nep-geo New Economics Papers
on Economic Geography
Issue of 2016‒06‒25
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Clustering or Co-Agglomeration? A Love-for-Variety Approach By Nikita Malykhin; Philip Ushchev
  2. Cities Export Specialization By Jorge Díaz-Lanchas; Carlos Llano; Asier Minondo; Francisco Requena
  3. Estimating agglomeration in the EU and the Western Balkan regions By Roman Römisch
  4. Institutions vs. "First-Nature" Geography - What Drives Economic Growth in Europe's Regions? By Ketterer, Tobias; Rodríguez-Pose, Andrés
  5. Remoteness equals backwardness? Human capital and market access in the European regions: insights from the long run. By Claude Diebolt; Ralph Hippe
  6. Industrial Cluster Policy and Transaction Networks: Evidence from firm-level data in Japan By OKUBO Toshihiro; OKAZAKI Tetsuji; TOMIURA Eiichi
  7. Liberals, Socialists, and pork-barrel politics in Greece. By Andrés Rodríguez-Pose; Yannis Psycharis; Vassilis Tselios
  8. The Inequality of Farmland Size in Western Europe By Loughrey, Jason; Donnellan, Trevor; Lennon, John
  9. Implementing Smart Specialisation in Sparsely Populated Areas By Jukka TERÄS; Alexandre DUBOIS; JENS SÖRVIK; MARTINA PERTOLDI
  10. Crecimiento del empleo y estructura espacial el caso de las provincias españolas. 1999 y 2004 By Luz Dary Ramirez Franco
  11. Subsidios a la oferta y decisiones de localización: El caso de la Ley de Vivienda de Interés Social By Felipe Berrutti

  1. By: Nikita Malykhin; Philip Ushchev (National Research University Higher School of Economics)
    Abstract: We develop a simple partial-equilibrium model of endogenous city structure formation. No production externalities are at work, the only two forces shaping the spatial configurations of the city being love for variety (on the consumer side) and seeking for a better access to the market (on the firm side). We show that, unlike in existing models of a similar nature, our model generates clustering rather than co-agglomeration. Namely, if there are few firms relative to the urban population size, then firms tend to cluster at the city center, while consumers choose to reside on the outskirts. Otherwise, the opposite holds. Although a continuum of equilibrium city structures may emerge, we show that all spatial equilibria are segregated. In addition, the market outcome features spatial price dispersion, even though our framework does not involve imperfect information and search costs on the consumer side.
    Keywords: urban structure, monopolistic competition, agglomeration, clustering, quadratic preferences, segregated spatial equilibrium, price dispersion.
    JEL: R12 R14 D43 L13
    Date: 2016
  2. By: Jorge Díaz-Lanchas (Department of Economic Analysis: Economic Theory. Universidad Autónoma de Madrid and Lawrence R. Klein Institute/CEPREDE. 28049 Cantoblanco. Madrid); Carlos Llano (Department of Economic Analysis: Economic Theory. Universidad Autónoma de Madrid and Lawrence R. Klein Institute/CEPREDE. 28049 Cantoblanco. Madrid); Asier Minondo (Corresponding author. Deusto Business School, University of Deusto, Camino de Mundaiz 50, 20012 Donostia - San Sebastian (Spain). Research afiliate of Instituto Complutense de Estudios Internacionales.); Francisco Requena (Department of Economic Structure, University of Valencia, Avda. dels Tarongers s/n, 46022 Valencia (Spain).)
    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
  3. By: Roman Römisch (The Vienna Institute for International Economic Studies, wiiw)
    Abstract: Abstract The paper develops a model to consistently estimate agglomeration and agglomeration economies in European NUTS3 regions. It is based on the empirical observation that the size of population across regions as well as of other economic variables tend to follow a Zipf distribution. Furthermore, the model is extended to capture agglomeration effects in traditional regional convergence estimations. Agglomeration is analysed for 25 European countries, including Macedonia and Serbia, and the years 2000 to 2012. Results indicate significant agglomeration effects on the level and growth of regional economic development, with agglomeration and agglomeration economies generally declining in the Western European countries and increasing the Central East and South East European countries.
    Keywords: Zipf’s Law, agglomeration economies, Europe, Western Balkans
    Date: 2015–11
  4. By: Ketterer, Tobias; Rodríguez-Pose, Andrés
    Abstract: The debate on whether institutions or geography prevail in driving economic growth has been rife (e.g. Sachs 2003 vs. Rodrik et al. 2004). Most of the empirical analyses delving into this debate have focused on world countries, whose geographical and institutional conditions differ widely. Subnational analyses considering groups of countries with, in principle, more similar institutional and geographical conditions have been limited and tended to highlight that geography is more important than institutions at subnational level. This paper aims to address whether this is the case by investigating how differences in institutional and "first-nature" geographical conditions have affected economic growth in Europe's regions in the period 1995-2009. In the analysis we use a newly developed dataset including regional quality of government indicators and geographical charactersitics and employ 2-SLS and IV-GMM estimation techniques with a number of regional historical variables as instruments. Our results indicate that at a regional level in Europe institutions rule. Regional institutional conditions - and, particularly, government effectiveness and the fight against corruption - play an important role in shaping regional economic growth prospects. This does not imply, however, that geography is irrelevant. There is evidence of geographical factors affecting regional growth, although their impact is dwarfed by the overriding influence of institutions.
    Keywords: Europe; Geography; institutions; NUTS-2 regions; quality of government; Regional economic growth
    JEL: O11 O43 R11
    Date: 2016–06
  5. By: Claude Diebolt; Ralph Hippe
    Abstract: In a recent contribution, Redding and Schott (2003) add human capital to a two sector NEG model, highlighting that remoteness represents a penalty that gives disincentives to invest in human capital. But is this hypothesis consistent with long-term evidence? We test the persistence of this effect at the regional level in an historical setting. The results show that market access has a significant positive influence on human capital in OLS, Tobit and IV regression models. Thus, the paper confirms the ‘penalty of remoteness’ hypothesis for Europe in the long run.
    Keywords: Human Capital, New Economic Geography, Regional Development, Market Access.
    JEL: I21 N33 N93 R11
    Date: 2016
  6. By: OKUBO Toshihiro; OKAZAKI Tetsuji; TOMIURA Eiichi
    Abstract: Cluster policy is designed to facilitate inter-firm networking. We examine industrial clusters in Japan based on firm-level transaction data. Firms in clusters expand transaction networks at higher speeds, but do so significantly only with firms agglomerated in Tokyo and not with local firms within the same region. By disaggregating firms according to their main bank types, we find that cluster firms expanding networks are mainly financed by regional banks and not by banks with nationwide operations. This suggests the importance of intensive relationships with main banks for inter-firm network formation.
    Date: 2016–05
  7. By: Andrés Rodríguez-Pose; Yannis Psycharis; Vassilis Tselios
    Abstract: This paper analyses the role of pork-barrel politics in the allocation of public investment expenditures in Greece. It proposes a model which explicitly relates the allocation of public investment to electoral results using a unique dataset covering the period from the restoration of democracy in 1974 until 2009, just before the Great Recession that radically transformed the political panorama of the country. The analysis includes ten legislative periods marked by governments of the two parties that dominated the political arena in Greece: the Liberal and the Socialist Party. The results show that Socialist and re-elected governments applied more expansionary fiscal policies relative to Liberals. The two main parties also used different tactics when it came to pork-barrelling: while the Socialists when in government rewarded/groomed their electoral fiefs, the Liberals invested in areas controlled by the opposition to win over new votes or seats.
    Keywords: Public investment, pork-barrel politics, elections, regional policy, Greece.
    JEL: P16 R1 R12 R42 R58 H54
    Date: 2016–06
  8. By: Loughrey, Jason; Donnellan, Trevor; Lennon, John
    Abstract: In this paper, we seek to identify spatial clusters of farmland size inequality across Western Europe and to discuss the implications for the future of agriculture and agricultural policy reform in the region. We utilise Eurostat data to estimate the degree of inequality in farmland size at the NUTS (Nomenclature of Territorial Units for Statistics) 2 level. We utilise geographical information systems software to illustrate the spatial distribution of farm size inequality and conduct exploratory spatial data analysis techniques to identify spatial dependence between neighbouring NUTS 2 regions. The findings show that there are clusters of low inequality in the countries of Northern Europe and clusters with high inequality in much of Southern Europe. The highlands of Scotland are a notable exception to the general trend in Northern Europe. The variation in farmland size is a key determinant in the distribution of farm income. In combination with high farmland prices and sparse land rental opportunities, a highly unequal farm size distribution can militate against the progress of new-entrant farmers and small farmers wishing to expand their production and increase their farm incomes. A highly unequal farm size distribution can therefore grant an elevated importance to land inheritance as a determinant of relative economic success at the farm level.
    Keywords: Farm Size, Inequality, Western Europe, Spatial Autocorrelation, Agricultural and Food Policy, C21, D31, 013, Q12, Q15, R58,
    Date: 2016–04
  9. By: Jukka TERÄS (Nordregio, Stockholm (Sweden)); Alexandre DUBOIS (Swedish University of Agricultural Sciences, Uppsala (Sweden)); JENS SÖRVIK (European Commission – JRC - IPTS); MARTINA PERTOLDI (European Commission – JRC - IPTS)
    Abstract: This Working Paper explores Research and Innovation Strategies for Smart Specialisation (RIS3) in Sparsely Populated Areas (SPA). The paper discusses the most significant elements of Smart Specialisation (S3) in SPA focusing on its theoretical background as well as on the empirical processes related to the introduction and implementation of the S3 concept in selected European regions. Presenting both issues emerging from theoretical debates and practice-based examples, this paper provides a critical discussion on the operationalisation of S3 in the specific context of European Sparsely Populated Areas. SPA should not be seen as regions lagging behind by definition but as regions with specific characteristics including challenges and opportunities. The analysis of the case-study regions demonstrates that SPA have been able to create innovative environments in sparsely populated and remote areas and that there is a mind-set and willingness to utilise the possibilities provided by S3 processes. However, in doing so SPA need to strengthen their competitiveness with extra-regional knowledge and networking pipelines and even more so than other types of regions in consideration of the lack of critical mass. The specific characteristics and features of SPA often with abundant natural resources, but with limited human capital and lack of agglomeration economies need to be carefully studied and the regional actors need not only to be heard but also to be invited to an inclusive S3 process. The cases discussed enlighten the need to address S3 as an overarching framework for territorial development based on the integration of complementary policies.
    Keywords: Regional Policy, Smart Specialisation, Sparsely Populated Areas, territorial diversity, place-based approach, policy integration
    Date: 2015–11
  10. By: Luz Dary Ramirez Franco
    Abstract: En este documento se presenta un estudio acerca de cómo variables de estructura económica y de estructura espacial afectaron al crecimiento del empleo en 50 provincias españolas entre los años 1999 y 2004. Para ello, se realiza una estimación por Mínimos cuadrados ordinarios que abarca los sectores de manufacturas y de servicios. Los resultados evidencian que el grueso de las empresas de la industria española es de tamaño pequeño o mediano; que existen economías de urbanización; que hay ambigüedad con respecto a las economías de localización; que los índices de centralización y concentración generan un impacto negativo y positivo respectivamente sobre el crecimiento del empleo, y que a mayor dispersión del empleo, menor crecimiento del mismo.
    Keywords: Estructura económica; estructura espacial; subcentros de empleo; empleo disperso.
    JEL: R11 R12 R23
    Date: 2015–12–30
  11. By: Felipe Berrutti (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: This paper uses differences-in-differences to analyze the impact of a program which grants place-based subsidies to residential construction (Ley de Vivienda de Interés Social) on the location of housing developments in the city of Montevideo, Uruguay using administrative municipal data over the period 2007-2014. The results reveal that the policy had a sizable and statistically significant impact on the location of residential construction. The relative effect of the policy on treated areas is over 200% of the mean for square meters built and approximately 50% of the mean for the number of housing starts. Furthermore, the study shows that the policy increased the mean square meters of residential projects in treated zones. This study suggests that the Ley de Vivienda de Interés Social promoted a relocation process of residential construction towards the treated areas while simultaneously increasing the average size of housing projects in said areas.
    Keywords: subsidies, location, housing market, Uruguay
    JEL: D04 H25 R31
    Date: 2016–02

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