nep-geo New Economics Papers
on Economic Geography
Issue of 2016‒10‒02
fifteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. The Impact of Chinese Import Competition on the Local Structure of Employment and Wages: Evidence from France. By C. Malgouyres
  2. Urban Networks: Connecting Markets, People, and Ideas By Glaeser, Edward L.; Ponzetto, Giacomo A. M.; Zou, Yimei
  3. The Competitive Paradigm in Spatial Economics By Jacques-Francois Thisse
  4. Why Family Matters: The Impact of Family Resources on Immigrant Entrepreneurs’ Exit from Entrepreneurship By Bird, Miriam; Wennberg, Karl
  5. The Workforce of Pioneer Plants By Hausmann, Ricardo; Neffke, Frank
  6. Accessibility Models Based On the Gravity Analogy: In Theory and Practice By Tóth, Géza; Kincses, Áron
  7. Modelling the spatial structure of Europe By Kincses, Áron; Nagy, Zoltán; Tóth, Géza
  8. Do People Shape Cities, or Do Cities Shape People? THe Co-evolution of Physical, Social and Economic Change in Five Major U.S. Cities By Naik, Nikhil; Kominers, Scott Duke; Raskar, Ramesh; Glaeser, Edward L.; Hidalgo, Cesar A.
  9. Regional Convergence in the Russian Federation - Spatial and Temporal Dynamics By Jens K. Perret
  10. Big Data and Big Cities: The Promises and Limitations of Improved Measures for Urban Life By Glaeser, Edward L.; Kominers, Scott Duke; Luca, Michael; Naik, Nikhil
  11. The Effects of FDI on Innovation Systems in Hungarian Regions: Where is the Synergy Generated? By LENGYEL, BALÁZS; LEYDESDORFF, LOET
  12. Graph Regionalization with Clustering and Partitioning: an Application for Daily Commuting Flows in Albania By BENASSI, FEDERICO; DEVA, MIRELA; ZINDATO, DONATELLA
  13. New trajectories of the Hungarian regional development: balanced and rush growth of territorial capital By Jóna, György
  14. From Global Economic Crisis to Armed Crisis: Changing Regional Inequalities in Ukraine By KARÁCSONYI, DÁVID; KOSTYANTYN, MEZENTSEV; PIDGRUSNYI, GRYGORII; DÖVÉNYI, ZOLTÁN
  15. The impact of urban concentration on countries’ competitiveness and entrepreneurial performance By KOMLÓSI, ÉVA; PÁGER, BALÁZS

  1. By: C. Malgouyres
    Abstract: The rapid rise of Chinese exports over the past two decades has raised concerns about manufacturing jobs and wage inequality in high-income countries. Spill-overs beyond the manufacturing sector are an important issue given the large size of the non-traded sector in modern economies as well as the imperfect spatial mobility of households. In this paper, I estimate the impact of Chinese import competition onto the structure of employment and wages of local labor markets in France, with an emphasis on spill-overs effects beyond manufacturing and the degree of local wage inequality. Local employment and total labor income in both manufacturing and non-manufacturing are negatively affected by rising exposure to imports. The estimates imply that each local manufacturing job destroyed by Chinese import competition results in the loss of about 1.5 local job outside of manufacturing. These substantial “local multiplier effects” are however much lower when expressed in terms of hours worked or earnings rather than job count. Import competition from China polarized the local structure of employment in the manufacturing sector. The wage distribution is uniformly negatively affected in manufacturing while the non-traded sector experiences wage polarization, i.e. a rise in upper-tail inequality and a decline in bottom-tail inequality. While overall wage inequality is on average not affected, I show that it increased in response to trade shocks in areas where the minimum wage is only weakly binding.
    Keywords: wage distribution, international trade, import competition, local labor markets.
    JEL: F16 J23 J31 R11 R23
    Date: 2016
  2. By: Glaeser, Edward L. (Harvard University); Ponzetto, Giacomo A. M. (Universitat Pompeu Fabra and Barcelona GSE); Zou, Yimei (Universitat Pompeu Fabra)
    Abstract: Should China build mega-cities or a network of linked middle-sized metropolises? Can Europe's mid-sized cities compete with global agglomeration by forging stronger inter-urban links? This paper examines these questions within a model of recombinant growth and endogenous local amenities. Three primary factors determine the trade-off between networks and big cities: local returns to scale in innovation, the elasticity of housing supply, and the importance of local amenities. Even if there are global increasing returns, the returns to local scale in innovation may be decreasing, and that makes networks more appealing than mega-cities. Inelastic housing supply makes it harder to supply more space in dense confines, which perhaps explains why networks are more popular in regulated Europe than in the American Sunbelt. Larger cities can dominate networks because of amenities, as long as the benefits of scale overwhelm the downsides of density. In our framework, the skilled are more likely to prefer mega-cities than the less skilled, and the long-run benefits of either mega-cities or networks may be quite different from the short-run benefits.
    Date: 2015–12
  3. By: Jacques-Francois Thisse (National Research University Higher School of Economics; Catholic University of Louvain)
    Abstract: This paper discusses the reasons for the spatial impossibility theorem, which states that the competitive paradigm cannot explain the formation of large urban agglomerations and trade ows. This result is especially meaningful insofar as it is internal to the theory itself. We then briey explores dierent solutions to remedy to this methodological failure.
    Keywords: space, transport costs, land rent, general equilibrium
    JEL: D50 F12 Q54 Q58 R13
    Date: 2016
  4. By: Bird, Miriam (Center for Family Business, University of St. Gallen); Wennberg, Karl (Stockholm School of Economics, Institute of Analytical Sociology (IAS) and the Ratio Institute)
    Abstract: We integrate insights from the social embeddedness perspective with research on immigrant entrepreneurship to theorize on how family resources influence exit from entrepreneurship among previously unemployed immigrant entrepreneurs. Results from a cohort study of immigrant entrepreneurs in Sweden reveal that family resources are important for immigrants to integrate economically into a country. We find that having family members in geographical proximity increases immigrant entrepreneurs’ likelihood of remaining in entrepreneurship. Further, family financial capital enhances immigrant entrepreneurs’ likelihood of remaining in entrepreneurship as well as their likelihood of exiting to paid employment. Although often neglected in immigrant entrepreneurship studies, resources accruing from spousal relationships with natives influence entrepreneurs’ exit behavior. We discuss contributions for research on entrepreneurial exit, entrepreneurs’ social embeddedness, and immigrant entrepreneurship.
    Keywords: Immigrant entrepreneurship; entrepreneurial exit; family resources; social embeddedness; relational embeddedness
    JEL: J60 L26
    Date: 2016–09–26
  5. By: Hausmann, Ricardo (Harvard University and Santa Fe Institute); Neffke, Frank (Harvard University)
    Abstract: Is labor mobility important in technological diffusion? We address this question by asking how plants assemble their workforce if they are industry pioneers in a location. By definition, these plants cannot hire local workers with industry experience. Using German social-security data, we find that such plants recruit workers from related industries from more distant regions and local workers from less-related industries. We also show that pioneers leverage a low-cost advantage in unskilled labor to compete with plants that are located in areas where the industry is more prevalent. Finally, whereas research on German reunification has often focused on the effects of east-west migration, we show that the opposite migration facilitated the industrial diversification of eastern Germany by giving access to experienced workers from western Germany.
    JEL: J23 J24 M13 M50 O15 O33 R11 R12
    Date: 2016–01
  6. By: Tóth, Géza; Kincses, Áron
    Abstract: The most commonly applied types of accessibility models are based on the gravity analogy. In these models, researchers use different types of resistance factors, but they rarely give any elaborate explanation for their choice of a specific type of factor in their research. Another problem with this kind of analysis is that in many cases, the authors do not describe precisely how they determine the constants for a line of calculations in a given model. Thus, the results cannot be fully accepted since they cannot be reproduced by the reader. Finally, we consider it to be yet another huge problem that the results of the models are rarely compared to the real (for example traffic) parameters, therefore, it is also impossible to detect what would happen if the researcher used a different model. In this study, we tried to line up the most commonly used models, and by enlightening the resistance factors, examine their possible usage and their boundaries through exact Hungarian examples.
    Keywords: accessibility models, gravity analogy, resistance factors
    JEL: R00 R40 R41 R49
    Date: 2015–07
  7. By: Kincses, Áron; Nagy, Zoltán; Tóth, Géza
    Abstract: How can spatial location affect the operation of society, population or economic conditions? What is the role of neighbourhood and distance in social phenomena? In what way can a social organisation limit spatial barriers? How would spatial structures be affected by the attraction and repulsion of territorial units? Does society only use or also design regions? These questions are explored in this study. This work analyses some important issues, concepts and analysis procedures of the territorial structure of society and social processes of spatiality. It does not contain a comprehensive theory of spatiality and regional science; it is primarily a practical empirical research. Many theoretical works aim at defining the spatial structure of Europe. This article provides an overview of models describing the spatial structure of Europe. The study describes the economic spatial structure of Europe using bi-dimensional regression analysis, based on the gravity model. The spatial structure of Europe is illustrated with the help of the gravity model and spatial auto-correlation. With these patterns, it is possible to justify the appropriateness of the models based on different methodological backgrounds by comparing them with the results of this paper. The subject of field theory concepts and methods that can aid regional analyses is examined, and attempts to offer a synthesised knowledge with a wide variety of examples and methods.
    Keywords: bi-dimensional regression, Europe, gravity model, spatial autocorrelation, spatial models
    JEL: C5 R1
    Date: 2015–02
  8. By: Naik, Nikhil (MIT); Kominers, Scott Duke (Harvard University); Raskar, Ramesh (MIT); Glaeser, Edward L. (Harvard University); Hidalgo, Cesar A. (MIT)
    Abstract: Urban change involves transformations in the physical appearance and the social composition of neighborhoods. Yet, the relationship between the physical and social components of urban change is not well understood due to the lack of comprehensive measures of neighborhood appearance. Here, we introduce a computer vision method to quantify change in physical appearance of streetscapes and generate a dataset of physical change for five large American cities. We combine this dataset with socioeconomic indicators to explore whether demographic and economic changes precede, follow, or co-occur with changes in physical appearance. We find that the strongest predictors of improvement in a neighborhood's physical appearance are population density and share of college-educated adults. Other socioeconomic characteristics, like median income, share of vacant homes, and monthly rent, do not predict improvement in physical appearance. We also find that neighborhood appearances converge to the initial appearances of bordering areas, supporting the Burgess "invasion" theory. In addition, physical appearance is more likely to improve in neighborhoods proximal to the central business district. Finally, we find modest support for "tipping" and "filtering" theories of urban change.
    Date: 2015–10
  9. By: Jens K. Perret (European Institute for International Economic Relations at the University of Wuppertal)
    Abstract: Set in the context of the neoclassical growth model this study revisits the discussion of economic convergence in the context of the Russian Federation. Compared to previous similar studies, here a larger more comprehensive data set is implemented (1994-2013) allowing in particular to check for differences in convergence during different time periods. Using a panel approach more reliable results are achieved which point to absolute convergence occurring across the regions of the Russian Federation. The stability of these results is strengthened by estimating Kernel density to test for the presence of potential groups of regions with different steady states, on the one hand, and Markov transition matrices to test for the temporal stability of the regions on the other. Finally, a quantile regression approach is used to assure overall stability of the convergence speed. All results show that Russia reports absolute convergence up to Vladimir Putin's the second term as president and occurring again during his third term in office and conditional convergence in all time periods. All results remain stable even when including spatial effects or when testing for temporal stability. Quantile regression analysis also reports a more or less stable speed of convergence across the whole time horizon which is significantly higher than comparable results for the US or the regions of the European Union.
    Keywords: Russian Federation, USA, Innovation System, Knowledge Production Function, Knowledge Generation, Quantile Regression, Regional Economics
    JEL: C21 P25 O47 R11
    Date: 2016–09
  10. By: Glaeser, Edward L. (Harvard University); Kominers, Scott Duke (Harvard University); Luca, Michael (Harvard University); Naik, Nikhil (MIT)
    Abstract: New, "big" data sources allow measurement of city characteristics and outcome variables higher frequencies and finer geographic scales than ever before. However, big data will not solve large urban social science questions on its own. Big data has the most value for the study of cities when it allows measurement of the previously opaque, or when it can be coupled with exogenous shocks to people or place. We describe a number of new urban data sources and illustrate how they can be used to improve the study and function of cities. We first show how Google Street View images can be used to predict income in New York City, suggesting that similar image data can be used to map wealth and poverty in previously unmeasured areas of the developing world. We then discuss how survey techniques can be improved to better measure willingness to pay for urban amenities. Finally, we explain how Internet data is being used to improve the quality of city services.
    Date: 2015–12
    Abstract: In this study, we show how internationalization and foreign-owned firms influence synergies in the regional innovation systems of Hungary. We first distinguish three innovation system functions (knowledge exploitation, knowledge exploration, and organizational control) operating in regions and study their interactions using entropy statistics. The functions and their interactions are measured by analysing the distribution of firms in terms of geographical location, organizational size (number of employees), technologies (NACE codes of the OECD), and ownership (foreign versus domestic share in registered stock) in the 2005. Synergy is defined as mutual information among the three dimensions; a fourth dimension is added in order to bring internationalization (FDI) into the model. The factor is relevant since the four-dimensional model explains the GDP contributions to regional development in Hungary, whereas the three-dimensional model does not. We find that regional innovation systems in Hungary are self-organized differently, in relation to a relatively small number of foreign firms. These firms have a large positive effect on synergy in regions between the Hungarian capital and the Austrian border. However, FDI has negative effects on domestic synergy in the lagging eastern and southern provinces of the country.
    Keywords: regional innovation systems, innovation system function, synergy, entropy, foreign firms
    JEL: B52 O18 P25 R12
    Date: 2015–07
    Abstract: The paper presents an original application of the recently proposed spatial data mining method named GraphRECAP on daily commuting flows using 2011 Albanian census data. Its aim is to identify several clusters of Albanian municipalities/communes; propose a classification of the Albanian territory based on daily commuting flows among municipalities/communes. Starting from 373 local units, we first applied a spatial clustering technique without imposing any constraining strategy. Based on the input variables, we obtained 16 clusters. In the second step of our analysis, we impose a set of constraining parameters to identify intermediate areas between the local level (municipality/commune) and the national one. We have defined 12 derived regions (same number as the actual Albanian prefectures but with different geographies). These derived regions are quite different from the traditional ones in terms of both geographical dimensions and boundaries.
    Keywords: GraphRECAP, regionalization, daily commuting flows, census data, Albania, territorial imbalances
    JEL: J61 R00 R11 R41
    Date: 2015–07
  13. By: Jóna, György
    Abstract: The basic assumption of the paper is that numerous similarities exist between the patterns of economic growth and territorial capital growth. The rush economic growth and rush growth of territorial capital are compared empirically at Hungarian micro-regional level from 2004 until 2010. After normalizing the dataset, a very novel spatial econometric method is applied, called a penalty for bottleneck. The results show that the constant rush growth of territorial capital is as harmful as economic recession. On the other hand, the decrease of infrastructural and social capital caused the rush growth of territorial capital in this period. Moreover, the key findings of two case studies suggest that the balanced growth of territorial capital will be created by the falling social inequalities and increasing infrastructural capital.
    Keywords: territorial capital, rush growth, balanced development, endogenous assets
    JEL: R00 R10 R11 R12 R13
    Date: 2015–06
    Abstract: Despite the new geopolitical situation caused by the revolution at Maidan in February 2014, little is known about the real economics of Ukraine and its internal spatial disparities. In the survey of regional disparities, data on incomes, employment and unemployment were involved and completed by those on migration and age structure of the population. The spectrum of available data at rayon level is not particularly broad, but this is counterbalanced by the ca. five hundred territorial units that provide a minute picture of the inequalities. According to the classic view, the spatial pattern of economic development is opposite to the Central European west to east slope. In Ukraine, Eastern regions are not more developed as a whole but they accommodate more developed large urban centres. Spatial differences grew most rapidly during the period of economic decline (1990–2000). However, these disparities were mitigated during the two years following the global financial crisis as the latter mainly affected the large urban centres of the economy. Conversely, the Donets Basin as a whole was highly exposed to the effects of these crises owing to its outdated industrial structure (coal mining, iron and steel industry). This led to a rearrangement in the ranking of the east Ukrainian regions based on GDP per capita: Dnipropetrovs’k overtook Donets’k, and the Dnieper Region (including Zaporizhzhia) has a higher output per capita than Donbas. A significant part of the productive capacities and incomes are found in the Donbas, an area hit hard by the fighting; their loss would further deteriorate the state of the country’s economy. The fighting in the Donbas that did by far the greatest harm to the economy among the post-Soviet conflicts. It happened in a period when Ukraine, after the transformation crisis, had been on the path of growth for more than one decade. Concerning population number, area and economic weight, the Donbas exceeds Transnistria or Karabakh by an order of magnitude.
    Keywords: Ukraine, crisis, separatism, regional inequalities, rayon level
    JEL: R00 R11 R12
    Date: 2015–02
    Abstract: This paper aims to elaborate the role of Jacobs-type of agglomeration effects on countries’ competitiveness and entrepreneurial performance. Our research allows for a better understanding of the relationship that exists between a country’s urban system, characterized by spatial agglomeration (concentration) or deglomeration (deconcentration) processes, and its competitiveness and entrepreneurial performance. Urbanization economies refer to considerable cost savings generated through the locating together of people, firms and organizations across different industries. It has recently become an axiom that the better performance of global cities (as they are important nodes of innovation and creativity) is derived from agglomeration effects. This general assumption follows that the more concentrated an urban system of a country, the more competitive and better its entrepreneurial performance. Even though this notion has gained quick and ardent acceptance from practitioners, the related literature shows contradictory results;this has induced a heated debate in academic circles, because it has raised serious doubts about the “bigger is better” theory. We hope to contribute to this debate with our detailed analysis. To understand the impact of urban concentration, we selected 70 countries and calculated the so-called ROXY Index measuring the degree of agglomeration or deglomeration in their urban systems. To exemplify country-level competitiveness, we applied the Global Competitiveness Index (GCI) while the Global Entrepreneurship and Development Index (GEDI) was used to demonstrate country level entrepreneurial performance. Using these indexes correlation and cluster analysis were designed to obtain understanding of the relationship between them. Our analysis indicates that as urban concentration initially increases competitiveness, entrepreneurial performance also increases, but at a decreasing rate. Both of them eventually reaches a maximum, and then after a certain point decrease with further concentration. Therefore, the curve for this relationship is non-linear and folds back. This indicates that over- or under-concentration of the population within an urban system does not necessarily result in a better outcome. However, we should consider that a high concentration of population is only one important factor for competitiveness and entrepreneurial performance while other effects may exist.
    Keywords: urbanization economies, entrepreneurship, competitiveness, spatial cycles, ROXY Index
    JEL: R00 R10 R11 R12
    Date: 2016–07

This nep-geo issue is ©2016 by Andreas Koch. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.