nep-geo New Economics Papers
on Economic Geography
Issue of 2016‒10‒16
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Fiscal Decentralisation and Regional Disparities By David Bartolini; Sibylle Stossberg; Hansjörg Blöchliger
  3. Worker migration or job creation? Persistent shocks and regional recoveries By Greenaway-McGrevy, Ryan; Hood, K
  4. Industrial diversification in Europe: The differentiated role of relatedness By Jing Xiao; Ron Boschma; Martin Andersson
  5. Quantitative Spatial Economics By Stephen J. Redding; Esteban Rossi-Hansberg
  6. Regional GDP in OECD countries: How has inequality developed over time? By Felix Arnold; Hansjörg Blöchliger
  7. Industry Global Value Chains, Connectivity and Regional Smart Specialisation in Europe. An Overview of Theoretical Approaches and Mapping Methodologies By Emanuela Todeva; Ruslan Rakhmatullin
  8. The importance of spatial adjustment processes in the labour force: the case of Albania By Benassi, Federico; Boeri, Marco; Elezi, Pranvera; Zindato, Donatella
  9. Researching commuting to work using the methods of complex network analysis By Pálóczi, Gábor
  10. Attempts to delineate functional regions in Hungary based on commuting data By Pálóczi, Gábor; Pénzes, János; Hurbánek, Pavol; Halás, Marián; Klapka, Pavel
  11. Group-specific analysis of commuting in the most disadvantaged areas of Hungary By Alpek B., Levente; Tésits, Róbert; Bokor, László

  1. By: David Bartolini; Sibylle Stossberg; Hansjörg Blöchliger
    Abstract: Fiscal decentralisation can lead to a more efficient provision of local public goods and services and promote a better match between policies and citizens’ preferences. At the same time, however, there are concerns about whether all regions will gain from more autonomy. Decentralisation may not lift all boats, with “poor” regions losing competitiveness with respect to better endowed ones, thus increasing regional disparities. The present work investigates the relationship between fiscal decentralisation and regional inequality within countries. Particular attention is paid to the different channels through which decentralisation can affect disparities: taxing powers, spending autonomy and the vertical fiscal imbalance. The empirical analysis, which is conducted on a sample of 30 OECD countries for the period 1995-2011, suggests that a balanced fiscal structure, where local spending is mainly financed by local taxation, reduces regional disparities, by providing an incentive to better use local resources and implement policies that favour economic development. Décentralisation budgétaire et disparités régionales Si la décentralisation budgétaire peut permettre d’améliorer l’efficience de la fourniture des biens et services publics locaux et promouvoir une meilleure adéquation entre les politiques publiques et les préférences des citoyens, la question de savoir si toutes les régions peuvent tirer parti d’une plus grande autonomie est source de préoccupation. Il est possible que la décentralisation ne profite pas à toutes les régions, et qu’elle se traduise, pour les régions « pauvres » par une perte de compétitivité par rapport à d’autres mieux dotées, exacerbant ainsi les disparités régionales. Les travaux en cours consistent en une analyse du lien entre la décentralisation budgétaire et les inégalités régionales au sein des pays. Une attention particulière y est accordée aux différents vecteurs par lesquels la décentralisation peut influer sur les disparités : compétences en matière fiscale, autonomie au niveau des dépenses et déséquilibre budgétaire vertical. Cette analyse empirique menée à partir d’un échantillon de 30 pays de l’OCDE sur la période 1995-2011, tend à démontrer qu’une structure budgétaire équilibrée, dans laquelle les dépenses locales sont financées essentiellement par la fiscalité locale, a pour effet de réduire les disparités régionales, car elle incite à une meilleure utilisation des ressources locales et à la mise en oeuvre de politiques qui favorisent le développement économique.
    Keywords: fiscal decentralisation, panel data, regional inequality
    JEL: H71 H77 R11
    Date: 2016–10–11
  2. By: Buzard, Kristy (Syracuse); Carlino, Gerald A. (Federal Reserve Bank of Philadelphia); Hunt, Robert M. (Federal Reserve Bank of Philadelphia); Carr, Jake (Ohio State University); Smith, Tony E. (University of Pennsylvania)
    Abstract: We employ a unique data set to examine the spatial clustering of private R&D labs. Instead of using fixed spatial boundaries, we develop a new procedure for identifying the location and size of specific R&D clusters. Thus, we are better able to identify the spatial locations of clusters at various scales, such as a half mile, 1 mile, 5 miles, and more. Assigning patents and citations to these clusters, we capture the geographic extent of knowledge spillovers within them. Our tests show that the localization of knowledge spillovers, as measured via patent citations, is strongest at small spatial scales and diminishes rapidly with distance.
    Keywords: spatial clustering; geographic concentration; R&D labs; localized knowledge spillovers; patent citations
    JEL: O31 R12
    Date: 2016–10–13
  3. By: Greenaway-McGrevy, Ryan; Hood, K
    Abstract: Although a large body of literature has documented the role of household out-migration in the recovery from regional downturns, the role that firms play in the recovery process has remained a neglected topic of research. Firms may choose to locate new jobs in depressed regions, thereby reducing unemployment through the job creation channel. We present a new empirical model of regional adjustment that permits us to decompose recoveries into both household and firm responses to local economic conditions. The model features a set of auxiliary serial dependence parameters that are used to filter out persistency in the identified labor market shocks, so that changes in employment obtained from the fitted model only reflect the endogenous firm response of interest, and not the ongoing exogenous job destruction from the original downturn. We find that the labor demand response is two to three times larger than the labor supply response, meaning that local job creation-and not household out-migration-is the main driver of recoveries in the US. This result is robust to a wide variety model specifications and identification strategies.
    Date: 2016
  4. By: Jing Xiao; Ron Boschma; Martin Andersson
    Abstract: There is increasing interest in the drivers of industrial diversification, and how these depend on economic and industry structures. This paper contributes to this line of inquiry by analyzing the role of relatedness in explaining variations in industry diversification, measured as the entry of new industry specializations, across 173 European regions during the period 2004-2012. There are significant differences across regions in Europe in terms of industrial diversification. Relatedness has a robust positive influence on the probability that new industry specialization develops in a region. A novel finding is that the influence of relatedness on the probability of new industrial specializations depends on innovation capacity. We find that relatedness is a more important driver of diversification in regions with a weaker innovation capacity. The effect of relatedness appears to decrease monotonically as the innovation capacity of a local economy increases. This is consistent with the argument that high innovation capacity allows an economy to ‘break from its past’ and to develop, for the economy, truly new industry specializations. We infer from this that innovation capacity is a critical factor for economic resilience.
    Keywords: industrial diversification, related diversification, evolutionary economic geography, unrelated diversification, European regions, resilience
    JEL: B52 L16 O14 O18 R11
    Date: 2016–10
  5. By: Stephen J. Redding; Esteban Rossi-Hansberg
    Abstract: The observed uneven distribution of economic activity across space is influenced by variation in exogenous geographical characteristics and endogenous interactions between agents in goods and factor markets. Until recently, the theoretical literature on economic geography had focused on stylized settings that could not easily be taken to the data. This paper reviews more recent research that has developed quantitative models of economic geography. These models are rich enough to speak to first-order features of the data, such as many heterogenous locations and gravity equation relationships for trade and commuting. Yet at the same time these models are sufficiently tractable to undertake realistic counterfactuals exercises to study the effect of changes in amenities, productivity, and public policy interventions such as transport infrastructure investments. We provide an extensive taxonomy of the different building blocks of these quantitative spatial models and discuss their main properties and quantification.
    Keywords: agglomeration, cities, economic geography, quantitative models, spatial economics
    JEL: F10 F14 R12 R23 R41
    Date: 2016–10
  6. By: Felix Arnold; Hansjörg Blöchliger
    Abstract: This paper surveys the state and evolution of GDP per capita in 281 regions of OECD countries for the time period 1995 – 2013. It puts a special focus on the disparities between the regions. These can be substantial: In 2013, GDP per capita of the least and most developed region varied by a factor of roughly ten. Using standard inequality measures like the coefficient of variation or the Gini coefficient, it is found that inequality has been decreasing between countries, while within-country disparities have often widened. Furthermore, transition matrices reveal that mobility within the distribution over time is higher in countries with larger degrees of fiscal decentralisation. This suggests that decentralisation allows regions to “take matters into their own hands”. Implications of other factors that correlate with the level of economic development are also discussed. Le PIB régional dans les pays de l'OCDE : comment les inégalités ont-elles évolué au fil du temps ? Nous étudions dans ce document l'état et l'évolution du produit intérieur brut (PIB) par habitant dans 281 régions de pays de l'OCDE au cours de la période 1995-2013. Nous mettons l'accent sur les disparités entre régions, qui peuvent être substantielles. En 2013, le PIB par habitant variait d'un facteur de 1 à 10 environ entre les régions les moins développées et les plus développées. À partir de mesures classiques des inégalités telles que le coefficient de variation ou le coefficient de Gini, nous parvenons à la conclusion que les inégalités ont diminué entre les pays, tandis que les disparités se sont souvent accentuée à l'intérieur de chaque pays. En outre, des matrices de transition montrent que la mobilité à l'intérieur de la distribution au fil du temps est plus forte dans les pays caractérisés par un degré relativement élevé de décentralisation budgétaire. Cela laisse à penser que la décentralisation permet aux régions de « prendre les choses en mains ». Nous examinons également les implications d'autres facteurs corrélés au niveau de développement économique.
    Keywords: regions, inequality, GDP-per-capita
    JEL: D30 E01 H70 I31 O10 O57 R11 R12
    Date: 2016–10–11
  7. By: Emanuela Todeva (BCNED - Business Clusters, Networks and Economic Development); Ruslan Rakhmatullin (European Commission - JRC)
    Abstract: This paper is the second paper in a series of three papers on Global Value Chains (GVCs), developed under the auspices of the Joint Research Centre (JRC) of the European Commission. It provides a clear understanding and comparison of existing theories and methodologies for mapping value chains and offer a demonstration of the use of such methodologies in the context of S3 and strategic interventions at regional, national and cluster level. The paper provides an overview of five distinctive theoretical frameworks to global value chain research, and related to them methodologies for mapping GVCs, and analysis of patterns of industry diversification and integration. The paper highlights that mapping interconnected industry capabilities at a global scale and GVC analysis requires the use of data on the operations of multinational enterprises (MNEs). This discussion is intricately linked to the third paper in the series, which presents a new methodological approach using a bespoke database of the most innovative biopharma MNEs, describing the step-by-step procedure for building the MNE database and mapping the biopharma GVC at country, region and cluster level. Our policy recommendations are co-aligned with the existing framework - EU industrial policy: ‘Towards Industrial Renaissance’, Regional growth through Smart Specialisation Strategy, COSME programme for SME support, building Circular Economy for sustainable and inclusive growth, cluster internationalisation, and other relevant policy initiatives by the European Commission.
    Keywords: global value chains, methodology, mapping, smart specialisation, industrial modernisation, regional policy, European Union
    Date: 2016–10
  8. By: Benassi, Federico; Boeri, Marco; Elezi, Pranvera; Zindato, Donatella
    Abstract: Using census data on work commuting in Albania – collected for the first time in 2011 – this study examines the spatial adjustment processes between demand and supply of labour across the country. The first part focuses on the spatial adjustment of labour forces that occur within and between Albanian’s prefectures. Several statistical indicators, derived using origin-destination matrices, measure the differential levels of attraction and expulsion of each prefecture. Results show a high level of heterogeneity and emphasise the crucial role of spatial contiguity among prefectures on this spatial dynamic. The second part examines the role of the municipality of Tirana. This is first investigated within a three-territorial-units system (the municipality of Tirana, rest of the prefecture and rest of Albania) and then within the prefecture as a closed system. Interestingly, 71.5% of all the commuting flows directed to the Municipality originate from municipalities located very close to Tirana (less than 10 km). We conclude that the spatial structure of the prefecture, reasonably extendable to the whole country, can be defined as monocentric. Further studies should focus on the implied costs of this system to the society and environment of Albania.
    Keywords: work commuting, census data, territorial imbalances, spatial adjustments, Albania
    JEL: N3 R11 R12 R14
    Date: 2016–10
  9. By: Pálóczi, Gábor
    Abstract: In the current paper the possible utilization of complex network analysis in spatial researches was investigated. The organizational and developmental regularities of networks were demonstrated from the aspect of regional development planning. The reviewed regularities provide a new approach of the regional developments. The dependencies of settlements were analysed with the application of disparity method on the basis of the commuting matrix of the census from 2011. The disparity of out-commuting exceeded the level of in-commuting in all population categories, producing a more significant dependency relation in case of out-commuting. In general, the value of disparity increases with decreasing population number in settlements and dependency grows. This can be related with decrease in the level of degree and commuting distance. According to detailed results, the method of disparity might be effectively used in additional spatial analyses as well. The community detection procedures of the complex network analysis were also applied for spatial division. Modularity optimization with the Louvain method was successfully used in the delimitation of larger territorial units. Smaller units can be created by the increase of the resolution but modularity stability deteriorates. At the same time the composition of the units changes. In the light of the results, it could be stated that regions formed by commuting relations (according to the process of regionalism) did not match the Hungarian NUTS2 statistical regions, but natural borders and NUTS-3 level administrative boundaries could be detected in more cases. The differences between the results and NUTS-3 boundaries are not unique distortions caused by the methodology but these reflect real commuting relations (the local labour system units were discussed in a previous study). The methodology might be appropriate to detect the hierarchical order of the local labour system’s units. The method is adaptable for additional analysis of spatial interactions.
    Keywords: network analysis, commuting, disparity, dependency, regionalization, community detection
    JEL: R00 R10 R11 R12
    Date: 2016–10–10
  10. By: Pálóczi, Gábor; Pénzes, János; Hurbánek, Pavol; Halás, Marián; Klapka, Pavel
    Abstract: The issue of defining functional regions in Hungary is presented in this paper, which contains detailed methodological description with the help of relevant studies from the Czech Republic and Slovakia. The use of Smart’s measure together with the CURDS algorithm and the relatively new concept of trade-off constraint function with four different sets of parameter values provided four optional solutions for this issue, based on the analysis of daily travel-to-work flows from the 2011 census. The resulting regions correspond to the micro-regional level and give valuable additions to the discussion about regionalization. The paper provides basic descriptive statistics for each of the four variants of functional region systems, which enables their overall evaluation (seeing advantages and disadvantages) and mutual comparison (seeing similarities and differences), and thus facilitates an informed debate on future work in functional regionalisation in Hungary carried out with respect to different purposes.
    Keywords: functional regions, commuting, census data, Hungary
    JEL: R00 R10 R11 R12 R52
    Date: 2016–10–10
  11. By: Alpek B., Levente; Tésits, Róbert; Bokor, László
    Abstract: The study aims to examine the commuting opportunities of the most disadvantaged job seeker groups living in Hungary's most disadvantaged regions, as well as Hungary’s spatial and group-specific boundary conditions. The study also aims to develop and present an indexation process (fMFÁ model), allowing the measurement of the mobility degree of different territorial units (in this case, the municipalities) and effects of certain factors determining commuting (transport subsidies, individual choices and options). The index measures the degree of mobility by considering individual and several types of public transport, expenses and expected time of commuting. The present document defines mobility for territorial units, separating its objective and subjective types. The group-specific analysis of boundary conditions is implemented through a questionnaire survey and logical models, the aim of which is twofold. On one hand, the model specifies the maximum commuting distance, which would be accepted rationally for the most disadvantaged job seekers. On the other hand, it presents a decision-making dilemma, namely the choice between commuting to work and local employment. Thus, the study provides insights into the specific features of labour market mobility of the target group. The Average Mobility Level Model and the Adjusted Mobility Index also evaluate the regional structure of the group-specific features of commuting. Through all these, the present study may promote a more efficient spatial allocation of employment policy measures. Strengthening of local employment in areas where group-specific mobility degrees are lower and support to improve commuting opportunities and employment centres where the mobility degrees are appropriate can contribute to the decrease of unemployment.
    Keywords: commuting, unemployment, disadvantaged groups, disadvantaged areas, regional mobility, Adjusted Mobility Index
    JEL: R10 R11 R12
    Date: 2016–10

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