nep-geo New Economics Papers
on Economic Geography
Issue of 2017‒09‒17
thirteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Accessibility, absorptive capacity and innovation in European urban areas By Clément Gorin
  2. Cross-border regional development in Gibraltar By Benner, Maximilian; Engin, Melda; Sperber, Leon; Trendl, André
  3. A concise history of the knowledge base literature: challenging questions for future research By Ron Boschma
  4. Heterogeneous Growth and Regional (Di)Convergence in Bolivia: A Distribution Dynamics Approach By Mendez-Guerra, Carlos
  5. Out-of-town Home Buyers and City Welfare By Favilukis, Jack; van Nieuwerburgh, Stijn
  6. Quantifying the effect of labor market size on learning externalities By Peters, Jan Cornelius
  7. Decomposing the Impact of Immigration on House Prices By Rosa Sanchis-Guarner
  8. Smart Specialisation at work: Analysis of the calls launched under ERDF Operational Programmes By Carlo Gianelle; Fabrizio Guzzo; Krzysztof Mieszkowski
  9. The Regional Input-Output Model: An Application to the Mexican Automotive Sector By Torre Cepeda Leonardo E.; Alvarado Jorge; Quiroga Miroslava
  10. European R&D networks: A snapshot from the 7th EU Framework Programme By Sara Amoroso; Alex Coad; Nicola Grassano
  11. R&D Policy and Technological Trajectories of Regions: Evidence from the EU Framework Programmes By Wolf-Hendrik Uhlbach; Pierre-Alexandre Balland; Thomas Scherngell
  12. Clustering Space-Time Series: A Flexible STAR Approach By E. Otranto; M. Mucciardi
  13. Inclusive local development: A strategy for Heraklion, Greece By Benner, Maximilian; Buzin, Johannes; Hoffmann, Jakob; Taifour, Ahmad Azzam

  1. By: Clément Gorin (GATE Lyon Saint-Étienne - Groupe d'analyse et de théorie économique - ENS Lyon - École normale supérieure - Lyon - UL2 - Université Lumière - Lyon 2 - UCBL - Université Claude Bernard Lyon 1 - UJM - Université Jean Monnet [Saint-Etienne] - Université de Lyon - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Empirical studies on the geography of innovation have established that skilled workers' mobility and collaboration networks shape the diffusion of knowledge across firms and regions. At the same time, the literature on absorptive capacity insisted on the importance of local research capabilities to take advantage of knowledge developed elsewhere. This paper investigates both phenomena in an integrated framework by assuming that mobility and networks provide access to knowledge, but the proportion of accessible knowledge effectively used for innovation depends on absorptive capacity. Such complementaries in regional research efforts are effectively captured using a spatial Durbin model in which the conne ctivity structure stems from mobility and collaboration patterns. Results suggest the relative importance of these two channels in the diffusion of knowledge, and suggests that human capital increases absorptive capacity. These findings have implications for the geography of innovation. While greater accessibility encourages convergence, the notion of absorptive capacity implies a self-reinforcing effect leading to divergence. Abstract Empirical studies on the geography of innovation have established that skilled workers' mo
    Keywords: Innovation, Mobility, Network, Absorptive capacity, Spatial Durbin model, Urban areas
    Date: 2017
  2. By: Benner, Maximilian; Engin, Melda; Sperber, Leon; Trendl, André
    Abstract: Political borders are a reality regional development has to cope with, even if they do not necessarily correspond to the functional boundaries of regional economies. EU membership has afforded regions located close to national borders a high degree of permeability, supported by EU cohesion policy through Interreg projects. But how can these cross-border regions manage to develop under political tides towards re-erecting hard borders? The present study examines the regional economy of British Gibraltar in relation to its Spanish neighbor region, and proposes ideas on how to develop Gibraltar’s economy in a post-“Brexit” reality. Despite continuing uncertainties about the nature and scope of future EU-UK relations, this study presents possibilities for future cross-border regional cooperation, and for developing Gibraltar’s local economy within a region that may be crossed by a hard border but even so remains functionally strongly integrated.
    Keywords: Brexit; cross-border regions; EU cohesion policy; Gibraltar; Interreg; regional development; Spain; United Kingdom
    JEL: L83 O18 R11 R58
    Date: 2017–09–07
  3. By: Ron Boschma
    Abstract: This chapter aims to sketch a short history of the differentiated knowledge base (DKB) literature that has been initiated and pioneered by Bjorn Asheim. In its formative years, the DKB approach described three knowledge bases and explored the nature of knowledge sourcing and its geographical extent within each knowledge base. We identify seven claims proposed by DKB scholars concerning the geography of knowledge bases. Lately, DKB 1.0 has been challenged on several grounds. In recent years, a second generation of DKB literature, dubbed as DKB 2.0, has emerged, becoming more tightly connected to the evolutionary approach in economic geography. DKB 2.0 takes a combinatorial approach to innovation and links it to evolutionary concepts like related variety and proximity. Its prime focus is on identifying combinations between knowledge bases and, to an increasing extent, combinations within knowledge bases, and assessing whether these combinations enhance innovative performance. As DKB 2.0 is still in an embryonic stage, we identify promising avenues for future research, inspired by evolutionary thinking.
    Date: 2017–09
  4. By: Mendez-Guerra, Carlos
    Abstract: Bolivia has experienced high economic growth rates in the last decade and a half. This fast growth, however, varies largely across its administrative regions. Considering this heterogeneous-growth context, this article documents the evolution of income disparities and convergence patterns of the Bolivian regions over the 1988-2014 period. In particular, using a distribution dynamics approach, this article evaluates both the long-run equilibrium and the transition dynamics of the cross-sectional distribution of regional GDP per capita. The main results show a clear pattern of regional divergence for the period 1988-2000. In contrast, the 2000-2014 period points to a much more complex pattern of (di)convergence: the long-run equilibrium distribution is characterized by both a process of convergence arising from the top and a process of divergence near its bottom tail. Overall, the evolution of the external shape of the distribution and the intra-distribution dynamics suggest that the process of regional growth in Bolivia may be characterized by at least two convergence clubs. Moreover, these clubs are identifiable in periods of both low and high national growth.
    Keywords: regional growth, convergence, distribution dynamics, Bolivia
    JEL: O40 O47 R11
    Date: 2017–08–30
  5. By: Favilukis, Jack; van Nieuwerburgh, Stijn
    Abstract: The major cities of the world have attracted a flurry of out-of-town (OOT) home buyers. Such capital inflows affect housing affordability, the spatial distribution of residents, construction, labor income, wealth, and ultimately welfare. We develop a spatial equilibrium model of a city with substantial heterogeneity among residents. We calibrate the model to the New York and Vancouver metro areas. The observed increase in OOT purchases is associated with 1.1% (5.0%) higher house prices and a 0.1% (0.34%) welfare loss in New York (Vancouver). Taxing OOT buyers can turn welfare losses into gains when tax revenues finance a local public good.
    Keywords: affordable housing; Dynamic spatial equilibrium; foreign investors; Gentrification; House Prices; property taxes
    JEL: G11 G12 H41 H70 J61 R10 R20 R30 R40 R51
    Date: 2017–09
  6. By: Peters, Jan Cornelius
    Abstract: We show for Germany that labor productivity as reflected in wage is, ceteris paribus, higher for workers who previously acquired work experience in rather urban labor markets with a large local workforce than in rather rural labor markets which are small in terms of regional employment. Our empirical analysis provides new evidence on the magnitude of these dynamic agglomeration gains by estimating the elasticity of wages with regard to the (cumulated) size of the local labor markets in which workers acquired experience. It shows that this elasticity increases with the level of individual experience to more than 0.06 implying that today's wage of a worker with 20 years of experience or more would be about four to five percent higher if the worker would have gained all his or her experience in local labor markets double the size of the labor markets in which he or she actually was working in the past. These identified dynamic agglomeration gains are supposed to be related to learning externalities. The analysis uses information on individual employment biographies and regional employment from 1975 onwards. The wage information refers to more than 300,000 entry wages of new employment relationships in Germany in the period 2005 to 2011. The depreciation of human capital is taken into account and that high-skilled workers presumably are the ones other workers learn the most from.
    Keywords: Dynamic agglomeration economies,Human capital externalities,Learning,Regional disparities,Dynamische Agglomerationsvorteile,Humankapitalexternalitäten,Lernen,Regionale Disparitäten
    JEL: R10 R23 J31
    Date: 2017
  7. By: Rosa Sanchis-Guarner (Imperial College Business School)
    Abstract: An inflow of immigrants into a region impacts house prices in three ways. For a fixed level of local population, housing demand rises due to the increase in foreign-born population. In addition, immigrants can influence native location decisions and induce additional shifts in demand. Finally, changes in housing supply conditions can in turn affect prices. Existing reduced form estimates of the effect of immigration on house prices capture the sum of all these effects. In this paper I propose a methodology to identify the different channels driving the total effect. I show that, conditional on supply, total changes in housing demand can be decomposed into the sum of direct immigrant demand and indirect demand changes from relocated population. The size and sign of the indirect demand effect depends on the impact of immigration on native mobility. I use Spanish data during the period 2001-2012 to estimate the different elements of the decomposition, applying an instrumental variables strategy to obtain consistent coefficients. The results show that overlooking the impact of immigration on native location induces a sizeable difference between the total and the immigrant demand effects, affecting the interpretation of the estimates.
    Keywords: Immigration, Housing, Spain, Instrumental Variables
    JEL: J61 R12 R21
    Date: 2017–09
  8. By: Carlo Gianelle (European Commission - JRC); Fabrizio Guzzo (European Commission - JRC); Krzysztof Mieszkowski (European Commission - JRC)
    Abstract: The goal of this paper is to assess how and to what extent resources under Thematic Objective 1 (TO1) of national and regional Operational Programmes for the European Regional Development Fund (ERDF) were allocated to operations falling within the innovation and research priorities set in the respective national and regional smart specialisation strategies (S3) during the first phase of the 2014-2020 programming period. The analysis is based on information drawn from calls for proposals launched under 46 Operational Programmes in Italy, Poland, Portugal, Czech Republic, Hungary, Lithuania and Slovenia and published by 31 December 2016. In particular, the study assesses the coherence of calls with S3 priorities; it also looks at the concentration of resources on priorities by calculating the share of ERDF-TO1 funding made available to S3-related projects through calls. Moreover, the analysis explores the range of S3 priorities tackled by individual calls for projects, identifies the policy instruments utilised and the types of beneficiaries targeted by those instruments. The examination reveals that the S3 approach is being translated into practice from a formal point of view. In most of the examined calls, S3 alignment is a binding eligibility condition for funding. Nearly the total amount of the ERDF-TO1 resources made available through calls supports project proposals falling exclusively within S3 priority areas. This could be interpreted as positive evidence of improved prioritisation and more strategic spending patterns, yet results should be taken with caution given the relatively short time-span of the analysis.
    Keywords: regional innovation policy, smart specialisation, prioritisation, EU Cohesion policy
    JEL: O25 O30 R12 R58
    Date: 2017–08
  9. By: Torre Cepeda Leonardo E.; Alvarado Jorge; Quiroga Miroslava
    Abstract: We use the national Input-Output Matrix 2012 of INEGI and Flegg's approach to estimate four Regional Input-Output Matrices (RIOM) applying Banco de Mexico's regionalization. The RIOM are employed to evaluate the effects on gross output, value added and employment at the regional level resulting from two shocks: (a) the construction of a hypothetical automotive plant worth 1,000 million dollars; and (b) the production of 200,000 vehicles per year in that plant. The exercise reveals that: (i) the construction and the operation of the plant at full capacity have differentiated effects across regions and sectors on the studied variables, in both absolute and relative terms; (ii) the spillover effects resulting of both shocks within each region are concentrated in a limited number of sectors; and (iii) the north central region resulted to be the one receiving the largest relative benefits from both shocks.
    Keywords: Input-Output Model;Regional Analysis;Multiplier Effects;Automotive Sector
    JEL: R11 R12 R15
    Date: 2017–07
  10. By: Sara Amoroso (European Commission - JRC); Alex Coad (CENTRUM Católica Graduate Business School, Pontificia Universidad Católica del Perú, Lima, Perú); Nicola Grassano (European Commission – JRC)
    Abstract: Recent empirical studies have investigated the territorial impact of Europe’s research policies, in particular the contribution of the European Framework Programmes to the integration of a European Research Area. This paper deepens the analysis on the integration and participation of peripheral regions, by focusing on the differences in intensity and determinants of inter-regional collaborations across three groups of collaborations. We consider collaborations among more developed regions, between more and less developed regions, and among less developed regions. Building on the recent spatial interaction literature, this paper investigates the effects of physical, institutional, social and technological proximity on the intensity of inter-regional research collaboration across heterogeneous European regions. We find that the impact of disparities in human capital and technological proximity on regional R&D cooperation is relevant and differs across subgroups of collaborations. Moreover, despite the efforts of integrating marginal actors, peripheral regions have lower rates of collaborations.
    Keywords: European Research Area, spatial interaction modelling, R&D collaboration, regional integration
    JEL: O38 L14 F15 R15
    Date: 2017–07
  11. By: Wolf-Hendrik Uhlbach; Pierre-Alexandre Balland; Thomas Scherngell
    Abstract: It is widely acknowledged that new technological specializations of regions are to a large extent driven by the recombination of existing knowledge and capabilities. Since this process is path-dependant and self-reinforcing, it can easily lead to technological lock-ins. A key issue is therefore to evaluate whether public policy can impact technological trajectories of regions and how it can be more effective. To address this issue, we analyze quantitatively and systematically the relation between R&D subsidies and new technological specializations of European regions from 1999 to 2010. R&D subsidies are identified by using the EU Framework Pro- grammes (FP) from the EUPRO database, and matched with patent documents from the OECD-REGPAT database. Using a fixed-effects linear probability model, our results indicate that FP participations have a positive but relatively small effect on the development of new specializations of regions, and that it can compensate for a lack of local related capabilities. We also find evidence that R&D subsidies have the highest impact if the level of relatedness with the new technology is neither too low (policy can not build a cathedral in the desert) nor too high (if all the capabilities are already present there is no need for policy).
    Keywords: Regional Diversification, Technological Change, R&D subsidies, EU Framework Programmes
    JEL: O31 O33 O38 O52
    Date: 2017–09
  12. By: E. Otranto; M. Mucciardi
    Abstract: The STAR model is widely used to represent the dynamics of a certain variable recorded at several locations at the same time. Its advantages are often discussed in terms of parsimony with respect to space-time VAR structures because it considers a single coefficient for each time and spatial lag. This hypothesis can be very strong; we add a certain degree of flexibility to the STAR model, providing the possibility for coefficients to vary in groups of locations. The new class of models is compared to the classical STAR and the space-time VAR by simulations and an application.
    Keywords: clustering;forecasting;space–time models;spatial weight matrix
    Date: 2017
  13. By: Benner, Maximilian; Buzin, Johannes; Hoffmann, Jakob; Taifour, Ahmad Azzam
    Abstract: Identifying opportunities to facilitate economic growth is a major challenge in local and regional development. Particularly for local or regional economies confronted with deep structural economic problems, unlocking growth differentials by targeting untapped potentials for employment and entrepreneurship can provide an opportunity to renew themselves. Therefore, it is logical that the “missing entrepreneurs” from among economically underrepresented or disadvantaged groups such as women, senior citizens, people with special needs, or youth as well as immigrants have recently gained attention by scholars and policymakers in local and regional development. Still, there is not yet a clear and comprehensive understanding on how to consider the needs of economically underrepresented or disadvantaged groups, both as entrepreneurs or as employees, in local and regional development strategy design. While women and youth entrepreneurship have been subject to an academic and policy debate for some time, the discourse on how to include other economically underrepresented or disadvantaged groups in local or regional economies is far less advanced. The present study reviews the state of literature on inclusive local development and, based on a preliminary analysis of the local economy, proposes a strategy for inclusive local development in Heraklion, Greece. As a locality suffering under the structural economic crisis that has afflicted Greece for almost a decade, a strategy for how to include economically underrepresented or disadvantaged groups in the local economy is both a social necessity and a way to unlock untapped potentials for economic growth.
    Keywords: local development; regional development; inclusiveness; women entrepreneurship; senior entrepreneurship; youth entrepreneurship; immigrant entrepreneurship; special-needs entrepreneurship; missing entrepreneurs; Heraklion; Crete; Greece
    JEL: L26 L31 L83 O13 O14 R11 R58
    Date: 2017–09–12

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