nep-geo New Economics Papers
on Economic Geography
Issue of 2015‒01‒19
fifteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. The geographic dimensions of institutions By Bhupatiraju S.
  2. Network Structures in Regional Innovation Systems By Jérôme Stuck; Tom Broekel; Javier Revilla
  3. Exports, agglomeration and workforce diversity: An empirical assessment of German establishments By Stephan Brunow; Luise Grünwald
  4. Regional policies to foster firms' innovation activity By Francesca Lotti; Maria Lucia Stefani
  5. Does Proximity Matter in the Choice of Partners in Collaborative R&D Projects? – An Empirical Analysis of Granted Projects in Germany By C. Fuhrmeister; Mirko Titze; U. Blum; Philipp Marek
  6. Who acquires whom? The role of geographical proximity and industrial relatedness in Dutch domestic M&As between 2002 and 2008 By Ellwanger , Nils; Boschma , Ron
  7. Welfare Benefits of Agglomeration and Worker Heterogeneity By Ioulia Ossokina; Coen N. Teulings; Henri L.F. de Groot
  8. The Direct and Indirect Effects of Small Business Administration Lending on Growth: Evidence from U.S. County-Level Data By Andrew T. Young; Matthew J. Higgins; Donald J. Lacombe; Briana Sell
  9. Spin-offs: Why geography matters By Baltzopoulos, Apostolos; Braunerhjelm, Pontus; Tikoudis, Ioannis
  10. Driving factors for cluster development - Which kind of spatial rootedness and change? By Franz Tödtling; Alexander Auer; Tanja Sinozic
  11. Modelling social welfare effects of relocation and road pricing By Babri, Sahar; McArthur, David Philip; Thorsen, Inge; Ubøe, Jan
  12. Temperate climate - Innovative outputs nexus By Coccia M.
  13. Can internet infrastructure help reduce regional disparities? : evidence from Turkey By Celbis M.G.; Crombrugghe D.P.I. de
  14. New Path Development in the Periphery By Isaksen , Arne; Trippl , Michaela
  15. Firm-Level Productivity Spillovers in China's Chemical Industry: A Spatial Hausman-Taylor Approach By Badi H. Baltagi; Peter H. Egger

  1. By: Bhupatiraju S. (UNU-MERIT)
    Abstract: In this paper we examine the role of institutions relative to economic performance, absolute geography and financial performance of a country. In order to do this, we use the spatial principal component analysis and a spatial canonical correlation analysis to obtain multi-dimensional measure of institutions, economic performance, absolute geography and financial performance of countries. Our analysis shows that the first canonical functions in all the cases give us results that conform to current literature. That is, we find that a higher level of development is correlated to a higher level of institutional quality, deeper financial structure as well as good geography of the Jeffery Sachs variety. From the second canonical functions we find that economic growth is correlated to market steering. We further find that geographic conditions need not define the institutional set up of countries. A similar institutional set up need not result in a similar financial structure in countries. We show that there is a necessity to take spatial interactions with neighbouring countries into account while analysing the relationships between institutions, geography, economic and financial performance of a country. We find that space indeed has a strong influence on the prevailing institutional and economic conditions of countries. While the impact of space on geography is very obvious, we find that it has no bearing on the financial performance of countries.
    Keywords: Economic Development: General; Economic Development: Financial Markets; Saving and Capital Investment; Corporate Finance and Governance; Formal and Informal Sectors; Shadow Economy; Institutional Arrangements; Institutions and Growth; Size and Spatial Distributions of Regional Economic Activity; General Regional Economics: Econometric and Input-Output Models; Other Models;
    JEL: O10 O16 O17 O43 R12 R15
    Date: 2014
  2. By: Jérôme Stuck (1 Institute of Economic and Cultural Geography, Leibniz University, Hanover, Germany); Tom Broekel (Institute of Economic and Cultural Geography, Leibniz University, Hanover, Germany); Javier Revilla (Institute of Geography, University of Cologne, Cologne Germany)
    Abstract: While interactive learning and inter-organisational relations are fundamental building blocks in RIS theory, the framework is rarely related to investigations of regional knowledge network structures, because in RIS literature relational structures and interaction networks are discussed in a rather fuzzy and generic manner with the ‘network term’ often being used rather metaphorically. This paper contributes to the literature by discussing theoretical arguments about interactions and knowledge exchange relations in the RIS literature from the perspective of social network analysis. More precise, it links network theoretical concepts and insights to the well-known classification of RIS types by Cooke (2004). We thereby exemplarily show how the RIS literature and the literature on regional knowledge networks can benefit from considering insights of the respective other.
    Keywords: regional innovation system, network analysis, SNA, RIS
    JEL: O18 O33 R11 R12
    Date: 2014–12–17
  3. By: Stephan Brunow (Institut für Arbeitsmarkt- und Berufsforschung (IAB)); Luise Grünwald (Technische Universität Dresden)
    Abstract: Theoretical and empirical contributions on export behavior highlight the importance of firms' productivity and their levels of economies of scale on firms' export success in `foreign’ markets. In the context of agglomeration economies, firms enjoy productivity gains when they are located close to competitors or upstreaming industries and they benefit from knowledge spillovers and other positive externalities. In such a stimulating environment, firms become more prone to be exporters. Beyond the role played by externalities, firms may benefit when they employ a diverse workforce and when the interaction of distinct knowledge and related problem-solving abilities increases productivity and secures export success. In this paper, we ask whether German firms (i.e., establishments) benefit from localization and urbanization externalities and face higher export proportions. We also control for a variety of establishment characteristics and workforce diversity. For this purpose, a comprehensive German data set that combines survey data and administrative data is used. While controlling for firm heterogeneity in a fractional response model, we provide evidence that manufacturing establishments and smaller establishments (up to 250 employees) benefit most from externalities and especially from knowledge spillover. There is weak evidence supporting the benefit of workforce diversity; however, that factor could explain between-establishment variation.
    Keywords: Export behavior, firms, agglomeration economies, cultural and workforce diversity
    JEL: D F J M R12
    Date: 2014–12
  4. By: Francesca Lotti (Bank of Italy); Maria Lucia Stefani (Bank of Italy)
    Abstract: Following the constitutional reform of 2001, which gave increased autonomy Italian regions, and the new European guidelines from the Lisbon Agenda, there has been an upturn in regional legislative activity concerning innovation, leading to a critical review of the instruments adopted, mainly towards greater selectivity. Regional intervention tends to be highly fragmented, focusing on the funding of applied research and using grants as the preferred policy tool. In terms of sources of funds, structural funds have gained importance since the 2007-13 programming cycle, partly due to the economic crisis, and in the southern regions account for nearly all the resources devoted to fostering innovation. This paper presents a summary indicator, consisting of three "sub-indicators" approximating, respectively, the input of the innovation process, innovation output, and a quantitative measure of regional policies for innovation.
    Keywords: Innovation, regional policies
    JEL: O38 R58
    Date: 2014–11
  5. By: C. Fuhrmeister; Mirko Titze; U. Blum; Philipp Marek
    Abstract: This paper contributes to the discussion on the importance of physical distance in the emergence of cross-region collaborative Research and Development (R&D) interactions. The proximity theory, and its extensions, is used as a theoretical framework. A spatial interaction model for count data was implemented for the empirical analysis of German data from the period from 2005 to 2010. The results show that all tested proximity measurements (geographical, cognitive, social and institutional proximity) have a significant positive influence on collaboration intensity. The proximity paradox, however, cannot be confirmed for geographical, social and institutional proximity, but for cognitive proximity.
    Keywords: proximity theory, proximity paradox, gravity models, cross-regional collaborations, spatial interaction
    JEL: O18 R00 R11
    Date: 2014–12
  6. By: Ellwanger , Nils (APE BV, Den Haag); Boschma , Ron (Center for Innovation and Research and Competence in the Learning Economy (CIRCLE), Lund University, Sweden, and Utrecht University,Urban and Regional research centre Utrecht (URU), The Netherlands)
    Abstract: In economic geography, geographical proximity has been identified as a key driver of M&A activity. In this context, little attention has yet been drawn to the effect of industrial relatedness, which refers to the similarity and complementarity of business activities. We examine 1,855 domestic M&A deals announced between 2002 and 2008 in the Netherlands, and we assess the extent to which geographical proximity and industrial relatedness affect M&A partnering. Our study shows that geographical proximity drives domestic M&A deals, even at very detailed spatial scales like the municipality level. We also found evidence that companies that share the same or complementary industries are more likely to engage in an M&A deal. Logistic regressions show that the effect of industrial relatedness is stronger than the effect of geographical proximity and that the effect of geographical proximity is stronger in unrelated than related target selection.
    Keywords: Mergers and acquisitions; Netherlands; geographical proximity; home bias; industrial relatedness
    JEL: O18 R00 R11
    Date: 2014–12–15
  7. By: Ioulia Ossokina; Coen N. Teulings; Henri L.F. de Groot
    Abstract: The direct impact of local public goods on welfare is relatively easy to measure from land rents. However, the indirect effects on home and job location, on land use, and on agglomeration benefits are hard to pin down. We develop a spatial general equilibrium model for the valuation of these effects. Read also <a href="">CPB Policy Brief 2014/10</a> (Publication in Dutch). The model is estimated using data on transport infrastructure, commuting behavior, wages, land use and land rents for 3000 ZIP-codes in the Netherlands and for three levels of education. Welfare benefiÂ…ts are shown to differ sharply by workersÂ’educational attainment.
    JEL: H4 H54 R13 R23 R4
    Date: 2014–12
  8. By: Andrew T. Young (West Virginia University, College of Business and Economics); Matthew J. Higgins (Georgia Institute of Technology & NBER); Donald J. Lacombe (West Virginia University, College of Business and Economics); Briana Sell (Georgia Institute of Technology)
    Abstract: Conventional wisdom suggests that small businesses are innovative engines of Schumpetarian growth. However, as small businesses, they are likely to face credit rationing in financial markets. If true then policies that promote lending to small businesses may yield substantial economy-wide returns. We examine the relationship between Small Business Administration (SBA) lending and local economic growth using a spatial econometric framework and a sample of 3,035 U.S. counties for the years 1980 to 2009. We find evidence that a county’s SBA lending per capita is associated with direct negative effects on its income growth. We also find evidence of indirect negative effects on the growth rates of neighboring counties. Overall, a 10% increase in SBA loans per capita is associated with a cumulative decrease in income growth rates of about 2%.
    Keywords: Small Business Administration, guaranteed loans, economic growth, income growth, entrepreneurship, US counties, spatial econometrics, spillovers
    JEL: O47 E65 R11 H25 C23
    Date: 2014–12
  9. By: Baltzopoulos, Apostolos (Department of Industrial Economics and Management, KTH Royal Institute of Technology and The Swedish Competition Authority, Stockholm, Sweden.); Braunerhjelm, Pontus (Department of Industrial Economics and Management, KTH Royal Institute of Technology, Centre of Excellence for Science and Innovation Studies (CESIS), 100 44 Stockholm, Sweden.); Tikoudis, Ioannis (Department of Spatial Economics, VU University Amsterdam, De Boelelaan 1105, 1081HV, and Tinbergen Institute, Gustav Mahlerplein 117, 1082MS Amsterdam.)
    Abstract: Based on unique data covering individuals, firms, industries, and regions for the 1999-2005 period, we contribute with new knowledge concerning the impact of regional variables on spin-offs. Implementing a large number of controls, as well as different estimation techniques and robustness tests, we show that Jacobian externalities have a positive effect on spin-offs. Moreover, using an entropy measure to disentangle unrelated and related variety, we conclude that the effect is confined to related variety. These findings are likely to be associated with strong welfare effects: a standard-deviation increase (decrease) in related (unrelated) variety increases spin-off propensity by approximately 25%. Other variables are shown to have economic effects of a similar magnitude but may have a different effect across sectors. Sensitivity analyses indicate that the impact of other determinants proposed in the literature (e.g., Marshallian externalities and scale effects) is too small to be detected.
    Keywords: Regions; spin-offs; industries
    JEL: D01 L26 R10
    Date: 2014–12–22
  10. By: Franz Tödtling; Alexander Auer; Tanja Sinozic
    Date: 2014
  11. By: Babri, Sahar (Dept. of Business and Management Science, Norwegian School of Economics); McArthur, David Philip (Urban Big Data Centre, University of Glasgow); Thorsen, Inge (Stord/Haugesund University College); Ubøe, Jan (Dept. of Business and Management Science, Norwegian School of Economics)
    Abstract: Road pricing is a popular congestion reduction strategy. However, there may be wider impacts associated with a road toll. We consider a factor which is sometimes overlooked, namely that workers and firms may choose to change location in response to changes in the travel costs. A spatial equilibrium model is used to analyse suboptimalities in road pricing which may occur if relocations are ignored. We show that such suboptimalities can be substantial. The advantage of the model we use over many existing approaches is that it is easy to implement, and requires very little data.
    Keywords: Relocation; Road pricing; Congestion; Spatial equilibrium modelling; LUTI modelling
    JEL: R23 R41 R48
    Date: 2014–12–18
  12. By: Coccia M. (UNU-MERIT)
    Abstract: Technological change is a vital human activity that interacts with geographic factors and environment. The purpose of the study here is to analyse the relationship between geo-climate zones of the globe and technological outputs in order to detect favourable areas that spur higher technological change and, as a consequence, human development. The main finding is that innovative outputs are higher in geographical areas with a temperate climate latitudes. In fact, warm temperate climates are favourable environments for human societies that, by a long-run process of adaptation and learning, create platforms of institutions and communications systems, infrastructures, legal systems, economic governance and socio-economic networks that support inventions and diffusion of innovations. The linkages between observed facts show the vital geo-climate sources of fruitful patterns of the technological innovation and economic growth.
    Keywords: Economic Development: General; Technological Change; Research and Development; Intellectual Property Rights: General; Regional Economic Activity: Growth, Development, Environmental Issues, and Changes; Size and Spatial Distributions of Regional Economic Activity;
    JEL: O10 O30 R11 R12
    Date: 2014
  13. By: Celbis M.G.; Crombrugghe D.P.I. de (UNU-MERIT)
    Abstract: This study presents novel evidence regarding the role of regional internet infrastructure in reducing regional per capita income disparities. We base our study on the assumptions that 1 the diffusion of information homogenizes regional economies through reducing the dissimilarities in institutions and culture, and 2 the telecommunication capacity, represented as the internet infrastructure of a region, facilitates this flow of information. Using the data from the 26 statistical regions of Turkey, we find evidence that internet infrastructure has contributed to regional convergence during the period 1999-2011. We also observe that the Turkish economic geography is defined by a strong core-periphery pattern and significant spatial clustering.
    Keywords: Macroeconomics: Consumption, Saving, Production, Employment, and Investment: General (includes Measurement and Data); Public Goods; Telecommunications; Economic Development: Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure; Measurement of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence; Size and Spatial Distributions of Regional Economic Activity;
    JEL: R12 L96 E20 H41 O18 O47
    Date: 2014
  14. By: Isaksen , Arne (Department of Working Life and Innovation, University of Agder, Norway); Trippl , Michaela (Center for Innovation and Research and Competence in the Learning Economy (CIRCLE), Lund University, Sweden)
    Abstract: This paper seeks to enhance our understanding of critical preconditions and factors that facilitate the rise and development of new industrial paths in peripheral regional economies. Current conceptualizations of regional path creation are largely based on experiences from core regions and fail to provide satisfactory theoretical explanations of new path development in peripheral regions. Applying a knowledge base approach, we advance the argument that path creation in the periphery can follow either an analytic or a synthetic route. We highlight that new path development is linked to an increase of knowledge variety through the combination of knowledge from outside and inside the region. The paper contains an analysis of the emergence and evolution of new industries in two peripheral regions in Norway and Austria: the electronics and software industry in Arendal-Grimstad in the South-Eastern part of Norway, and the software industry in Mühlviertel in Upper Austria. The two industries have developed differently; through the 'synthetic route' based on the emergence and restructuring of manufacturing firms in Arendal-Grimstad, and through the 'analytical route' building on the establishment of research facilities in Mühlviertel. However, similar factors, such as exogenous development impulses through the inflow of new analytical and synthetic knowledge, the presence of key actors of change, and building of supportive institutional structures are found to be vital in sparking the formation of new industrial paths in both regions. The two cases, however, differed in their further evolution, as they showed varying capacities to successfully combine the newly emerging knowledge base with the existing one. The findings clearly challenge uniform, narrowly conceptualized models of endogenous industrial evolution and highlight the advantages of applying a theoretical framework that takes not only endogenous but also exogenous sources of path creation and its relation to combinations of knowledge bases into account.
    Keywords: Peripheral regions; new path creation; knowledge bases
    JEL: O18 O38 R11
    Date: 2014–12–15
  15. By: Badi H. Baltagi (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244); Peter H. Egger (ETH Zurich, Leonhardstrasse 21, 8092 Zurich)
    Abstract: This paper assesses the role of intra-sectoral spillovers in total factor productivity across Chinese producers in the chemical industry. We use a rich panel data-set of 12,552 firms observed over the period 2004-2006 and model output by the firm as a function of skilled and unskilled labor, capital, materials, and total factor productivity, which is broadly defined. The latter is a composite of observable factors such as export market participation, foreign as well as public ownership, the extent of accumulated intangible assets, and unobservable total factor productivity. Despite the richness of our data-set, it suffers from the lack of time variation in the number of skilled workers as well as in the variable indicating public ownership. We introduce spatial spillovers in total factor productivity through contextual effects of observable variables as well as spatial dependence of the disturbances. We extend the Hausman and Taylor (1981) estimator to account for spatial correlation in the error term. This approach permits estimating the effect of time-invariant variables which are wiped out by the fixed effects estimator. While the original Hausman and Taylor (1981) estimator assumes homoskedastic error components, we provide spatial variants that allow for both homoskedasticity and heteroskedasticity. Monte Carlo results show, that our estimation procedure performs well in small samples. We find evidence of positive spillovers across chemical manufacturers and a large and significant detrimental effect of public ownership on total factor productivity.
    Keywords: Technology Spillovers, Spatial econometrics, Panel data econometrics, Firm-level productivity, Chinese firms
    JEL: C23 C31 D24 L65
    Date: 2014–12

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