nep-geo New Economics Papers
on Economic Geography
Issue of 2015‒06‒05
fourteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Evolutionary Economic Geography By Ron Boschma; Koen Frenken
  2. Increasing Wage Gap, Spatial Structure and Market Access: Evidence from Swedish Micro Data By Nabavi, Pardis
  3. Location Strategies of Multinationals from Emerging Countries in the EU Regions By Riccardo Crescenzi; Carlo Pietrobelli; Roberta Rabellotti
  4. Networking, context and firm-level innovation: Cooperation through the regional filter in Norway By Fitjar, Rune Dahl; Rodriguez-Pose, Andres
  5. Political Entrepreneurship, Cluster Policies and Regional Growth By Karlsson, Charlie
  6. Gibrat’s law and the British industrial revolution By Alexander Klein; Tim Leunig
  7. Research clusters: How public subsidies matter? By Marie-Laure Cabon-Dhersin; Emmanuelle Taugourdeau
  8. When and how does commuting to cities influence rural employment growth? By Lavesson, Niclas
  9. A Comparative Analysis of Gibrat’s and Zipf’s Law on Urban Population By M. Modica; A. Reggiani; P. Nijkamp
  10. Knowledge externalities and knowledge creation: the role of inventors’ working relationships and mobility By Favaro, Donata; Ninka, Eniel; Turvani, Margherita
  11. Persistence vs. Reversal and Agglomeration Economies vs. Natural Resources. Regional inequality in Argentina in the first half of the twentieth century By María Florencia Aráoz; Esteban A. Nicolini
  12. Does Agglomeration Discourage Fertility? Evidence from the Japanese General Social Survey 2000-2010 By KONDO Keisuke
  13. Cross-commuting and housing prices in a polycentric modeling of cities By Vincent Viguié
  14. The Urban-Rural Gap in Governance: Evidence from Vietnam By Jairo, Acuna-Alfaro; Nguyen, Cuong; Tran, Anh; Phung, Tung

  1. By: Ron Boschma; Koen Frenken
    Abstract: The chapter gives a brief overview of the most recent literature on Evolutionary Economic Geography (EEG). We describe how EEG has provided new and additional insights on a number of topics that belong to the core of the economic geography discipline: why do industries concentrate in space, how do clusters operate and evolve, how are innovation networks structured in space and how do they evolve over time, what types of agglomeration externalities induce urban and regional growth, how do regions diversify, and how do institutions and institutional change matter for the development of new growth paths in regions.
    Keywords: Evolutionary Economic Geography, related variety, regional branching, proximity, path dependence, co-evolution, institutional change
    Date: 2015–05
  2. By: Nabavi, Pardis (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)
    Abstract: The new economic geography predicts that the wage gap will increase with accessibility to markets but does not consider the impact of spatial proximity. In contrast, urban economic theory explains wage differences by density without accounting for accessibility. Using a rich Swedish micro-panel, we empirically examine the two rival theories for males and females separately, controlling for individual, firm and regional characteristics. The regression results indicate that wage dispersion is correlated with both accessibility to markets and density. However, the urban economic theory has greatest explanatory power when we control for factors such as occupation, ethnical background, skill, firm size, technical change, ownership, commuting time, unobserved heterogeneity and spatial autocorrelation.
    Keywords: New economic geography; urban economics; spatial econometrics; micro panel data
    JEL: C21 J30 R12 R23
    Date: 2015–06–01
  3. By: Riccardo Crescenzi; Carlo Pietrobelli; Roberta Rabellotti
    Abstract: This paper contributes to the current debate in both Economic Geography and International Business on the nature and strategies of Multinational Enterprises (MNEs) from emerging countries (EMNEs). The paper fills a relevant gap in the existing literature by shedding new light on the location strategies of EMNEs at the national and regional level, looking at their investment drivers and systematically comparing them with those of multinationals from advanced countries (AMNEs). The empirical analysis looks at the location choices of MNEs in the European Union (EU-25) regions and unveils that EMNEs follow distinctive location strategies. Their attraction into large regional markets is similar to AMNEs as well as their irresponsiveness to efficiency seeking motives. Conversely, the most knowledge-intensive investments of EMNEs respond mainly to two ‘attraction’ factors: strategic assets (in the form of local technological dynamism) and the agglomeration of foreign investments in the same business functions. In addition, both the national and the regional levels are simultaneously relevant to EMNEs decisions.
    Keywords: multinationals, emerging countries, regions, European Union
    JEL: F21 F23 O33 R12 R58
    Date: 2015–05
  4. By: Fitjar, Rune Dahl; Rodriguez-Pose, Andres
    Abstract: The paper assesses the role for innovation of one aspect which has been generally overlooked by evolutionary economic geography: context. It analyses how context shapes the impact of collaboration on firm-level innovation for 1604 firms located in the five largest city regions of Norway. Specifically, the analysis shows how the benefits to firms of collaborating within regional, national, and international innovation networks are affected by the knowledge endowments of the region within which the firm is located. Using a logit regression analysis, we find, first, that only national and international networking have a significant positive impact on the likelihood of innovation (the former only for process innovation), whereas the regional knowledge endowments have no direct effect. Second, regional cooperation is particularly effective in regions with high investments in R&D, whereas international cooperation is important in regions with an educated workforce – and regional and national collaboration may be ineffective in such cases. We conclude that, in the case of Norway, context is essential in determining the capacity of firms to set up networks and innovate. Regions with an educated workforce can use the resulting absorptive capacity to successfully assimilate knowledge being diffused through global pipelines from faraway places. However, this absorptive capacity is likely to be heavily filtered if regional firms mainly rely on internal connections within Norway.
    Keywords: context; firms; human capital; innovation; interaction; networking; Norway; R&D
    JEL: O31 O32
    Date: 2015–05
  5. By: Karlsson, Charlie (Centre of Excellence for Science and Innovation Studies and Jönköping International Business School)
    Abstract: In recent years and not least after the latest financial and economic crisis, we have seen a strongly renewed interest for industrial policy to get the developed economies growing again. The political entrepreneurs, i.e. the politicians and their experts and advisers have been hunting desperately for new approaches to industrial policy. With political entrepreneurs, we here understand politicians/bureaucrats/civil servants/authorities within publically financed activities that with different methods try to stimulate entrepreneurship and self-employment with the overall goal to increase employment and economic growth. The renewed interest for industrial policy and the increased importance of political entrepreneurs motivate that we once again ask the fundamental question about what shall be the proper focus, measures and extent of industrial policy. Shall the industrial policy be vertical and focus at specific industries and even specific companies or shall it be horizontal and focus at improving the general conditions for all industries and firms? However, there is a related and partly more controversial question, namely, what is the proper spatial scale for the policy interventions by the political entrepreneurs? Shall the industrial policy focus at certain places and possibly focus at existing and/or emerging industrial clusters or shall it be spatially neutral and not try to discriminate between different regions and places? The purpose of this paper is to throw some light over all above questions but with some extra focus at the questions concerning the spatial aspects. The above questions are by no means new but there are today very good reasons to throw new light at them not least against the back¬ground of EU´s new industrial and regional policy that aims at achieving ‘smart specialization’, what that now may be.
    Keywords: Political entrepreneurship; industrial policy; clusters; smart specialization; regional growth
    JEL: L38 L52 L53 R11 R58
    Date: 2015–06–01
  6. By: Alexander Klein; Tim Leunig
    Abstract: Gibrat's Law states that the growth of towns and cities is independent of their initial size. We show that the Industrial Revolution was revolutionary enough to violate this law for 1761-1801, 1801-1891, and all decades within. Small places grew more slowly throughout this period. Larger towns, in contrast, typically grew faster, but only if they were in core Industrial Revolution Counties. In line with economic theory, towns grew disproportionately when agglomeration economies exceeded urban disamenities, allowing wage rises that induced workers to migrate to the town. This only occurred in places characterised by new, mechanised industries and mining.
    Keywords: Gibrat’s law; city-size distribution; industrial revolution
    JEL: N0
    Date: 2015–05
  7. By: Marie-Laure Cabon-Dhersin (CREAM - CREAM - Centre de Recherche en Economie Appliquée à la Mondialisation - Université de Rouen); Emmanuelle Taugourdeau (CES - Centre d'économie de la Sorbonne - UP1 - Université Panthéon-Sorbonne - CNRS)
    Abstract: This paper investigates the factors underlying the emergence of Research Cluster (RC), i.e. cooperation (or coordination of research efforts) through spatial proximity between public and private research teams. A ‘public lab’ and a ‘private lab’ interact in a two-stage game to decide on ‘location’ and ‘research effort’. A high level of public subsidies associated to a low asymmetry in the ‘valorisation capability’ between both labs is necessary for the formation of a cluster. We find that RC performs better than non-cooperation in terms of research efforts in a ‘public lab’ (but not in a ‘private lab’) and output gains that can be appropriated by each lab.
    Abstract: Cet article étudie les facteurs sous-jacents de l'émergence de Clusters de recherche. Un Cluster de recherche est ici caractérisé par une proximité géographique et une coopération entre des laboratoires de recherche publique et privée. Nous modélisons un jeu à deux dans lequel un laboratoire public et un laboratoire privé interagissent pour déterminer leur localisation et leur effort de recherche. Une subvention publique élevée versée au laboratoire public associée à une valorisation de la recherche dans le public proche de celle du privé est nécessaire pour la réalisation d'un Cluster. Nous montrons que le Cluster de recherche est préférable à la non-coopération en termes d'efforts de recherche dans le laboratoire public et de gains retirés par chaque laboratoire. En revanche le Cluster est préjudiciable en termes d'efforts de recherche dans le laboratoire privé.
    Date: 2015–02
  8. By: Lavesson, Niclas (CIRCLE, Lund University)
    Abstract: Urban areas tend to grow in population and employment while most rural areas face decline. Earlier research suggests that well-growing rural areas benefit from urban proximity and more specifically from rural-to-urban commuting. Studies on local labor markets suggest that highly educated individuals earn more than other commuters and that they tend to travel over longer distances to work. This suggests that the impacts on growth differ for different parts of commuting labor. The aim of this paper is to combine these literatures and explore how rural employment growth is influenced by commuting and how far across space these effects reach.
    Keywords: Urban spread effects; rural-urban integration; commuting
    JEL: R00
    Date: 2015–05–29
  9. By: M. Modica; A. Reggiani; P. Nijkamp
    Abstract: The regional economics and geography literature on urban population size has in recent years shown interesting conceptual and methodological contributions on the validity of Gibrat’s Law and Zipf’s Law. Despite distinct modeling features, they express similar fundamental characteristics in an equilibrium situation. Zipf’s law is formalized in a static form, while its associated dynamic process is articulated by Gibrat’s Law. Thus, it is likely that both Zipf’s Law and Gibrat’s Law share a common root. Unfortunately, empirical investigations on the direct relationship between Gibrat’s Law and Zipf’s Law are rather rare and not conclusive. The present paper aims to answer the question whether (a generalisation of) Gibrat’s Law allows us to infer Zipf’s Law, and vice versa? In our conceptual and applied framework, particular attention will be paid to the role of the mean and the variance of city population as key indicators for assessing the (non-) validity of the generalised Gibrat’s Law. Our empirical experiments are based on a comparative analysis between the dynamics of the urban population of four countries with entirely mutually contrasting spatial-economic and geographic characteristics: Botswana, Germany, Hungary and Luxembourg. We arrive at the following results: if (i) the mean is independent of city size (first necessary condition of Gibrat’s law) and (ii) the coefficient of the rank-size rule/Zipf’s Law is different from one, then the variance is dependent on city size.
    JEL: C46 D30 O40 R11
    Date: 2015–05
  10. By: Favaro, Donata; Ninka, Eniel; Turvani, Margherita
    Abstract: We study the transmission of tacit knowledge arising from working relationships established by inventors and its impact on firms’ knowledge creation. First, we consider knowledge spillovers that originate through inventor working relationships that are not the result of collaboration agreements among patenting firms. Second, we analyse their effect on the creation of new knowledge as measured by companies’ patenting activity. The study focuses on the role played by geographical proximity. The analysis was carried out on the population of firms located in the Italian region of Veneto and is based upon the original OECD REGPAT database that records all patenting applications at EPO.
    Keywords: patenting activity, knowledge externalities, working relationships, mobility, geographical proximity
    JEL: J24 O3 R1
    Date: 2014–12
  11. By: María Florencia Aráoz; Esteban A. Nicolini
    Abstract: The economic performance of Argentina in the long run is quite usually divided in two periods: in the first one (1870-1914) we observe openness, low levels of public intervention and rapid growth in relative terms, while in the second (1914-1970) we observe relative economic slowdown together with inward looking policies and higher levels of public intervention. While there are many reconstructions of the evolution of main macroeconomic variables at a national aggregate level since the second half of the nineteenth century and many descriptions of the sectorial dimensions of this process, the available information about its provincial or regional dimensions is very scarce. In this paper we present an estimation of the GDPs of the twenty four provinces in Argentina in 1914 which is the first consistent and comparable estimation of this variable for any period before the 1950s. Our results confirm the standard view that most of the economic activity at the end of the period of the first globalization is located in the central area of the country and, in particular, in the province and city of Buenos Aires which seems to have been a quite important pole of economic activity; however, we also show that some peripheral areas in Patagonia, with very low population density, are quite affluent in per capita terms suggesting that resource abundance was an important factor to explain levels of income per capita. The comparison of the relative incomes per capita of the provinces in 1914 with the available data for 1953 suggest a remarkable stability and indicates that in this period there were no signs of reversal of income but rather persistence or even divergence.
    Keywords: regional development , inequality , Argentina , convergence , reversal
    JEL: E01 R11 R12
    Date: 2015–05
  12. By: KONDO Keisuke
    Abstract: This study empirically investigates whether agglomeration discourages married couples' fertility decisions. Exploiting Japanese social survey data to control for economic and social factors underlying fertility, it examines whether agglomeration affects completed fertility and the timing of childbirth. Results indicate that agglomeration impedes completed fertility. In addition, this study finds that agglomeration delays young married couples' fertility decision, and that they bear children later in life.
    Date: 2015–05
  13. By: Vincent Viguié (CIRED)
    Abstract: Long term strategies, relying on city planning and travel demand management, are essential if deep GHG reduction ambitions are to be achieved in urban transport sector. However, how to precisely design such strategies remains unclear. Indeed, whereas there is a broad consensus that urban spatial structure is a key determinant in explaining travel pattern generation, the mechanisms are not yet fully understood. Especially, the interplay between commuting and localization choices leading to cross commuting in a polycentric city remains an open question, and cannot be easily explained using existing urban economics frameworks. In this study, we introduce a novel urban economic framework, fully micro-economic based, which describes land prices, population distribution and commuting travel choices in a polycentric city, with jobs locations exogenously given. It relies on the modeling of moving costs and market imperfections, especially housing-search imperfections. Using Paris as a case study, we show how this model, when adequately calibrated, reproduces available data on the internal structure of the city (rents, population densities, travel choices). A validation over the 1900-2010 period also shows that the model captures the main determinants of city shape evolution over this time. This suggests that this tool can be used to inform policy decisions.
    Keywords: urban economics, cross-commuting, urban planning, climate change mitigation
    JEL: Q5 R14 R4
    Date: 2015–05
  14. By: Jairo, Acuna-Alfaro; Nguyen, Cuong; Tran, Anh; Phung, Tung
    Abstract: The relationship between development and governance is a central question in the public administration literature on developing countries. Yet, we still understand little about the gap between urban and rural governance in these nations. Our paper tackles this issue using the novel Vietnam Provincial Governance and Public Administration Performance Index (PAPI). PAPI is Vietnam’s largest nationwide survey, and it is considers six dimensions of local public administration, including participation, transparency, accountability, corruption control, administrative procedures, and public service delivery. Using a small area estimation approach we present three new findings. First, urban citizens report better local governance and public administration than rural citizens do. Second, districts with better reported governance tend to have a smaller urban-rural public administration gap. Third, this gap follows a U-shaped pattern, decreasing initially and then increasing slightly as local living standards rise. These findings have implications for priorities in public administration reforms.
    Keywords: Governance, urban-rural difference, PAPI, small area estimation, Vietnam.
    JEL: H0 R1 R2
    Date: 2014–09–10

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