nep-geo New Economics Papers
on Economic Geography
Issue of 2016‒11‒27
eight papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Service industries and regional analysis.New directions and challenges By Juan Ramón Cuadrado Roura
  2. Optimal Economic Growth Through Capital Accumulation in a Spatially Heterogeneous Environment By Raouf Boucekkine; Giorgio Fabbri; Salvatore Federico
  3. The EU cohesion policy in context: does a bottom-up approach work in all regions? By Riccardo Crescenzi; Mara Giua
  4. The optimal distribution of population across cities By Albouy, David; Behrens, Kristian; Robert-Nicoud, Frédéric; Seegert, Nathan
  5. Measuring network proximity of regions in R&D networks By Iris Wanzenböck
  6. The business cycle resilience of the Western Cape economy: a regional analysis of the 2009 recession and subsequent recovery By Pieter Laubscher
  7. Next train to the polycentric city: The effect of railroads on subcenter formation By Miquel-Àngel Garcia-López; Camille Hémet; Elisabet Viladecans-Marsal
  8. What is Different about Urbanization in Rich and Poor Countries? Cities in Brazil, China, India and the United States By Juan Pablo Chauvin; Edward Glaeser; Kristina Tobio

  1. By: Juan Ramón Cuadrado Roura
    Abstract: The service sector currently accounts for the largest share, both in terms of GDP and employment, of all developed economies, as well as many of the so-called emerging or developing ones. In spite of this, it has been the subject of far less research than manufacturing, although the situation has started to change in the past three decades and it must be pointed out that some activities – such as finance, commerce, transport and those most closely linked to tourism – do have significant analytical literature. In any case, this sector is undergoing very notable changes deriving from new technologies and the progress of digitalization, as well as economic globalization, in which services are playing a particularly relevant role. These changes demand specific and in-depth analyses to explain their causes and to understand their spatial and territorial effects. The objective of this work is to underscore the need for greater research effort focusing on the regional and urban aspects of services, and to suggest certain facts and trends that seem particularly relevant. Undoubtedly, services should occupy a privileged position in the new frontiers of Regional and Urban Analysis. This work aims to justify that need and pose some topics of interest for new research.
    Keywords: Service sector; growth factors; location and concentration; ICT and digitalization; research agenda.
    Date: 2016–11
  2. By: Raouf Boucekkine (Aix-Marseille University (Aix-Marseille School of Economics), CNRS, EHESS); Giorgio Fabbri (Aix-Marseille University (Aix-Marseille School of Economics), CNRS, & EHESS); Salvatore Federico (Universit`a degli Studi di Siena)
    Abstract: We design a general set-up for the study of a generic economy whose development process is entirely driven by the spatio-temporal dynamics of capital accumulation. It allows to take into account spatial heterogeneities in technological level and population distribution. We solve analytically, via dynamic programming in infinite dimensions, the optimal control problem associated to the model, finding explicitly the optimal feedback and the value function. The expression of the optimal dynamics of the system in terms of eigenfunctions of an appropriate Sturm-Liouville problem allows to simulate the behavior of the variables and, in particular, their optimal discounted long-run spatial distribution.
    Keywords: Dynamical spatial model, growth, agglomeration, infinite dimensional optimal control problems, Sturm-Liouville theory
    JEL: R1 O4 C61
    Date: 2016–11
  3. By: Riccardo Crescenzi; Mara Giua
    Abstract: This paper looks at the European Union as a laboratory to study how ‘spatially-targeted’ policies (i.e. the EU Cohesion and Rural Development Policies) interact with sectoral ‘spatially-blind’ policies (i.e. the Common Agricultural Policy - CAP), jointly shaping regional growth dynamics. The analysis of the drivers of regional growth shows that the EU Regional Policy has a positive influence on economic growth in all regions. However, its impact is stronger in the most socio-economically advanced areas and is maximised when its expenditure is complemented by Rural Development and CAP funds. The top-down funding of the CAP seems to be able to concentrate some benefits in the most deprived areas of the Union. This suggests that bottom-up policies are not always the best approach to territorial cohesion. Top-down policies may – in some cases – be effective in order to channel resources to the most socio-economically deprived areas. Territorial cohesion requires the flexible integration and coordination of both bottom-up and top-down approaches.
    Keywords: regional policy; European Union; regional growth; bottom-up policies; rural development; common agricultural policy
    JEL: O18 R11 R58
    Date: 2016–10–26
  4. By: Albouy, David; Behrens, Kristian; Robert-Nicoud, Frédéric; Seegert, Nathan
    Abstract: The received economic wisdom is that cities are too big and that public policy should limit their sizes. This wisdom assumes, unrealistically, that city sites are homogeneous, migration is unfettered, land is given freely to incoming migrants, and federal taxes are neutral. Should those assumptions not hold, large cities may be inefficiently small. We prove this claim in a system of cities with heterogeneous sites and either free mobility or local governments, where agglomeration economies, congestion, federal taxation, and land ownership create wedges. A quantitative version of our model suggests that cities may well be too numerous and underpopulated for a wide range of plausible parameter values. The welfare costs of free migration equilibria appear small, whereas they seem substantialwhen local governments control city size.
    Keywords: City size; federal taxation.; heterogeneous sites; local governments
    JEL: H73 J61 R12
    Date: 2016–11
  5. By: Iris Wanzenböck
    Abstract: This paper proposes a new measure for assessing the network proximity between aggregated units, based on disaggregated information on the network distance of actors. Specific focus is on R&D network structures between regions. We introduce a weighted version of the proximity measure, related to the idea that direct and indirect linkages carry different types of knowledge. Here, first-order proximity arising from direct cross-regional linkages is to be distinguished from higher-order network proximity resulting from indirect linkages in the R&D network. We use an macroeconomic application where we analyse the productivity effects of R&D network spillovers across regions to illustrate the usefulness of a proximity measure specifically developed for aggregated units.
    Keywords: network proximity, aggregated networks, first-order proximity, higher-order proximity, R&D networks, knowledge spillovers
    Date: 2016–11
  6. By: Pieter Laubscher (Bureau for Economic Research, University of Stellenbosch)
    Abstract: Business cycle research revived in the run-up to and in the aftermath of the Great Recession. This paper focuses on the concept of regional economic resilience as an applied field of business cycle research. The resilience of the Western Cape regional economy is analysed by assessing the impact of the 2009 recession. Being one of the leading provincial economies of South Africa, the question is asked to what extent the 2009 recession impacted the Western Cape’s longer term economic growth path. The latest research techniques in assessing economic resilience are applied, albeit that the analysis is narrowed down to quantifying the region’s resistance to and recoverability from the 2009 recession. While the national and provincial contexts receive attention, the focus is on the district economies of the Western Cape. The drivers of economic resilience are decomposed into two key forces, namely industry mix and regional competitiveness, using a shift-share analysis. Longer term structural change is also considered. The paper finds that the Eden and Overberg district economies’ growth paths, and the way in which these regions absorbed the recession impact, may provide policy makers with pointers as how to revive the Western Cape’s growth path, which took a knock with the 2009 recession.
    Keywords: Business cycles, Size and spatial distributions of regional economic activity
    JEL: E32 R12
    Date: 2016
  7. By: Miquel-Àngel Garcia-López (Universitat Autònoma de Barcelona and IEB); Camille Hémet (Ecole Normale Supérieure (PSE) and IEB); Elisabet Viladecans-Marsal (IEB and Universitat de Barcelona)
    Abstract: Recent evidence reveals that transportation’s improvements within metropolitan areas have a clear effect on population and job decentralization processes. Yet, very little has been said on how these improvements affect the spatial organization of the economic activity in the suburbs. This paper analyses the effects of transportation’s changes on employment subcenters formation. Using data from metropolitan Paris between 1968 and 2010, we first show that rail network improvements cause the expected job decentralization by attracting jobs to suburban municipalities. Our main contribution is to show that the new rail transit clearly affects the spatial organization of employment through the number and size of the employment subcenters: not only does the presence of a rail station increase the probability of a suburban municipality of belonging to a subcenter by 5 to 10 %, but a 10 % increase in municipality proximity to a suburban station is found to increase its chance to be part of a subcenter by 3 to 5 %.
    Keywords: Urban spatial structure, decentralization, subcenters, polycentric city, transportation.
    JEL: R11 R12 R14 R4 O2
    Date: 2016–11
  8. By: Juan Pablo Chauvin (Harvard University); Edward Glaeser (Harvard University and NBERAuthor-Name: Yueran Ma; Harvard University); Kristina Tobio (Harvard University)
    Abstract: Are the well-known facts about urbanization in the United States also true for the developing world? We compare American metropolitan areas with analogous geographic units in Brazil, China and India. Both Gibrat’s Law and Zipf’s Law seem to hold as well in Brazil as in the U.S., but China and India look quite different. In Brazil and China, the implications of the spatial equilibrium hypothesis, the central organizing idea of urban economics, are not rejected. The India data, however, repeatedly rejects tests inspired by the spatial equilibrium assumption. One hypothesis is that spatial equilibrium only emerges with economic development, as markets replace social relationships and as human capital spreads more widely. In all four countries there is strong evidence of agglomeration economies and human capital externalities. The correlation between density and earnings is stronger in both China and India than in the U.S., strongest in China. In India the gap between urban and rural wages is huge, but the correlation between city size and earnings is more modest. The cross-sectional relationship between area-level skills and both earnings and area-level growth are also stronger in the developing world than in the U.S. The forces that drive urban success seem similar in the rich and poor world, even if limited migration and difficult housing markets make it harder for a spatial equilibrium to develop.
    Keywords: Urbanization; developing countries; spatial equilibrium; agglomeration economies; human capital externalities
    JEL: O15 O18 R12 R23
    Date: 2016

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