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on Economic Geography |
| By: | Juan Pablo Chauvin; Edward Glaeser; Yueran Ma; Kristina Tobio |
| Abstract: | Are the well-known facts about urbanization in the United States also true for the developing world? We compare American metropolitan areas with comparable geographic units in Brazil, China and India. Both Gibrat’s Law and Zipf’s Law seem to hold as well in Brazil as in the U.S., but China and India look quite different. In Brazil and China, the implications of the spatial equilibrium hypothesis, the central organizing idea of urban economics, are not rejected. The India data, however, repeatedly rejects tests inspired by the spatial equilibrium assumption. One hypothesis is that the spatial equilibrium only emerges with economic development, as markets replace social relationships and as human capital spreads more widely. In all four countries there is strong evidence of agglomeration economies and human capital externalities. The correlation between density and earnings is stronger in both China and India than in the U.S., strongest in China. In India the gap between urban and rural wages is huge, but the correlation between city size and earnings is modest. The cross-sectional relationship between area-level skills and both earnings and area-level growth are also stronger in the developing world than in the U.S. The forces that drive urban success seem similar in the rich and poor world, even if limited migration and difficult housing markets make it harder for a spatial equilibrium to develop. |
| JEL: | O15 O18 R12 R23 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:22002&r=geo |
| By: | You, Kefei |
| Abstract: | Our study examines home drivers of China’s regional outward FDI. We propose a theoretical framework that incorporates an extended Investment Development Path (IDP) theory, home locational constraints, policy incentives and geographic factors. Empirically, we employ the Bayesian Averaging Maximum Likelihood Estimates method to address model uncertainty. All proposed theories (except for geographic aspects) are found to provide important perspectives explaining China’s regional outward FDI. Our results highlight the importance of government policies but do not support the original IDP hypothesis that outward investment is automatically generated as income grows. Our findings have implications for both regional and central-government policy. |
| Keywords: | China, regional outward FDI, home determinants, extended IDP theory, home locational constraints, government policies, Bayesian |
| JEL: | F21 R11 C11 C23 |
| Date: | 2015–05–05 |
| URL: | http://d.repec.org/n?u=RePEc:bof:bofitp:urn:nbn:fi:bof-201505061170&r=geo |
| By: | IKEDA Kiyohiro; MUROTA Kazuo; AKAMATSU Takashi; TAKAYAMA Yuki |
| Abstract: | Narrow industrial belts comprising a system of cities are prospering worldwide. The self-organization of a system of cities in a long narrow economy of a new economic geography model is demonstrated through a comparative study with a racetrack economy, which is an idealized uniform trading space. A spatially repeated core-periphery pattern a la Christaller and Lösch emerges when agglomeration forces are large. Peripheral zones of this pattern are enlarged recursively to engender agglomeration shadow en route to an atomic mono-center. A megalopolis emerges when agglomeration forces are small. |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:eti:dpaper:16018&r=geo |
| By: | Riccardo Crescenzi; Mara Giua |
| Abstract: | This paper looks at the European Union as a laboratory to study how ‘spatially-targeted’ policies (i.e. the EU Cohesion and Rural Development Policies) interact with sectoral ‘spatially-blind’ policies (i.e. the Common Agricultural Policy - CAP), jointly shaping regional growth dynamics. The analysis of the drivers of regional growth shows that the EU Regional Policy has a positive influence on economic growth in all regions. However, its impact is stronger in the most socio-economically advanced areas and is maximised when its expenditure is complemented by Rural Development and CAP funds. The top-down funding of the CAP seems to be able to concentrate some benefits in the most deprived areas. This suggests that bottom-up policies are not always the best approach to territorial cohesion. Top-down policies may – in some cases – be effective in order to channel resources to the most socioeconomically deprived areas. Territorial cohesion requires the flexible integration and coordination of both bottom-up and top-down approaches. |
| Keywords: | Regional Policy, European Union, Regional Growth, Rural Development, Common Agricultural Policy |
| JEL: | O18 R11 R58 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:rtr:wpaper:0206&r=geo |
| By: | Elias Einiö; Overman; Henry |
| Abstract: | We investigate the impacts of a significant area-based intervention (LEGI) that aimed to increase employment and entrepreneurial activity in 30 disadvantaged areas across England. We examine the spatial pattern of effects at a fine spatial scale using panel data for small geographic units and a regression discontinuity design that exploits the programme eligibility rule. The results indicate considerable local displacement effects. Employment increases in treated areas close to the treatment area boundary at the cost of significant employment losses in untreated localities just across the boundary. These differences vanish quickly when moving away from the boundary and do not persist after the programme is abolished. These findings support the view that area-based interventions may have considerable negative displacement effects on untreated parts of the economy. This displacement can substantially reduce (or in this case eliminate) any net benefits. |
| Keywords: | Place-based policy, Programme evaluation, Displacement, Employment |
| JEL: | J20 O40 R11 H25 |
| Date: | 2016–03–07 |
| URL: | http://d.repec.org/n?u=RePEc:fer:wpaper:71&r=geo |
| By: | Ono, Arito; Saito, Yukiko; Sakai, Koji; Uesugi, Iichiro |
| Abstract: | Using a unique and massive firm-bank matched panel dataset, this paper examines the causal link between the geographical distance between a firm and its main bank and the probably that a firm will switch its main bank. Utilizing the exogenous change in firm-main bank distances brought about by bank mergers and bank branch consolidations in Japan during 2000–2010, the analysis – the first of its kind – finds the following. First, an increase in lending distance positively affected switching of firm-main bank relationships. Second, the average lending distance for firms that switched to new main banks significantly decreased afterwards. Third, the lending distance of new firm-main bank relationships after the switch did not have a significant impact on firms' probability of ex-post default, suggesting that larger lending distance does not necessarily result in a deterioration in the quality of soft information. |
| Keywords: | lending distance, firm-bank relationships, bank mergers, main bank |
| JEL: | G21 R12 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:hit:remfce:40&r=geo |
| By: | Frank Neffke; Anne Otto; César Hidalgo |
| Abstract: | Establishment closures leave many workers unemployed. Based on employment histories of 20 million German workers, we find that workers often cope with their displacement by moving to different regions and industries. However, which of these coping strategies is chosen depends on the local industry mix. A large local presence of predisplacement or related industries strongly reduces the rate at which workers leave the region. Moreover, our findings suggest that a large local presence of the predisplacement industry induces workers to shift search efforts toward this industry, reducing the spatial scope of search for jobs in alternative industries and vice versa. |
| Keywords: | Displacement, local industry mix, agglomeration externalities, matching, mobility |
| JEL: | J24 J61 J64 R12 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:egu:wpaper:1605&r=geo |
| By: | Francisco J. Buera; Ezra Oberfield |
| Abstract: | We provide a tractable theory of innovation and technology diffusion to explore the role of international trade in the process of development. We model innovation and diffusion as a process involving the combination of new ideas with insights from other industries or countries. We provide conditions under which each country's equilibrium frontier of knowledge converges to a Frechet distribution, and derive a system of differential equations describing the evolution of the scale parameters of these distributions, i.e., countries' stocks of knowledge. In particular, the growth of a country's stock of knowledge depends only on its trade shares and the stocks of knowledge of its trading partners. We use the framework to quantify the contribution of bilateral trade costs to cross-sectional TFP differences, long-run changes in TFP, and individual post-war growth miracles. |
| JEL: | F1 F43 O33 O47 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21844&r=geo |
| By: | Grégoire Garsous; David Corderi; Mercedes Velasco; Andrea Colombo |
| Abstract: | In recent decades, a significant number of developing countries have implemented fiscal incentives programs for the tourism industry as part of their regional development policies. The main objective of these programs is to increase local investment and employment, as tourism activities are labor intensive. However, little evidence is available to assess the effect of these policies on job creation in emerging markets. In this paper, we analyze a program of fiscal incentives introduced by the Brazilian federal government in the SUDENE area in 2002 and in which tourism firms were eligible to participate. Through a difference-in-difference estimation, we compare before and after 2002 the change in the logarithm of local employment in the SUDENE municipalities (the treatment group) to the change in the same outcome in a group of municipalities that were not affected by the program (the control group). Our empirical analysis provides robust evidence that the fiscal incentives led to a substantial increase in tourism employment in the SUDENE region. In particular, we find that local employment in the tourism industry was on average 34 percent higher in the treatment group. This result does not seem to be affected by either displacement effect or job destruction in those neighboring municipalities that had not benefited from the same tax incentives. |
| Keywords: | employment; public economics; regional development; tax incentives; tourism |
| JEL: | H25 H71 J20 L83 R58 |
| Date: | 2016–03 |
| URL: | http://d.repec.org/n?u=RePEc:eca:wpaper:2013/227978&r=geo |
| By: | Martin Beraja; Erik Hurst; Juan Ospina |
| Abstract: | We argue that it is difficult to make inferences about the drivers of aggregate business cycles using regional variation alone because (i) the local and aggregate elasticities to the same type of shock are quantitatively different and (ii) purely aggregate shocks are differenced out when using cross-region variation. We highlight the importance of these confounding factors by contrasting the behavior of U.S. aggregate time-series and cross-state patterns during the Great Recession. In particular, using household and scanner data for the US, we document a strong relationship across states between local employment growth and local nominal and real wage growth. These relationships are much weaker in US aggregates. In order to identify the shocks driving aggregate (and regional) business cycles we develop a semi-structural methodology that combines regional and aggregate data within a model of a monetary union. The methodology uses theoretical restrictions implied by a wage setting equation with nominal wage rigidities. Taking this methodology to the data, we find that a combination of both "demand" and "supply" shocks are necessary to account for the joint dynamics of aggregate prices, wages and employment during the 2007-2012 period in the US while only "demand" shocks are necessary to explain most of the observed cross-state variation. We conclude that the wage stickiness necessary to get demand shocks to be the primary cause of aggregate employment declines during the Great Recession is inconsistent with the flexibility of wages estimated from cross-state variation. |
| JEL: | E24 E31 E32 R12 R23 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:nbr:nberwo:21956&r=geo |