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on Economic Geography |
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Issue of 2015‒07‒25
fifteen papers chosen by Andreas Koch Institut für Angewandte Wirtschaftsforschung |
| By: | Rudiger Ahrend; Emily Farchy; Ioannis Kaplanis; Alexander C. Lembcke |
| Abstract: | This paper estimates agglomeration benefits across five OECD countries, and represents the first empirical analysis that combines evidence on agglomeration benefits and the productivity impact of metropolitan governance structures, while taking into account the potential sorting of individuals across cities. The comparability of results in a multi-country setting is supported through the use of a new internationally-harmonised definition of cities based on economic linkages rather than administrative boundaries. In line with the literature, the analysis confirms that city productivity increases with city size but finds that cities with fragmented governance structures tend to have lower levels of productivity. This effect is mitigated by the existence of a metropolitan governance body. |
| Keywords: | Cities, productivity, governance, agglomeration economies |
| JEL: | R12 R23 R50 H73 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0178&r=geo |
| By: | Pierre-Philippe Combes (Departement d'Economie de Sciences Po); Sylvie Démurger (CNRS); Shi Li |
| Abstract: | We analyse the impact of internal migration in China on natives׳ labour market outcomes. We find evidence of a large positive correlation of the city share of migrants with natives׳ wages. Using different sets of control variables and instruments suggests that the effect is causal. The large total migrant impact (+10% when one moves from the first to the third quartile of the migrant variable distribution) arises from gains due to complementarity with natives in the production function (+6.4%), and from gains due to agglomeration economies (+3.3%). Finally, we find some evidence of a stronger effect for skilled natives than for unskilled, as expected from theory. Overall, our findings support large nominal wage gains that can be expected from further migration and urbanisation in China. |
| Keywords: | Migration; Urban Development; Agglomeration Economies; Wage Disparities; China |
| JEL: | O18 J61 R23 J31 O53 |
| Date: | 2015–05 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/l4oaogsnr9rvqfme8pagm9sb6&r=geo |
| By: | Jordi Jofri-Monseny; Maria Sánchez-Vidal; Elisabet Viladecans-Marsal |
| Abstract: | This paper analyses the effects of large manufacturing plant closures on local employment. Specifically, we estimate the net employment effects of the closure of 45 large manufacturing plants in Spain, which relocated abroad between 2001 and 2006. We run differences-in-differences specifications in which locations that experience a closure are matched to locations with similar pre-treatment employment levels and trends. The results show that when a plant closes, for each job directly lost in the plant closure, between 0.3 and 0.6 jobs are actually lost in the local economy. The adjustment is concentrated in incumbent firms in the industry that suffered the closure, providing indirect evidence of labor market pooling effects. We find no employment effects in the rest of manufacturing industries or in the services sectors. These findings suggest that traditional input-output analyses tend to overstate the net employment losses of large plant closures. |
| Keywords: | Local employment, plant closures, input-output, agglomeration economies |
| JEL: | R12 R23 R58 J23 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0179&r=geo |
| By: | Shengjun Zhu; Canfei He; Yi Zhou |
| Abstract: | By using the proximity product index, recent studies have argued that regional diversification emerged as a path-dependent process, as regions often branch into industries that are related to preexisting industrial structure. It is also claimed that developed countries that start from the core, dense areas in the uneven industry space have more opportunities to jump to new related industries and therefore have more opportunities to sustain economic growth than do developing countries that jump from peripheral, deserted areas. In this paper, we differentiate two types of regional diversification—path-dependent and path-breaking—and ask questions from a different angle: can developing countries/regions jump further in the industry space to break path-dependent development trajectories and more importantly to catch up with developed ones? Based on China’s export data, this paper shows that regions can jump further by investing in extra-regional linkages and internal innovation. Not only do these two sets of factors promote regions’ jumping capability, but they also contribute to regions’ capability of maintaining a comparative advantage in technologically distant and less related industries. In addition, different extra-regional linkage and internal innovation factors have affected regional diversification to different extents, and these effects also vary across regions and industries. Empirically, this research seeks to find a more promising future for developing countries/regions. Theoretically, our research testifies some key findings of theoretical works in evolutionary economic geography by using a quantitative framework. In addition, this paper includes some economic and institutional factors that have been left out in previous studies. |
| Keywords: | path-dependent, path-breaking, industrial relatedness, proximity index, transition industries |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1524&r=geo |
| By: | Yi Zhou; Canfei He; Shengjun Zhu |
| Abstract: | Creative destruction is a key driving force behind industrial development. The continuing process of creative destruction provides an impetus to regional industrial renewal. Our analytical framework that emphasizes the ways in which firm exit creates a stimulus for firm entry, resulting in incremental innovation and productivity increase is complementary to the process of technological change and industrial renewal articulated by Schumpeter who pays attention to how new entrants bring in radical innovation and new products, making incumbents’ products and technologies obsolete and force them to exit or catch up. Using firm-level data of China’s industries during 1998-2008, this paper seeks to argue that the articulation between firm exit and entry has been constantly shaped by an assemblage of various factors, including firm characteristics, industrial linkages, regional institutions and geographical proximity. |
| Keywords: | Creative destruction, Firm Exit, Firm Entry, Industrial Dynamics, China |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1522&r=geo |
| By: | Luciano Lavecchia (Bank of Italy) |
| Abstract: | This note replicates the analysis of Tabellini (2010) on the relationship between social capital and regional economic growth in Europe, extending that work and the underlying dataset by focusing on the spatial dimension of social capital and introducing a definition of contiguity among European regions. We find a sizable and robust contribution of social capital to regional growth. We also estimate a Spatial autoregressive model with autoregressive disturbances (SARAR) and a Spatial Durbin Error model (SDEM). The results confirm the positive role of social capital, highlighting the importance of spatial spillovers, which warrants further discussion. |
| Keywords: | social capital, space, growth, Europe, sarar, sdem |
| JEL: | A13 O10 N13 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:bdi:wptemi:td_1017_15&r=geo |
| By: | Martin, Roman (CIRCLE, Lund University); Trippl, Michaela (CIRCLE, Lund University) |
| Abstract: | This paper extends research on long-term cluster evolution with a context sensitive conceptual framework that highlights how configurations of regional innovation systems (RIS), their knowledge base specificities and policy actions can shape cluster development and transformation. By doing so, we redress the neglect of regional context specific factors by current accounts of cluster life cycle models. The empirical part of the paper deals with the evolution of the ICT cluster in Scania, southern Sweden. The emergence of the cluster in the early 1980s was enabled by a strong analytical and synthetic knowledge base in the region, and the subsequent growth was driven by intense collaboration between industry and academia. The changing geography of the ICT industry in the past decade brought along new challenges for the existing companies and led to a transformation of the cluster towards a new growth trajectory. Cluster transformation was facilitated by policy actions that promoted symbolic knowledge activities in the region. The strategy was to combine existing competences in mobile communication with new competences in media and design, and to develop new industrial activities around the theme of New Media, which integrates analytical, synthetic and symbolic knowledge. In the case of Scania, the endowment of the RIS of a variety of knowledge bases and their combination has led to successful cluster development in spite of challenges resulting from changing socio-economic conditions. |
| Keywords: | Cluster evolution; knowledge bases; regional innovation systems; innovation policy; ICT; New Media; Sweden |
| JEL: | B52 O33 O38 |
| Date: | 2015–07–20 |
| URL: | http://d.repec.org/n?u=RePEc:hhs:lucirc:2015_024&r=geo |
| By: | Canfei He; Yan Yan; David Rigby |
| Abstract: | The evolutionary economic geography indicates that regional industrial development is path dependent. The path dependence approach however ignores the external factors, which may create new paths of regional development. Moreover, it does not pay much attention to the role of institutions. Both external factors and institutions are crucial to understand the regional industrial evolution in China. Based on firm level data of Chinese manufacturing industries during 1998-2008, this study examined the industrial evolution through the lens of entry and exit of four digit industries at the Chinese prefectures. Using a measure of co-occurrence based technological relatedness, we apply a logit model to link industry entry and exit to technological relatedness. We find significant evidence that regions branch into new industries which are technologically related to the existing industries and related industries are less likely to exit. Related globalization also encourages the entry of new related industries and discourages the exit of related industries. Further analysis reveals that economic transition has created favorable conditions to allow a larger role of technological relatedness. New industries are more likely to enter regions which are globalized, liberalized and fiscally independent, indicating that economic transition has also generated opportunities for Chinese regions to create new paths of industrial development. |
| Keywords: | Technological Relatedness, Economic Transition, Industrial Evolution, Path Dependence, Path Creation |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1520&r=geo |
| By: | Qi Guo; Canfei He |
| Abstract: | A growing literature on evolutionary economic geography concludes that regional industrial evolution is path-dependent and is determined by the pre-existing industries. This study applies the co-occurrence approach to calculate the production relatedness and portrays the production space and then examines the impact of production relatedness on regional industrial evolution. The findings report that production relatedness does underscore the regional structure change in China but shows significant regional differences in the evolution path. The coastal region has strong tendency of path dependence in its industrial evolution, while North West and South West break the path-dependent trajectory and transition into high productive sectors distant from their own production network. The results suggest that national policies can play its crucial role in creating new paths in China's regional development. Institutions matter to allow the significant role of industry relatedness in driving regional industrial evolution. |
| Keywords: | Production space, Industry relatedness, Regional Industrial Evolution, China |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1521&r=geo |
| By: | Jesus Crespo Cuaresma (Department of Economics, Vienna University of Economics and Business); Gernot Doppelhofer (Norwegian School of Economics); Florian Huber (Oesterreichische Nationalbank); Philipp Piribauer (Department of Economics, Vienna University of Economics and Business) |
| Abstract: | In this paper we present an econometric framework aimed at obtaining projections of income growth in Europe at the regional level. We account for model uncertainty in terms of the choice of explanatory variables, as well as the nature of the spatial spillovers of output growth and human capital investment. Building on recent advances in Bayesian model averaging, we construct projected trajectories of income and human capital simultaneously, while integrating out the effects of other covariates. This approach allows us to assess the potential contribution of future educational attainment to economic growth and income convergence among European regions over the next decades. Our findings suggest that income convergence dynamics and human capital act as important drivers of income growth for the decades to come. In addition we find that the relative return of improving educational attainment levels in terms of economic growth appears to be higher in peripheral European regions. |
| Keywords: | Income projections, model uncertainty, spatial filtering, European regions |
| JEL: | C11 C15 C21 O52 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wiwwuw:wuwp198&r=geo |
| By: | Randall Jackson (Regional Research Institute, West Virginia University) |
| Abstract: | In this address, I review industry clustering and diversification strategies to compare and contrast their underlying foundations. The lack of consensus choice of one or the other for regional economic development strategies along with the recognition that in the dynamic process of development these two processes are related leads me to conclude that clusters and diversity need not be such strange bedfellows after all, and that a rational approach to economic development can leverage the strengths of each and offset weaknesses. I follow this discussion by introducing a cluster assessment diversification strategy (CADS) apparatus that can be used to measure existing cluster strength, to identify industrial strengths and deficit bottlenecks, and to explore the regional consequences of potential cluster diversification strategies. |
| Keywords: | Industry Clusters, Regional Industrial diversification, Input-output, Industry structure |
| JEL: | R30 C67 L16 |
| Date: | 2015–04 |
| URL: | http://d.repec.org/n?u=RePEc:rri:wpaper:2015wp04&r=geo |
| By: | Siqi Zheng; Weizeng Sun; Jianfeng Wu; Matthew E. Kahn |
| Abstract: | Several Chinese cities have invested billions of dollars to construct new industrial parks. These place based investments solve the land assembly problem which allows many productive firms to co-locate close to each other. The resulting local economic growth creates new opportunities for real estate developers and retailers that develop properties and stores close to the new park. The city mayor has the political clout and the personal promotion incentives to anticipate these effects as he chooses whether and where within the city to build the park. Using several geo-coded data sets, we measure the localized spillover effects of the new parks on local incumbent firm productivity, the growth of retail activity close to the park and local real estate pricing and construction. We document the heterogeneous effects of investment in parks. Those parks featuring a higher level of human capital, a greater level of co-agglomeration among firms within the park, and a smaller share of State Owned Enterprises offer greater spillover effects. |
| JEL: | H42 H72 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21378&r=geo |
| By: | Andrés Rodríguez-Pose; Callum Wilkie |
| Abstract: | Smart specialization approaches to regional innovation policies have attracted, and in all likelihood will continue to attract, considerable attention. With this attention has come significant interest in one of the approach’s defining features: the ‘entrepreneurial discovery process’ (EDP). While this interest has yielded substantial progress in the development of a comprehensive collective understanding of the EDP, several important, even vital, aspects of the EDP remain ‘under-‘ or even ‘unaddressed’. This essay aims to fill what we consider to be two prominent gaps in the aforementioned collective understanding by, first, identifying the actors who are responsible for the EDP, investigating their respective roles, and exploring how they should be engaged, and, second, by dissecting the relationship between the EDP and the institutional context within which it occurs recognizing that institutions can exercise tremendous influence on the effectiveness and outcomes of the EDP. Four prominent conclusions emerge from this exercise – each of which is made explicit in the final section of the paper – that will hopefully contribute to the more effective implementation and execution of the EDP across diverse socioeconomic and institutional contexts. |
| Keywords: | Smart specialisation, entrepreneurial discovery process (EDP), innovation, innovation policy, institutions, Europe. |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1523&r=geo |
| By: | Gabriel M. Ahlfeldt; Daniel P. McMillen |
| Abstract: | We analyze the determinants of building heights in Chicago by combining a micro-geographic data set on tall buildings with a unique panel of land prices covering 140 years. Consistent with the predictions of classic urban economics models, we find that developers respond to increasing land prices by increasing density, i.e. building taller. In 2000, the elasticity of height with respect of land price was about 45% for tall commercial buildings and 30% for tall residential buildings. As expected given significant improvement in construction technology over time, we find that the height elasticity approximately doubled over the last 100 years. We find evidence for dissipative height competition within cities, as excessively tall buildings are significantly less likely to be constructed near to each other than other buildings. Proximity to scenic amenities creates an extra incentive to outrival competitors, particularly in the residential market. |
| Keywords: | Chicago, density, height, land value, skyscraper |
| JEL: | R20 R30 |
| Date: | 2015–07 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0180&r=geo |
| By: | Chakarin Bejrananda (College of Architecture and Planning, University of Colorado-Denver); Yuk Lee (College of Architecture and Planning, University of Colorado-Denver); Thanchanok Khamkaew (Faculty of Economics, Maejo University) |
| Abstract: | With the rise of the importance of air transportation in the 21st century, the role of economics in airport planning and decision-making has become more important to the urban structure and land value around it. Therefore, this research aims to examine the relationship between an airport and its impacts on the distribution of urban land uses and land values by applying the Alonso’s bid rent model. The New Bangkok International Airport (Suvarnabhumi International Airport) was taken as a case study. The analysis was made over three different time periods of airport development (after the airport site was proposed, during airport construction, and after the opening of the airport). The statistical results confirm that Alonso’s model can be used to explain the impacts of the new airport only for the northeast quadrant of the airport, while proximity to the airport showed the inverse relationship with the land value of all six types of land use activities through three periods of time. It indicates that the land value for commercial land use is the most sensitive to the location of the airport or has the strongest requirement for accessibility to the airport compared to the residential and manufacturing land use. Also, the bid-rent gradients of the six types of land use activities have declined dramatically through the three time periods because of the Asian Financial Crisis in 1997. Therefore, the lesson learned from this research concerns about the reliability of the data used. The major concern involves the use of different areal units for assessing land value for different time periods between zone block (1995) and grid block (2002, 2009). As a result, this affect the investigation of the overall trends of land value assessment, which are not readily apparent. In addition, the next concern is the availability of the historical data. With the lack of collecting historical data for land value assessment by the government, some of data of land values and aerial photos are not available to cover the entire study area. Finally, the different formats of using aerial photos between hard-copy (1995) and digital photo (2002, 2009) made difficult for measuring distances. Therefore, these problems also affect the accuracy of the results of the statistical analyses. |
| Keywords: | Economic rents, Airport development area, Spatial pattern, Thailand |
| JEL: | O18 R58 R28 |
| URL: | http://d.repec.org/n?u=RePEc:sek:iacpro:2604285&r=geo |