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on Economic Geography |
| By: | Kristian Behrens; Brahim Boualam; Julien Martin |
| Abstract: | Understanding and assessing the role played by geographical clusters in the resilience of industries' and firms' to adverse economic shocks is important to inform policy and to devise regional development strategies. Yet, surprisingly little is known about that topic. This report aims to fill this gap. To this end, we first use recent microgeographic techniques to measure the degree of clustering in the Canadian textile and clothing (T&C) industry, and to detect geographical clusters of plants. We then dissect the changes in that industry (exit of plants, employment changes, productivity, industry switching, and geographical relocation) between 2001 and 2013. The T&C industry is geographically strongly clustered and subject to large industry-specific shocks (the end of the Multi Fibre Arrangement; mfa) during our study period, thus providing an ideal laboratory to examine the role of geographical clusters for resilience. We find a very limited impact of the initial level of clustering on subsequent changes in either industry-level employment, productivity, or revenue. Using detailed geocoded plant-level data, we further find that plants in clusters were more likely to exit than plants that were not part of a cluster and they downsized their employment more than non-clustered plants. These results suggest that clusters need not make industries or plants more resilient to adverse economic shocks. Furthermore, there is a composition effect of clusters. In the T&C industry, clusters contain larger plants that react to shocks by exiting or downsizing. In this respect, clusters were actually less resilient to shocks in the sense of providing local employment stability, which is usually the key concern for local policy makers. Plants in clusters were, however, more likely to switch into different industries following the end of the mfa. This suggests that being part of a cluster may help surviving plants to adapt in the event of a negative shock. |
| Date: | 2016–05–19 |
| URL: | http://d.repec.org/n?u=RePEc:cir:cirpro:2016rp-05&r=geo |
| By: | J. Vernon Henderson; Tim Squires; Adam Storeygard; David Weil |
| Abstract: | We study the distribution of economic activity, as proxied by lights at night, across 250,000 grid cells of average area 560 square kilometres. We first document that nearly half of the variation can be explained by a parsimonious set of physical geography attributes. A full set of country indicators only explains a further 10%. When we divide geographic characteristics into two groups, those primarily important for agriculture and those primarily important for trade, we find that the agriculture variables have relatively more explanatory power in countries that developed early and the trade variables have relatively more in countries that developed late, despite the fact that the latter group of countries are far more dependent on agriculture today. We explain this apparent puzzle in a model in which two technological shocks occur, one increasing agricultural productivity and the other decreasing transportation costs, and in which agglomeration economies lead to persistence in urban locations. In countries that developed early, structural transformation due to rising agricultural productivity began at a time when transport costs were still relatively high, so urban agglomerations were localized in agricultural regions. When transport costs fell, these local agglomerations persisted. In late developing countries, transport costs fell well before structural transformation. To exploit urban scale economies, manufacturing agglomerated in relatively few, often coastal, locations. With structural transformation, these initial coastal locations grew, without formation of more cities in the agricultural interior. |
| Keywords: | agriculture, physical geography, development |
| JEL: | O13 O18 R12 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:cep:sercdp:0198&r=geo |
| By: | Díaz-Lanchas, Jorge (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Llano, Carlos (Departamento de Análisis Económico (Teoría e Historia Económica). Universidad Autónoma de Madrid.); Minondo, Asier (Deusto Business School, University of Deusto.); Requena, Francisco (Universitat de Valencia. Departamento de Estructura Economica.) |
| Abstract: | Do large and small cities exhibit different patterns of export specialization? Using highly disaggregated product-level trade data for Brazilian cities in year 2013, we find that more populated urban areas export proportionately more complex and skill-intensive goods than less populated urban areas. We also show that Brazilian urban areas that have increased more in population have also augmented more than proportionately the exports of complex and skill-intensive goods. Our empirical findings support recent models which argue that large cities attract more skilled workers and exhibit a wide range of capabilities, providing them a comparative advantage in skill-intensive and complex goods. |
| Keywords: | urban areas, exports, complexity, skills, comparative advantage, Brazil |
| JEL: | F11 F14 R12 |
| Date: | 2016–05 |
| URL: | http://d.repec.org/n?u=RePEc:uam:wpaper:201604&r=geo |
| By: | T. Arduini |
| Abstract: | This paper proposes a semiparametric estimator for spatial autoregressive (SAR) binary choice models in the context of panel data with fixed effects. The estimation procedure is based on the observational equivalence between distribution free models with a conditional median restriction and parametric models (such as Logit/Probit) exhibiting (multiplicative) heteroskedasticity and autocorrelation. Without imposing any parametric structure on the error terms, we consider the semiparametric nonlinear least squares (NLLS) estimator for this model and analyze its asymptotic properties under spatial near-epoch dependence. The main advantage of our method over the existing estimators is that it consistently estimates choice probabilities. The finite-dimensional estimator is shown to be consistent and root-n asymptotically normal under some reasonable conditions. Finally, a Monte Carlo study indicates that the estimator performs quite well in finite samples. |
| JEL: | C14 C21 C23 C25 R15 |
| Date: | 2016–01 |
| URL: | http://d.repec.org/n?u=RePEc:bol:bodewp:wp1052&r=geo |
| By: | Daria Ciriaci (European Commission – JRC - IPTS); Nicola Grassano (European Commission – JRC - IPTS); Antonio Vezzani (European Commission – JRC - IPTS) |
| Abstract: | This paper investigates how product and labour market regulations and red tape affect the way in which top corporate research and development (R&D) investors worldwide organise their cross-border operations. The decision about where a company locates its international subsidiaries is modelled using location-specific framework conditions, socio-economic factors and other controls commonly used in the economic geography literature. The location decision drivers are estimated using a multilevel mixed-effects logistic regression, controlling for both fixed and random effects. Our results confirm that both product market regulation (PMR) and employment protection legislation (EPL) significantly affect the location decisions of top R&D investors, as well as red tape and profit tax. The marginal effect of PMR is by far the largest, followed by EPL; the cost of starting a business and profit tax show lower marginal effects. Moreover, we found that (i) PMR and EPL are complementary (i.e. reducing one would also reduce the negative impact of the other) and (ii) of the three components of the PMR indicator —barriers to trade and investment, state control and barriers to entrepreneurship—the latter is the one with the lowest marginal effect. Policy implications are drawn accordingly. |
| Keywords: | Multinational Corporations (MNCs), Internationalization, Product market regulation, Employment protection. |
| JEL: | F23 D22 L20 |
| Date: | 2016–04 |
| URL: | http://d.repec.org/n?u=RePEc:ipt:wpaper:201601&r=geo |
| By: | Ernesto M. Pernia (School of Economics, University of the Philippines Diliman); Janine Elora M. Lazatin (School of Economics, University of the Philippines Diliman) |
| Abstract: | This paper looks into whether and how sub-national regions can benefit from a country’s economic openness. Using data on the Philippines, it first notes marked disparities across its regions as reflected in economic and social indicators. The dominance of Metropolitan Manila in the national economic landscape persists, albeit spread effects into adjacent regions are increasingly apparent. Applying econometric analysis to panel data, the paper then examines how regional economic growth is influenced by economic openness. Results show that regional gains appear to be uneven with the ex-ante lagging regions at a disadvantage; by extension, the welfare effect on the poor appears unequal, as well. |
| Keywords: | economic openness, regional development; poverty, Philippines, Asia |
| JEL: | I32 O18 R11 |
| Date: | 2016–02 |
| URL: | http://d.repec.org/n?u=RePEc:phs:dpaper:201602&r=geo |
| By: | RICARDO CARVALHO DE ANDRADE LIMA; RAUL DA MOTA SILVEIRA NETO |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2014:164&r=geo |
| By: | RENATO GARCIA; VENEZIANO ARAUJO; SUELENE MASCARINI; EMERSON GOMES DOS SANTOS; ARIANA COSTA |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2015:147&r=geo |
| By: | FERNANDO CARDOSO COTELO; BRUNO MARTINS HERMANN; SERGIO GOLDBAUM |
| Date: | 2016 |
| URL: | http://d.repec.org/n?u=RePEc:anp:en2014:009&r=geo |