nep-geo New Economics Papers
on Economic Geography
Issue of 2016‒05‒14
nine papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Quality of government and social capital as drivers of regional diversification in Europe By Nicola Cortinovis; Jing Xiao; Ron Boschma; Frank van Oort
  2. EU Structural Funds and Regional Income Convergence - A Sobering Experience By Breidenbach, Philipp; Mitze, Timo; Schmidt, Christoph M
  3. Network Structure and Industrial Clustering Dynamics in the Aerospace Industry By Ekaterina Turkina; Ari Van Assche; Raja Kali
  4. Weak and Strong Cross-Sectional Dependence: a Panel Data Analysis of International Technology Diffusion By Antonio Musolesi; Cem Ertur
  5. Migration and Innovation Diffusion : An Eclectic Survey By Francesco LISSONI
  6. ‘Williamson’s Fallacy’ in Estimation of Inter-Regional Inequality By Gluschenko, Konstantin
  7. Place-based Policies, Firm Productivity and Displacement Effects: Evidence from Shenzhen, China By Hans Koster; Fang Fang Cheng; Michiel Gerritse; Frank van Oort
  8. Places and spaces in the weightless economy By Huiwen Gong
  9. The Regional Distribution of Public Employment:Theory and Evidence By Sebastian G. Kessing; Chiara Strozzi

  1. By: Nicola Cortinovis; Jing Xiao; Ron Boschma; Frank van Oort
    Abstract: Industrial diversification is considered crucial for economies to prosper. Recent studies have shown that regional economies tend to diversify into sectors that are related to those already present in the region. However, no study yet has investigated the impact of regional institutions. The objective of the paper is to bring together the literatures on related diversification and institutions by analyzing how formal and informal institutions influence regional diversification. Analyzing 118 European regions in the period 2004 and 2012, we find evidence that institutions matter for regions to diversify into new industries. Bridging social capital is a key driver of regional diversification, in addition to relatedness, in contrast to quality of government in regions. Bonding social capital has a negative impact in regions with a low quality of government. This suggests that regional institutions relevant for structural change in regions are predominantly informal in character rather than formal, and bridging rather than bonding.
    Keywords: regional diversification, social capital, quality of government, institutions
    JEL: R11 O14
    Date: 2016–05
  2. By: Breidenbach, Philipp; Mitze, Timo; Schmidt, Christoph M
    Abstract: The European Structural and Investment Funds (ESIF) are the prime instrument of EU regional policy. European policy makers place considerable hope into their growth stimulating funding measures to overcome current economic stagnation. Consequently, there is a strong need for credible evidence regarding the programs' effectiveness. Based on an empirical identification strategy linked to modern growth theory, we find that the disbursement of EU structural funds is negatively correlated with regional growth. Incorporating spatial dynamics and decomposing this correlation into a direct and a spatially-indirect component, it is particularly the latter which determines this "sobering" finding. Regarding the economics behind these results, the obtained negative spatial effect may reflect the role played by policy-induced spatial competition among neighboring regions. It could also highlight the backwardness in technological endowment and economic structures of highly funded regions. In any case, EU structural funding does not seem to contribute effectively to foster income convergence across regions.
    Keywords: EU Regional Policy; Spatial Spillovers; Panel Data
    JEL: C21 R12 R58
    Date: 2016–04
  3. By: Ekaterina Turkina; Ari Van Assche; Raja Kali
    Abstract: We use a new firm level dataset to study the network of formal firm linkages within and across 52 aerospace clusters in North America and Europe over the period 2002-2014. Applying community structure detection techniques, we find that the structure of the overall network has changed over time. We organize sub-networks by linkage type and find two important trends in their evolution. First, new linkages in the vertical buyer-supplier sub-network are generally formed in a hierarchical hub-and-spoke fashion, whereas new links in the horizontal partnership sub-network are generated in a more decentralized and cohesive manner. Second, the geographical scope of new linkages is different, with vertical buyer-supplier and investment linkages moving increasingly trans-local and partnership linkages becoming more localized. Taken together, our findings suggest that the overall network is evolving from a geographically partitioned community structure to a hierarchical community structure that is stratified along value chain stages.
    Keywords: industrial clusters, local and trans-local linkages, community structure detection, small world analysis,
    JEL: L14 L62 F23
    Date: 2016–04–08
  4. By: Antonio Musolesi; Cem Ertur
    Abstract: This paper provides an econometric examination of technological knowledge spillovers among countries by focusing on the issue of error cross-sectional dependence, particularly on the dif- ferent ways – weak and strong – that this dependence may affect model specification and estimation. A preliminary analysis based on estimation of the exponent of cross-sectional de- pendence provides a clear result in favor of strong cross-sectional dependence. This result has relevant implications in terms of econometric modeling and suggests that a factor structure is preferable to a spatial error model. The common correlated effects approach is then used be- cause it remains valid in a variety of situations that are likely to occur, such as the presence of both forms of dependence or the existence of nonstationary factors. According to the estimation results, richer countries benefit more from domestic R&D and geographic spillovers than poorer countries, while smaller countries benefit more from spillovers originating from trade. The re- sults also suggest that when the problem of (possibly many) correlated unobserved factors is addressed, the quantity of education no longer has a significant effect. Finally, a comparison of the results with those obtained from a spatial model provides interesting insights into the bias that may arise when we allow only for weak dependence, despite the presence of strong dependence in the data.
    Keywords: cross-sectional dependence; large panels; factor models; spatial models; heterogeneous slopes; unit root; total factor productivity; research and development; human capital
    JEL: C23 C5 F0 O3
    Date: 2016–05–09
  5. By: Francesco LISSONI
    Abstract: In the new era of mass migration, with highly skilled individuals playing a key role, the role of migration in innovation diffusion is a topical issue. The paper organizes several strands of literature, from the history of religious minorities to the spatial analysis of knowledge flows. Three main themes emerge: the distinction between mobility and migration, the directions of flows, and their contents. Migration supports diffusion from origin to host countries, but also in the opposite direction, as well as within and across destinations. Distinguishing between information access and knowledge exchanges remain a major item of the research agenda.
    Keywords: migration ; innovation ; diffusion
    JEL: O33 F22 J61
    Date: 2016
  6. By: Gluschenko, Konstantin
    Abstract: While estimating regional inequality, many economists use inequality indices weighted by regions’ shares in the national population. Despite this approach is widespread, its adequacy has not received attention in the regional science literature. This paper proves that such approach is conceptually inconsistent, yielding an estimate of interpersonal inequality among the whole population of the country rather than an estimate of regional inequality. Moreover, the population-weighted inequality indices do not meet requirements to an adequate inequality measure.
    Keywords: Inequality index, Weighting by population, Williamson coefficient of variation, inequality axioms
    JEL: D31 D63 R10
    Date: 2015–11–20
  7. By: Hans Koster (VU University Amsterdam, the Netherlands, and London School of Economics, United Kingdom); Fang Fang Cheng (Utrecht University, the Netherlands); Michiel Gerritse (University of Groningen, the Netherlands); Frank van Oort (Erasmus School of Economics, Erasmus University Rotterdam, and Utrecht University, the Netherlands)
    Abstract: We analyse the economic impacts of place-based policies that aim to enhance economic development by stimulating growth and productivity of firms in designated areas. We use unique panel data from China with information on manufacturing firms’ production factors, productivity and location, and we exploit temporal and spatial variation in place-based interventions due to the opening of science parks in the metropolitan area of Shenzhen. The identification strategy enables us to address the issues that (i) science parks are located in favourable locations and that (ii) high-productivity firms sort themselves in science parks. We find that productivity is approximately 15-25 per cent higher due to the policies. The results also show that local wages have increased in science parks. Weaker evidence suggests that displacement effects are sizeable.
    Keywords: place-based policies; transitional economies; science parks; productivity
    JEL: H2 R3 R5
    Date: 2016–04–01
  8. By: Huiwen Gong (Kiel University, Germany)
    Abstract: Proposition of the 'end of geography' based on globalization and digitalization has been havily criticized by different geographers in the last decades. This paper mainly focus on the digitalization side of debate because of the more obvious and contradictory relationships between geography and digital production/consumption. Based on a systemic reflection on the literature in new media industry in general, and video game industry in particular, this paper bridges two different strings of research in the weightless economy. By referring to previous respondents' opinions as well as extracting new ideas from other empirical studies, this paper organizes its arguments in a comprehensive way and supports these arguments with abundant empirical evidence found in different case studies. It contributes to economic geographers' side of debate on the role of geography in today's weihgtless economy
    Keywords: the weightless economy, the end of geography, new media, video game industry
    JEL: A14 D20
    Date: 2016–04–14
  9. By: Sebastian G. Kessing; Chiara Strozzi
    Keywords: Public employment, redistribution, regional inequality, European regions
    JEL: H11 J45 R12
    Date: 2016–01–25

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