nep-geo New Economics Papers
on Economic Geography
Issue of 2015‒12‒08
eighteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Measuring regional innovation in one dimension: More lost than gained? By Matthias Siller; Christoph Hauser; Janette Walde; Gottfried Tappeiner
  2. Porter vs Krugman: History, Analysis and Critique of Regional Competiveness By Psofogiorgos, Nikolaos - Alexandros; Metaxas, Theodore
  3. The Role of Clusters and Public Policy in New Regional Economic Path Development By Asheim , Bjørn T.; Isaksen , Arne; Martin , Roman; Trippl , Michaela
  4. Regional convergence – theoretical approaches By Daniela, Antonescu
  5. From periphery to core: measuring agglomeration effects using high-speed rail By Gabriel M. Ahlfeldt; Arne Feddersen
  6. The effect of trade on agglomeration within regions By Carolina Guevara
  7. Exploring the geography of China's airport networks: a hybrid complex-network approach By Zhengbin Dong; Wenjie Wu
  8. The economic value of local social networks By Frank Ethridge; Maryann Feldman; Tom Kemeny; Ted Zoller
  9. Research and Technology Organisations and Smart Specialisation By David CHARLES; Katerina CIAMPI STANCOVA
  10. Do large departments make academics more productive? Sorting and agglomeration economies in research By Clément Bosquet; Pierre-Philippe Combes
  11. Moving people with ideas - innovation inter-regional mobility and firm heterogeneity By Riccardo Crescenzi; Luisa Gagliardi
  12. The Roots of Regional Trust By Christoph Hauser; Gottfried Tappeiner; Janette Walde
  13. A tractable city model for aggregative analysis By Chatterjee, Satyajit; Eyigungor, Burcu
  14. Employment and technological change: on the geography of labour market adjustments By Luisa Gagliardi
  15. Cross-Regional Variations in the Level of Entrepreneurial Activity in Russia by Type of Motivation: Determining Factors By Alexander Chepurenko; Olga Obraztsova; Vladimir Elakhovsky
  16. Using Land-Use Modelling to Statistically Downscale Population Projections to Small Areas By Michael P. Cameron; William Cochrane
  17. Relativity and asymmetry in distance. The role of strategic distance in the internationalization decisions of Brazilian and Italian firms By Giovanna Magnani; Antonella Zucchella; Dinorà Eliete Floriani
  18. Gentrification and residential mobility in Philadelphia By Ding, Lei; Hwang, Jackelyn; Divringi, Eileen

  1. By: Matthias Siller; Christoph Hauser; Janette Walde; Gottfried Tappeiner
    Abstract: In both academic literature and political discussions the concept of innovation is recognized as an essential ingredient in economic development and competitiveness for firms, regions, and nations. Innovation also ranks at the top of policy agendas in the field of regional policy. Therefore, the attractiveness of an appropriate innovation index for ranking regions and further developing them along a more or less objective measurement scale is evident. However, whether such rankings help convey a better understanding of innovation and its drivers, or whether they are merely a special type of ‘beauty contest’ with little substance is the focus of our analyses. To deny the latter, the innovation output indicators used for the composite index have to be appropriate representatives of the underlying innovation concept and each indicator has to be driven by the same impact factors. If this is not the case, interpretation of the index inevitably gives rise to partly inappropriate policy recommendations. In order to demonstrate this claim we elaborate a set of innovation indicators at the regional level based on the theoretical concept of the OECD document ‘The Measurement of Scientific and Technological Activities, Proposed Guidelines for Collecting and Interpreting Technological Innovation Data’ known as the ‘Oslo Manual’ (OECD, 2005) and their empirical implementation in the Community Innovation Survey. Additionally, innovation drivers well established in the literature are collected to estimate their impact on each innovation indicator as well as on the composite index derived from the innovation indicators. The question whether innovation should be measured as a multidimensional concept and investigated using various indicators or whether simplifying innovation to a one-dimensional concept is appropriate is clearly answered in favor of the multidimensional approach. Surprisingly, this is not due to the multidimensionality of the indicators themselves (all statistical measures indicate that the considered variables are sufficiently represented by one component), but to our first evidence that the innovation output indicators are driven by various impact factors and can therefore be influenced by various political strategies. According to these findings any type of innovation ranking is of very limited use.
    Keywords: Regional innovation, Innovation dimensions, Patent applications, Community Innovation Survey
    JEL: R11 O31 O33
    Date: 2015–11
  2. By: Psofogiorgos, Nikolaos - Alexandros; Metaxas, Theodore
    Abstract: The subject of this study is to determine the competitiveness through an interdisciplinary approach of the theories of the new economic geography and regional economy. This article describes in detail the theory of competitiveness, which is defined differently by many authors, with particular emphasis on opposing views of Michael Porter and Paul Krugman. One of the first writers who stressed the importance of the geographical position was Michael Porter. In his model, the author emphasizes that the geographical concentration of firms enhances productivity, innovation and export sector. Following this theory, many authors have focused on the research of the "location problem ", which led to better connection of economics and geography. The result of these activities is the new guidelines that have been developed, such as the new theory of economic geography and regional economy. The new economic geography is mainly related to the Nobel prized, Paul Krugman, whose theories often conflict with those of Porter. This study initially sets out the views of both authors, in terms of competitiveness and then attempts to make a comparative analysis between the theories they developed.
    Keywords: Michael Porter, Paul Krugman, Regional Competitiveness
    JEL: R11 R19 R38
    Date: 2015–12
  3. By: Asheim , Bjørn T. (UiS Business School/Centre for Innovation Research, University of Stavanger; CIRCLE, Lund University; BI-Norwegian Business School); Isaksen , Arne (University of Agder, Norway); Martin , Roman (CIRCLE, Lund University); Trippl , Michaela (CIRCLE, Lund University)
    Abstract: This chapter deals with the role of clusters and public policy in new regional economic path development. New path development is analysed from an institutional perspective by focussing on changes in the wider regional innovation system (RIS), including firms, universities and governmental agencies, and by placing emphasis on the role that public policy can play. We argue that new regional economic path development requires a broad-based policy approach that stimulates cross-fertilizing effects between different industrial activities within and beyond the region. While cluster policies are well suited to support the growth and sustainment of existing industries, policies for new path development should aim at regional diversification and variety creation, preferably based on existing strengths and expertise in the region. These ideas are central to the Constructing Regional Advantage (CRA) approach. Empirically, the chapter draws on case study research on two new regional economic growth paths in Sweden and Norway, namely the new media cluster in Southern Sweden and the Oslo Cancer cluster. While the first is an example of path renewal through combining knowledge bases, the latter is an example for new path creation based on scientific knowledge. The empirical analysis underlines the role that public policy can play in facilitating new regional economic path development.
    Keywords: new path development; cluster evolution; regional innovation policy; constructing regional advantage; Oslo Cancer Cluster; New Media
    JEL: O18 O20 O38 R11
    Date: 2015–12–02
  4. By: Daniela, Antonescu
    Abstract: Within theoretical economic approaches, the convergence concept generated a great scientific literature elaborated at international , national and regional level . Also, the numerous studies from another field (economy , geography , history , sociology , and political science ) have an important impact of answers regarding the origin, evolution emergence, persistence, deepening, and more noticeable spatial inequalities in the field of incomes and standard living. The issues regarding convergence and dynamics of spatial distribution have an important role in the present economic literature, even though the approach of these topics remains still insufficiently explored and analysed. The regional convergence (along with nominal and institutional convergence) presents a special interest, considering the important gap between the new and old regions of EU Member-States. In this paper we limit approaching the field to main theoretical aspects regarding to regional convergence.
    Keywords: regional convergence
    JEL: C1 C10 R50
    Date: 2014–11–01
  5. By: Gabriel M. Ahlfeldt; Arne Feddersen
    Abstract: We analyze the economic impact of the German high-speed rail (HSR) connecting Cologne and Frankfurt, which provides plausibly exogenous variation in access to surrounding economic mass. We find a causal effect of about 8.5% on average of the HSR on the GDP of three counties with intermediate stops. We make further use of the variation in bilateral transport costs between all counties in our study area induced by the HSR to identify the strength and spatial scope of agglomeration forces. Our most careful estimate points to an elasticity of output with respect to market potential of 12.5%. The strength of the spillover declines by 50% ever 30 minutes of travel time, diminishing to 1% after about 200 minutes. Our results further imply an elasticity of per-worker output with respect to economic density of 3.8%, although the effects seem driven by worker and firm selection.
    Keywords: accessibility; agglomeration; high-speed rail; market potential; transport policy
    JEL: R12 R38 R48
    Date: 2015–03
  6. By: Carolina Guevara (Université de Lyon, Lyon, F-69007, France ; CNRS, GATE Lyon St Etienne,F-69130 Ecully, France, Université Jean Monnet, Saint-Etienne, F-42000, France)
    Abstract: This paper assesses for the first time the effect of regional trade openness on agglomeration within regions, using regional data on the trade of Colombia. The results of the panel model show that the effect of trade is sufficiently strong to shape the spatial configuration, a structure that rarely changes. The effect varies across regions. On the one hand, trade enhances spatial agglomeration within regions with large home market and location advantages. On the other hand, trade induces dispersion within regions that lack access to international trade or historical advantage. These results hold when controlling for the natural course of agglomeration (regions-pecific time trends), congestion effects in main cities and road infrastructure within regions.
    Keywords: Trade openness, spatial concentration, intra-inequality, congestion, cities, economic geography
    JEL: R12 F10 O54
    Date: 2015
  7. By: Zhengbin Dong; Wenjie Wu
    Abstract: Air networks are normal examples of transportation systems among ubiquitous big data networks in the dynamic nature. This is particularly the case in developing countries with rapid airport network expansions. This paper explores the structure and evolution of the trunk airport network of China (ANC) in major years during 1980s-2000s. We generalise the complex network approach developed in existing studies and further test for statistical properties of weighted network characteristics by using pair-wise traffic flows. The spatiotemporal decomposition of network metric plots and the visualization maps leads to a rich harvest of stylized ANC structures: (i) national hub-and-spoke patterns surrounding mega-cities; (ii) regional broker patterns surrounding Kunming and Urumqi, and (iii) local heterogeneous disparity patterns in isolated geographical cities, such as Lhasa, Lijiang, Huangshan, etc. These findings have important implications towards understanding the geo-political and economic forces at stake in shaping China's urban systems.
    Keywords: airport system; complex network; regional development; China
    JEL: O18 P25 R12
    Date: 2015–03
  8. By: Frank Ethridge; Maryann Feldman; Tom Kemeny; Ted Zoller
    Abstract: The idea that local social capital yields economic benefits is fundamental to theories of agglomeration, and central to claims about the virtues of cities. However, this claim has not been evaluated using methods that permit more confident statements about causality. This paper examines what happens to firms that become affiliated with a highly-connected local individual or “dealmaker.” We adopt a quasi-experimental approach, combining difference-in-differences and propensity score matching to address selection and identification challenges. The results indicate that firms who link to highly-connected local dealmakers are rewarded with substantial gains in employment and sales when compared to a control group.
    Keywords: cities; economic development; social networks; social capital
    JEL: L14 O12 O18 R11
    Date: 2015–01
  9. By: David CHARLES (University of Lincoln); Katerina CIAMPI STANCOVA (European Commission – JRC - IPTS)
    Abstract: Research and Technology Organisations (RTOs) have developed in many European countries at both national and regional levels to assist in the support of local industry, often around specific industrial technologies or sectors. With a core responsibility for technological upgrading they play a key role in regional and national innovation systems. Yet there is great variety in the form and mission of such RTOs, especially in terms of the degree of regional alignment, and whilst some regions are relatively well endowed with multiple RTOs, others are reliant on national RTOs in other regions or even other countries. These geographical challenges are also compounded by changes in the funding of RTOs with a shift to greater reliance on non-government funding and the search for funds from international sources such as global firms or Horizon 2020 projects. So whilst regions may see RTOs as critical regional assets, the RTOs may have a more nuanced attitude as their client base extends beyond national boundaries and they search for new sources of revenue. RTOs have an important role to play in smart specialisation (S3) though and three specific roles have been identified here. First, many RTOs have a policy role and have capabilities to identify industry needs and technological opportunities as a key input into the entrepreneurial discovery process. Second, RTOs, as increasingly international organisations, can facilitate the access to global knowledge for regional firms through their networks and research collaborations. Third RTOs often have a central role in the development of particular cluster groupings through their specialisation around core technologies, and as such can be a central player in the development of such clusters. But all three of these roles involve potential challenges and difficulties as the interests of the RTOs do not necessarily align with the needs of the region. The case studies in this report on RTOs in Spain, Finland, Italy, and the UK illustrate the variety of RTOs and the complexities of their relationships with regional hosts, but also some of the initiatives that are developing to support smart specialisation.
    Keywords: smart specialisation, research and technology organisations, regional innovation, research and innovation
    Date: 2015–11
  10. By: Clément Bosquet; Pierre-Philippe Combes (Université de Cergy-Pontoise, THEMA)
    Abstract: We study how departments' characteristics impact academics' quantity and quality of publications in economics. Individual time-varying characteristics and individual fixed-effects are controlled for. Departments' characteristics have an explanatory power at least equal to a fourth of that of individual characteristics and possibly as high as theirs. An academic's quantity and quality of publications in a field increase with the presence of other academics specialised in that field and with the share of the field's output in the department. By contrast, department's size, proximity to other large departments, homogeneity in terms of publication performance, presence of colleagues with connections abroad, and composition in terms of positions and age matter at least for some publication measures but only when individual fixed effects are not controlled for. This suggests a role for individual positive sorting where these characteristics only attract more able academics. A residual negative sorting between individuals' and departments' unobserved characteristics is simultaneously exhibited.
    Keywords: Research productivity, Local externalities, Skills sorting, Peer effects, Co-author networks, Economics of science.
    JEL: R23 J24 I23
    Date: 2015
  11. By: Riccardo Crescenzi; Luisa Gagliardi
    Abstract: This paper looks at the link between inter-regional mobility, innovation and firms’ behavioural heterogeneity in their reliance on localised external sources of knowledge. By linking patent data (capturing inventors’ inter-regional mobility) with firm-level data (providing information on firms’ innovation inputs and behaviour) a robust identification strategy makes it possible to shed new light on the geographical mobility-innovation nexus. The analysis of English firms suggests that firm-level heterogeneity – largely overlooked in previous studies - is the key to explain the innovation impact of inter-regional mobility over and above learning-by-hiring mechanisms. A causal link between inflows of new inventors into the local labour market and innovation emerges only for firms that make the use of external knowledge sources an integral part of their innovation strategies.
    Keywords: innovation; labour mobility; inter-regional migration; spillovers
    JEL: J61 O15 O31 R23
    Date: 2015–04
  12. By: Christoph Hauser; Gottfried Tappeiner; Janette Walde
    Abstract: Social trust is increasingly seen as an important determinant of economic growth and social prosperity in regions and nations. Even in a comparatively homogeneous area such as Europe, there are stark sub-national differences in levels of generalized trust. It is thus of crucial importance to identify the driving forces of regional trust and analyze the dynamics of its formation. The present paper considers these issues based on three waves of the European Values Study. Evidence is provided to demonstrate that values of regional trust remain substantially stable over an approx. 20-year period and are modified only through spatially correlated random noise processes. This finding is consistent with additional analyses identifying slow-moving factors that are responsible for the spatial distribution of trust scores and are buried deep in the cultural background of a society. Hence, in spite of its economic significance, social trust does not appear to be amenable to political intervention in the short to medium term.
    Keywords: social capital, European regions, spatial econometrics
    JEL: C21 R10 Z13
    Date: 2015–11
  13. By: Chatterjee, Satyajit (Federal Reserve Bank of Philadelphia); Eyigungor, Burcu (Federal Reserve Bank of Philadelphia)
    Abstract: An analytically tractable city model with external increasing returns is presented. The equilibrium city structure is either monocentric or decentralized. Regardless of which structure prevails, intracity variation in endogenous variables displays exponential decay from the city center, where the decay rates depend only on parameters. Given population, the equilibrium of the model is generically unique. Tractability permits explicit expressions for when a central business district (CBD) will emerge in equilibrium, how external increasing returns affect the steepness of downtown rent gradients, and how wages and welfare vary with population. An application to urban growth boundary is presented.
    Keywords: Agglomeration economies; Central business district; Rent gradient; Urban growth
    JEL: R30 Z10
    Date: 2015–10–17
  14. By: Luisa Gagliardi
    Abstract: This paper investigates the impact of technological change on local labour market outcomes in Britain. Using a newly assembled panel database for the period 2000-2007 and a directly observed measure of technological change based on patent records, the analysis suggests that employment levels are relatively lower in places that are more exposed to technological shocks depending on their existing industrial specialization. Results also suggest that the magnitude of the impact varies across locations and typologies of workers. The negative impact on employment is particularly evident in areas characterized by weaker agglomeration economies and specialization in mature industries and for intermediate skilled individuals employed in “routinary” activities
    Keywords: local labour market; employment; technological change; skills
    JEL: J24 O33 R12 R21 R23
    Date: 2014–10
  15. By: Alexander Chepurenko (National Research University Higher School of Economics); Olga Obraztsova (Russian State Social University); Vladimir Elakhovsky (National Research University Higher School of Economics)
    Abstract: The paper deals with the difference in the share of opportunity-based early entrepreneurs among regions in Russia, which is an important indicator of the ‘quality’ of the entrepreneurial activity. We invent an index called the share of opportunity-based early entrepreneurs (SOBE) which is defined as the number of nascent entrepreneurs and new business owners who are driven by the search for new opportunities and towards the realization of their own values when starting-up and developing their businesses. It is shown that the differences in SOBE levels among Russian regions are statistically significant; cross-regional differences in the SOBE level reflect a certain set of regional social and economic factors right away or with an one-year or two-year lag; they may depend on the tempo of changes in a certain set of factors related to social and economic development in given regions. Among the confirmed hypotheses are the following: a successive growth of private investment in the regional economy as well as a stable increase of real wages of employed population are factors that decrease a region’s SOBE level; moreover, the higher the population’s access to PC and Internet at home, the higher is the related region’s SOBE level. The empirical part is based on the survey designed by the Higher School of Economics which was conducted in 2011 in 79 regions of Russia with a sample of 56 900 respondents. The survey is representative for the structure of the adult population in each of the surveyed regions
    Keywords: entrepreneurial activity, entrepreneurial motivation, regional economy, entrepreneurship in Russia
    JEL: L26 R11
    Date: 2015
  16. By: Michael P. Cameron (University of Waikato); William Cochrane (University of Waikato)
    Abstract: Local government planners, property developers, large businesses and other stakeholders typically require good quality projections of the spatial distribution of the future population at the small-area level. Many approaches are available to project future populations, but all suffer from limitations due to their strict underlying assumptions or limited availability of data. In this paper we apply a novel approach to small-area population projection that combines cohort-component projections at the district level with grid-based land use projections at a fine (four-hectare) geographical scale. In our approach, residential population is directly estimated in the land use model, while a separate statistical model is used to link non-residential population to non-residential land use (by type). The model can then be used to project future small-area populations using projections of future land use from the land use model. We compare four data and model specifications for the statistical modelling, using either absolute land use area or principal components as explanatory variables, and using either OLS or Spatial Durbin model specifications. All four model combinations perform reasonably well for the Waikato Region of New Zealand, with good in-sample (2006) and out-of-sample (2013) properties. However, a naïve model based on constant shares of growth outperforms all four of our models in terms of forecast accuracy and bias. Notwithstanding the underperformance relative to a naïve model, our results suggest that land use modelling may still be useful, because the model is understandable by local authority planners and elected officials, and generates greater stakeholder ‘buy-in’ than black-box or naïve approaches.
    Keywords: population projections; small-area projections; forecasting; land use
    JEL: C53 J11 Q56 R23 R52
    Date: 2015–11–30
  17. By: Giovanna Magnani (Department of Economics and Management, University of Pavia); Antonella Zucchella (Department of Economics and Management, University of Pavia); Dinorà Eliete Floriani (University of Vale do Itajaí)
    Abstract: Distance studies often assume geographic distance in absolute terms rather than relative to firms’ perceptions, and symmetric between two countries. By pair-wise comparing six case studies of Brazilian and Italian ventures, we address this gap. We find that geographic distance is relative to a firm’s prospective internationalisation plans and we identify a considerable asymmetry in perceptions of distance. Overall, our findings seem to go against the predictions of the stages models of internationalization which envision internationalization decisions based on proximity and similarity of markets, rather firms leverage on market dissimilarities and consider the strategic distance of target markets, in addition to psychic, institutional, geographic, and cultural distances.
    Keywords: distance; relativity; asymmetry; strategic markets; similarity.
    Date: 2015–11
  18. By: Ding, Lei (Federal Reserve Bank of Philadelphia); Hwang, Jackelyn (Princeton University); Divringi, Eileen (Federal Reserve Bank of Philadelphia)
    Abstract: Gentrification has provoked considerable debate and controversy about its effects on neighborhoods and the people residing in them. This paper draws on a unique large-scale consumer credit database to examine the mobility patterns of residents in gentrifying neighborhoods in the city of Philadelphia from 2002 to 2014. We find significant heterogeneity in the effects of gentrification across neighborhoods and subpopulations. Residents in gentrifying neighborhoods have slightly higher mobility rates than those in nongentrifying neighborhoods, but they do not have a higher risk of moving to a lower-income neighborhood. Moreover, gentrification is associated with some positive changes in residents’ financial health as measured by individuals’ credit scores. However, when more vulnerable residents (low-score, longer-term residents, or residents without mortgages) move from gentrifying neighborhoods, they are more likely to move to lower-income neighborhoods and neighborhoods with lower values on quality-of-life indicators. The results reveal the nuances of mobility in gentrifying neighborhoods and demonstrate how the positive and negative consequences of gentrification are unevenly distributed.
    Keywords: Gentrification; Residential mobility; Credit scores; Displacement
    JEL: D14 J11 J6 R23
    Date: 2015–10–15

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