nep-geo New Economics Papers
on Economic Geography
Issue of 2016‒07‒30
sixteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Towards a theory of regional diversification By Ron Boschma, Lars Coenen, Koen Frenken, Bernhard Truffer; Lars Coenen; Koen Frenken; Bernhard Truffer
  2. Institutional proximity and the size and geography of FDI spillovers: do European firms generate more favourable productivity spillovers in the EU neighbourhood? By Vassilis Monastiriotis
  3. Misalignment of productivity and wages across regions ? Evidence from Belgian matched panel data By François Rycx; Yves Saks; Ilan Tojerow
  4. Strategic Entrepreneurship and Knowledge Spillovers: Spatial and Aspatial Perspectives By Tavassoli, Sam; Bengtsson, Lars; Karlsson, Charlie
  5. Resource effects in the Core-Periphery model By María Pilar Martínez-García; Jose Rodolfo Morales
  6. The Long-lasting Shadow of the Allied Occupation of Austria on its Spatial Equilibrium By Christoph Eder; Martin Halla
  8. Missing Men: World War II Casualties and Structural Change By Christoph Eder
  9. Diversity and Employment Prospects: Neighbors Matter! By Hémet, Camille; Malgouyres, Clément
  10. The co-evolution of innovation networks: Collaboration between West and East Germany from 1972 to 2014 By Jun, Bogang; Yi, Seung-Kyu; Buchmann, Tobias; Mueller, Matthias
  11. Effects of Sea Level Rise on Economy of the United States By Monika Novackova; Richard S. J. Tol
  12. Sources of Regional Inflation in Poland By Pawel Gajewski
  13. Spatial Development of the Largest Russian Cities During the Post-Soviet Period: Orienting Towards Transit or Maintaining Soviet Trends By Elena Koncheva; Nikolay Zalesskiy
  14. Spatial structure and economic network formation of manufacturing exports in Russia By Kuznetsova Maria
  15. spanel: le package R pour l’estimation des données de panel spatiale By Zaghdoudi, Taha
  16. Turbulences et résilience des territoires : éléments d'analyse By Jean-Luc Gaffard

  1. By: Ron Boschma, Lars Coenen, Koen Frenken, Bernhard Truffer; Lars Coenen; Koen Frenken; Bernhard Truffer
    Abstract: This paper aims to develop a theoretical framework on regional diversification. Combining insights from the evolutionary economic geography literature and the transition literature, we argue that a theory of regional diversification should build on the current understanding of conditions for related diversification but additionally start to tackle processes of unrelated diversification by accounting for (1) the role of agency (institutional entrepreneurship) and the dynamic interplay between agency and context; (2) enabling and constraining factors at various spatial scales. We propose a typology of four regional diversification processes by cross-tabulating related versus unrelated diversification with niche creation versus regime adoption.
    Keywords: evolutionary economic geography, transition studies, regional diversification, unrelated diversification, institutional entrepreneurship, institutional change
    JEL: B52 O18 R11
    Date: 2016–07
  2. By: Vassilis Monastiriotis
    Abstract: The EU association framework provides European businesses with an entry advantage into the associated countries by facilitating production links and encouraging institutional convergence. It is believed that this has multiple beneficial effects for the associated countries, including ones related to productivity spillovers accruing to domestic firms. However, no empirical evidence exists to show that the presence of European firms produces larger productivity spillovers in recipient economies compared to firms from other world regions. We examine this question using firm-level data covering 28 transition countries over the period 2002-2009. We estimate the intra-industry productivity effects of foreign ownership and examine how these differ across regional blocks (CEE, SEE and ENP), by origin of investor (EU15 versus non-EU15), across geographical scales (national versus regional) and for different types of locations (capital-city regions versus the rest). Our results suggest that investments of EU origin play a distinctive role, helping raise domestic productivity in the associated countries unlike investments from outside the EU. However, this process operates in a spatially selective manner, potentially enhancing regional disparities and spatial imbalances. This assigns a particular responsibility for EU policy to devise interventions that will help redress these problems within its existing association framework.
    Keywords: EU neighbourhood; FDI spillovers; institutional proximity; regional disparities
    JEL: R14 J01
    Date: 2016–06–24
  3. By: François Rycx; Yves Saks; Ilan Tojerow
    Abstract: This paper is one of the first to estimate how the region in which an establishment is located affects its productivity, wage cost and cost competitiveness (i.e. its productivity-wage gap). To do so, we use detailed linked employer-employee panel data for Belgium and rely on methodological approaches from both Hellerstein and Neumark (1995) and Bartolucci (2014) to estimate dynamic panel data models at the establishment level. Our findings show that inter-regional differences in productivity and wages are significant but vanish almost totally, both in industry and services, when controlling for a wide range of covariates, establishment fixed effects and endogeneity. Thus, our results suggest that wage cost and productivity differentials are ceteris paribus relatively well aligned across regions.
    Date: 2016–07
  4. By: Tavassoli, Sam (CIRCLE, Lund University); Bengtsson, Lars (LTH, Lund University); Karlsson, Charlie (CESIS, KTH)
    Abstract: The literature in the Strategic Entrepreneurship (SE) is increasingly embracing the concept and implications of knowledge spillovers. In this paper, we add to the theoretical repertoire on SE and knowledge spillovers by investigating the types of knowledge spillovers and what they imply for various dimensions of SE. On the one hand, we distinguish between spatial and aspatial knowledge spillovers. On the other hand, we distinguish between three dimensions of SE, i.e. inputs, resource orchestration, and output. Finally, we conceptually link the various types of knowledge spillovers and dimensions of SE and discuss the implications. Doing so, we argue that spatial knowledge spillovers (inter-firm) has received the major attention in previous research in increasing the amount of ‘inputs’ dimension of SE, while the aspatial knowledge (either inter-regional or intra-firm) has been relatively neglected not only for ‘inputs’, but also for ‘resource orchestration’ dimension. At the end, the paper provides suggestions for future research.
    Keywords: Strategic entrepreneurship; knowledge spillovers; spatial; aspatial
    JEL: D21 D80 L10 L26
    Date: 2016–07–06
  5. By: María Pilar Martínez-García (Facultad de Economía y Empresa. University of Murcia); Jose Rodolfo Morales (Facultad de Economía y Empresa. University of Murcia)
    Abstract: This paper developes an extension of Krugman’s (1991) Core-Periphery model, by considering the traditional sector as a competitive primary sector that makes use of a renewable natural resource. The natural resource can be consumed or used as a raw material in the industrial sector. Three results stand out. First, the dynamics of the resource and its use as a raw material give rise to new dispersion forces: the resource and the primary price index effects. Second, the pattern that arises reverts the usual stability behavior in core-prephery models. And third, different types of bifurcationsarise, resulting in different patterns of agglomeration-dispersion. In addition to transport costs, the productivity of the resource sector plays a key role in the bifurcation diagrams.
    Keywords: natural resources, new economic geography.
    JEL: F12 F18 R12 Q01
    Date: 2016–07
  6. By: Christoph Eder; Martin Halla
    Abstract: As a consequence of World War II, Austria was divided into four different occupation zones for 10 years. Before tight travel restrictions came into place, about 11 percent of the population residing in the Soviet zone moved across the demarcation line. We exploit this large internal migration shock to further our understanding of why economic activity is distributed unevenly across space. Our analysis shows that the distorted population distribution across locations has fully persisted until today (60 years after the demarcation line become obsolete). An analysis of more direct measures of economic activity shows an even higher concentration in the former non-Soviet zone. This gap in economic activity is growing over time, mainly due to commuting streams out of the former Soviet zone. This shows that a transitory shock is capable of shifting an economy to a new spatial equilibrium, which provides strong evidence for the importance of increasing returns to scale in explaining the spatial distribution of economic activity.
    Keywords: spatial equilibrium, agglomeration effects, population shock, World War II, Austria
    JEL: R11 R12 R23 J61 N44 N94
    Date: 2016–07
  7. By: Fernanda Ricotta (Dipartimento di Economia, Statistica e Finanza, Università della Calabria)
    Abstract: This paper examines the effect of the quality of regional government (QoG) on firm Total Factor Productivity (TFP) in a multi-country context. The analysis is based on comparable cross-country data of manufacturing firms operating in seven European countries (Austria, France, Germany, Hungary, Italy, Spain and the United Kingdom). The measure of the ‘quality of government’ is the European quality of government index (EQI), calculated at regional level over twenty-seven EU members. To disentangle internal from external productivity drivers, the multilevel approach is employed. Results refer to 2008 and show, as expected, the importance of firm-specific determinants of TFP. As far as the specific scope of this paper is concerned, firms located in regions with high quality regional government show higher levels of TFP. When considering the QoG components, corruption and the quality of services positively affect TFP, while the evidence is inconclusive for impartiality.
    Keywords: Institutions, firm performance, European regions, multilevel model
    JEL: O43 D24 C30
    Date: 2016–07
  8. By: Christoph Eder
    Abstract: A shock to the sector composition of the local labor market can affect long-run economic development of a location. Because structural change ultimately shifts labor from agriculture to services, an early transition to manufacturing may hamper long-run prosperity. The identification strategy exploits military World War II (WWII) casualties in Austrian municipalities as an exogenous shock to the local labor market. WWII casualties shifted labor out of agriculture into manufacturing in the short-run, which eventually led to a differential path of structural change. In the long-run, I find a strong and robust negative effect of WWII casualties on subsequent economic output.
    Keywords: structural change, local labor markets, spatial equilibrium, World War II, Austria
    JEL: O14 J40 N14 R11 R12
    Date: 2016–07
  9. By: Hémet, Camille; Malgouyres, Clément
    Abstract: This paper aims at determining whether and how the level of origins' diversity of a community affects its members' employment prospects. Relying on detailed data from the French Labor Force Survey, we measure diversity at two geographic levels: the neighborhood and the local labor market. The correlation between diversity and employment varies accordingly: it is negative at the former level but positive at the latter level. We then tackle the endogenous location selection issue in two ways. First, we rely on a standard instrumental variable approach to deal with diversity at the local labor market level, and propose a new instrument: diversity in the public housing sector. After correcting for endogeneity, the positive effect of diversity at this level is driven down to zero, revealing that it was mostly due to self-selection. Second, regarding neighborhood diversity, we adopt the strategy developed by Bayer, Ross and Topa (2008) which takes advantage of the very precise localization of the data. The negative effect of diversity on employment at the neighborhood level is reinforced. We also show that diversity in terms of nationalities (a proxy for cultural diversity) matters more than diversity based on parents' origins (a proxy for ethnic diversity). These results reveal that local diversity may act as a barrier to communication, preventing job information transmission, and hence reducing employment prospects.
    Keywords: diversity; employment; neighborhood effects
    JEL: J15 J60 R23 Z13
    Date: 2016–07
  10. By: Jun, Bogang; Yi, Seung-Kyu; Buchmann, Tobias; Mueller, Matthias
    Abstract: This paper describes the co-evolution of East and West German innovation networks after the German reunification in 1990 by analyzing publication data from 1972 to 2014. This study uses the following four benchmark models to interpret and classify German innovation networks: the random graph model, the small-world model, the Barabási-Albert model, and the evolutionary model. By comparing the network characteristics of empirical networks with the characteristics of these four benchmark models, we can increase our understanding of the particularities of German innovation networks, such as development over time as well as structural changes (i.e., new nodes or increasing/decreasing network density). We first confirm that a structural change in East-West networks occurred in the early 2000s in terms of the number of link between the two. Second, we show that regions with few collaborators dominated the properties of German innovation networks. Lastly, the change in network cliquishness, which reflects the tendency to build cohesive subgroups, and path length, which is a strong indicator of the speed of knowledge transfer in a network, compared with the four benchmark models show that East and West German regions tended to connect to new regions located in their surroundings, instead of entering distant regions. Our findings support the German federal government's continuous efforts to build networks between East and West German regions.
    Keywords: Innovation networks,Network dynamics,German reunification
    Date: 2016
  11. By: Monika Novackova; Richard S. J. Tol
    Abstract: We report the first ex post study of the economic impact of sea level rise. We apply two econometric approaches to estimate the past effects of sea level rise on the economy of the USA, viz. Barro type growth regressions adjusted for spatial patterns and a matching estimator. Unit of analysis is 3063 counties of the USA. We fit growth regressions for 13 time periods and we estimated numerous varieties and robustness tests for both growth regressions and matching estimator. Although there is some evidence that sea level rise has a positive effect on economic growth, in most specifications the estimated effects are insignificant. We therefore conclude that there is no stable, significant effect of sea level rise on economic growth. This finding contradicts previous ex ante studies.
    Date: 2016–07
  12. By: Pawel Gajewski (Department of Economics, Faculty of Economics and Sociology, University of Lodz, Lodz, Poland)
    Abstract: This paper aims at shedding some light on the sources of regional inflation in Poland. More specifically, it investigates the role of external, national and idiosyncratic shocks. In a two-step procedure, we estimate orthogonal components corresponding to each of these shocks, while performing variance decomposition to assess their relative importance in explaining inflation in individual regions. In the course of the paper we develop two ad hoc hypotheses. First, that regional inflation rates are largely driven by national shocks, while the impact of external shocks is smaller. Second, that shocks to inflation which are asymmetric between Poland and its external environment contribute to the cross-regional divergence of inflation rates in Poland. Empirical evidence supports both of these assertions. Indeed, we show that the importance of idiosyncratic shocks in the Polish regions is strikingly low. However, regional differences in inflation co-movements can be attributed to the diverse importance of global and national shocks. In auxiliary regressions we confirm that shocks which strongly and asymmetrically affect inflation in Poland and the EU, also contribute to crossregional inflation divergence in Poland. To the best of our knowledge this is the first attempt to investigate sources of regional inflation in a CEE country.
    Keywords: regional inflation, principal components, parallel analysis, regional economic dynamics
    JEL: E31 R11
    Date: 2016–06
  13. By: Elena Koncheva (National Research University Higher School of Economics); Nikolay Zalesskiy (National Research University Higher School of Economics)
    Abstract: Russian cities are traditionally characterized by high levels of public transport ridership, compared to the Western cities. Moreover, the cities were intensively developing during the Soviet era when the private transport was literally absent. Thus, it can be assumed that the spatial structure of Russian cities (as well as the spatial structure of the majority of the former USSR cities) is a perfect illustration of the Transit Oriented Development (TOD). In this paper the spatial development patterns of 13 Russian cities are analyzed to assess the current situation and the prospects for transit oriented development in the Russian Federation. À brief history of urban spatial development during the Soviet period is provided. Fundamental differences between TOD and Soviet Style Development (SSD) are discussed, such as the absence of competition between the private and public transport and the absence of private ownership of land.
    Keywords: urban spatial development, urban land use, land use and transportation, Soviet Style Development, Transit Oriented Development
    JEL: R14 R41
    Date: 2016
  14. By: Kuznetsova Maria
    Abstract: We study the agglomeration effect of exporters on decision of a firm to start exporting and volumes of trade. The unique database of Russian exporters in manufacturing sector for the eight-years period was constructed. It enables us to examine the nature and channels of export spillovers along the product and destination dimensions. At first, we provide the analysis using the existing empirical strategies. Our findings support the previous results, that export spillovers are destination-specific and affect both margins of trade. On the top of that, the large data sample and the usage of multiple fixed effects, that absorb time-variant and time-invariant unobserved characteristics, allowed us to achieve better identification strategy of the export spillover effect. It acts through the narrow group of firms that export the same product to the same destination as exporters nearby. Moreover, we tend to follow network view of international trade (Rauch 1999). The export spillover effect is positive for differentiated goods and negative for homogeneous goods. The presence of other exporters nearby to contiguous or linked country affects positively decision of a firm to export the same product to the same country.
    JEL: F14 R12
    Date: 2016–07–04
  15. By: Zaghdoudi, Taha
    Abstract: This paper introduces the spanel pacakge developped under the R statistical programming language.spanel estimates the spatial autoregressive panel models using the two stage least squares method proposed by Kelejian and Prucha [1998] and Lee [2003] and Baltagi and Liu, 2011.
    Keywords: Panel Data Spatial Model Two Stage Least Squares
    JEL: C13 C21
    Date: 2016–06
  16. By: Jean-Luc Gaffard (Observatoire français des conjonctures économiques)
    Abstract: L’économie géographique traite, principalement, de l’existence de forces centrifuges ou centripètes qui caractérisent l’évolution de l’espace économique. Nombre de travaux concluent à la prégnance de phénomènes de spécialisation des territoires et de concentration sans pour autant mettre en cause le principe de gains mutuels à l’échange interterritorial. Dans le pire des cas, la croissance serait, certes, porteuse d’inégalités de développement (et de revenus), mais ces inégalités seraient favorables à la croissance globale et au bien‐être de chacun. En toute hypothèse il serait malvenu d’entraver le libre jeu du marché qui s’incarnerait dans les variations des prix et des salaires censés constituer des signaux efficaces pour allouer les ressources productives. Il serait malvenu de s’opposer aux inégalités utiles de capacités de développement ou aux changements nécessaires de localisation. Dès lors, un principe d’équité seul devrait guider des politiques régionales réduites à des politiques de transferts de revenus conçues de telle manière à ne pas porter atteinte à la croissance globale. La nouvelle économie géographique fait, toutefois, valoir la possibilité d’un développement équilibré des territoires qui correspond à la situation dans laquelle chaque territoire est le siège d’entreprises occupant une niche particulière, un ou plusieurs segments d’une industrie, et bénéficiant de rendements croissants. Spécialisation et concentration vont de pair avec des taux de croissance élevés dans chaque territoire. Les gains mutuels à l’échange peuvent être équitablement répartis. La raison souvent aléatoire d’une localisation initiale importe, alors, moins que les conditions de sa pérennité et deson renforcement. La résilience d’un territoire tient moins à des attributs intangibles, à des dotations initiales, qu’à sa capacité à absorber des chocs technologiques ou de préférences en jouant d’avantages spécifiques qui sont des avantages construits et cumulatifs dont la spécificité réside dans le fait qu’ils rendent coûteux les changements de localisation. L’action publique, en aidant à la constitution de ces avantages, concourt à cet objectif de résilience en même temps qu’elle est susceptible de concourir à une égalisation des performances territoriales.
    Keywords: Regions; Inegalités; Croissance
    JEL: R1 R11
    Date: 2016–07

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