1999 through 2011. A unique regional GVA series covering this period is constructed for this purpose. We specifically account for the possibility of dependence between allocation decisions for different infrastructure types. Estimation results strongly suggest that political bias has been present in the allocation decisions of regional transportation and communication public investments in Turkey. Keywords Public Infrastructure; Regional Policy; Investment Allocation.
    Keywords: National Government Expenditures and Related Policies: Infrastructures; Other Public Investment and Capital Stock; Capitalist Systems: Political Economy; Transportation Systems: Government and Private Investment Analysis; Road Maintenance, Transportation Planning; Regional Development Planning and Policy;
    JEL: P16 R42 R58 H54
    Date: 2014
  15. By: Doucet, Romain; Margaretic, Paula; Thomas-Agnan, Christine; Villotta, Quentin
    Abstract: We explore the estimation of origin-destination (OD), city-pair, air passengers, in order to explicitly take into account spatial autocorrelation. To our knowledge, we are the …rst to test the presence of spatial autocorrelation and apply spatial econometric OD ow models to air transport. Drawing on a world sample of 279 cities, over 2010-2012, we …nd signi…cant evidence of spatial autocorrelation in air passenger ows. Thus, contrary to common practice, we need to incorporate the spatial structure present in the data, when estimating OD air passengers. Importantly, failure to do it, may lead to ine¢ cient estimated coe¢ cients and prediction bias.
    Keywords: Spatial autocorrelation, spatial econometric origin-destination flow model, air passenger flows.
    Date: 2014–03
  16. By: Guerreiro, Gertrudes; Caleiro, António
    Abstract: Human resources are an essential element in territorial development. When these are characterized by a high level of training, are also enhancers of a number of effects that areas fundamental in the binomial territorial-social cohesion. In this respect, the existence of higher education institutions scattered throughout the territory allows the delocalization of human resources qualification but, by itself, does not guarantee the retention of these resources in different regions. Thus, the objective of this paper is to undertake a spatial analysis of convergence of knowledge through the study of the evolution of the percentage of the population having a higher education level in the periods elapsed between the last two censuses in Portugal. It is shown that, although that percentage has risen appreciably, the convergence was (very) insignificant.
    Keywords: Census; Convergence Analysis; Higher Education; Spatial Econometrics.
    JEL: C23 I23 R12
    Date: 2014–05–23

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