nep-geo New Economics Papers
on Economic Geography
Issue of 2018‒03‒12
ten papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Cooperative banks and local economic growth By Paolo Coccorese; Sherrill Shaffer
  2. Spatial perspectives on knowledge brokers: Evidence from Brussels By Nicola Francesco Dotti; André Spithoven
  3. Fiscal decentralisation and the distributive incidence of the great recession. By Pablo Beramendi; Melissa Rogers
  4. When Regional Policies Fail An Evaluation of Indonesia's Integrated Economic Development Zones By Alexander D. Rothenberg; Samuel Bazzi; Shanthi Nataraj; Amalavoyal V. Chari
  5. Institutional change and the development of lagging regions in Europe. By Andrés Rodríguez-Pose; Tobias Ketterer
  6. Employment in Spanish regions: Cost control or growth-enhancing policies? By Roberto Bande; Marika Karanassou
  7. Identifying Productivity Spillovers Using the Structure of Production Networks By Samuel Bazzi; Amalavoyal V. Chari; Shanthi Nataraj; Alexander D. Rothenberg
  8. Assessing the Spatial Concentration of Indonesia's Manufacturing Sector Evidence from Three Decades By Alexander D. Rothenberg; Samuel Bazzi; Shanthi Nataraj; Amalavoyal V. Chari
  9. Simulated geo-coordinates as a tool for map-based regional analysis By Groß, Marcus; Rendtel, Ulrich; Schmid, Timo; Bömermann, Hartmut; Erfurth, Kerstin
  10. Switching between different area systems via simulated geocoordinates: A case study for student residents in Berlin By Groß, Marcus; Rendtel, Ulrich; Schmid, Timo; Tzavidis, Nikos

  1. By: Paolo Coccorese; Sherrill Shaffer
    Abstract: In this paper we study the impact of cooperative banks on local economic development. Working on Italian municipality data in the period 2001-2011, we find that this type of banks plays a distinct role in enhanced local economic performance – particularly income, employment and firms’ birth growth rates – and that their presence is more effective compared to conventional banks. This evidence upholds the view that their more widespread presence would be beneficial, especially in those areas that suffer from lower economic growth, and accords with other studies underlining the decisive role of cooperative banks in supporting traditional credit provision to local borrowers.
    Keywords: Cooperative banks, Growth, Municipalities, Economic performance
    JEL: G21 O4 R11
    Date: 2018–02
  2. By: Nicola Francesco Dotti; André Spithoven
    Abstract: Knowledge brokers have emerged as a new type of actors shaping scientific production, influencing science–policy relationships, and thereby contributing to regional competitiveness. Yet, the spatial dimension of these knowledge brokers has received little attention. Using Framework Programme participations in European cities, we analyse and discuss the location strategy of knowledge brokers, highlighting the importance of co-location with the funding source. Our findings show that knowledge brokers are clustered in Brussels, and not elsewhere, to be closer to the European Commission in order to access strategic, informal and tacit information, while contributing to the construction of transnational R&D networks. While this ‘local buzz’ has positive side effects on the regional innovation system of Brussels; knowledge brokers emerge as a new type of spatially clustered actors shaping the distribution of EU funding for ‘European knowledge pipelines’.
    Keywords: Brussels; Europe; Framework Programme; Knowledge brokers; local buzz
    Date: 2017–10
  3. By: Pablo Beramendi; Melissa Rogers
    Abstract: We argue that fiscal decentralisation is one important explanation for variation in distributive outcomes following the Great Recession. Using a difference in differences approach, we examine how fiscal decentralisation mediated the link between spatial distribution, redistributive effort, and interpersonal inequality in 21 OECD cases in the years following the Great Recession. We find that fiscally decentralised nations saw increased interpersonal inequality and lower redistribution, but lower inter-regional inequality. We attribute these results to the weaker redistributive mechanisms in fiscally decentralized nations, which increased interpersonal inequality while preserving market-driven productivity declines in high productivity areas that temporary increased regional convergence.
    Keywords: Fiscal decentralisation, Inter-regional inequality, Interpersonal inequality, Redistribution.
    JEL: H71 H72 H77 I38
    Date: 2018–02
  4. By: Alexander D. Rothenberg; Samuel Bazzi; Shanthi Nataraj; Amalavoyal V. Chari
    Abstract: Throughout the developing world, many countries have created special economic zones to attract investment and spur industrial growth. In some cases, these zones are designed to promote development in poorer regions with limited market access and lower quality infrastructure, an example of a "big push" development strategy. In this paper, we study the effects of Indonesia's Integrated Economic Development Zone (KAPET) program. This program provided substantial tax-breaks for firms that locate in certain districts in the Outer Islands of Indonesia, a country with large regional differences in per-capita income and a history of policies to promote inclusive growth. We find that along many dimensions, KAPET districts experienced no better development outcomes, and in some cases fared even worse, than their non-treated counterparts. If anything, the strongest finding is that firms in KAPET districts paid lower taxes, but these tax reductions neither encouraged greater firm entry, increased migration, nor raised local measures of output or welfare. Overall, the KAPET program does not appear to have achieved the intended outcome of promoting growth in lagging regions. While there are many possible reasons that the KAPET program failed, our findings suggest caution in spending scarce resources to subsidize development in lagging regions.
    JEL: R12 R32 O14
    Date: 2017–02
  5. By: Andrés Rodríguez-Pose; Tobias Ketterer
    Abstract: According to the dominant economic theories, economic growth is the result of a combination of three factors – physical capital, human capital or labour, and innovation –plus a residual factor or error term, which represents what we do not know or cannotexplain. Depending on whether a neoclassical growth (Solow, 1956; Swan, 1956) or an endogenous growth approach is adopted (Romer, 1986: Lucas, 1988), the weight attributed to each of the components varies, but they remain, in different guises the fundamental drivers informing development policies across the world. The European Union’s (EU) regional development and cohesion policy has been no exception. The bulk of cohesion investments have been channelled towards improving the infrastructure endowment and accessibility of the least developed regions of the EU, as well as increasing the availability and quality of human resources, and developing the innovative capacity of individuals and firms across lagging areas of Europe.
    Keywords: changes, development, regions, Europe.
    JEL: H76 O18 O21 R58
    Date: 2018–02
  6. By: Roberto Bande (Universidade de Santiago de Compostela); Marika Karanassou (Queen Mary University of London)
    Abstract: Spain provides an extreme case of unemployment rate oscillations (8.3% in 2007, 26.1% in 2013, 19.6% in 2016) in parallel with cute regional persistance in labour market outcomes - the sets of relatively high and low unemployment regions have not changed in decades. Since generic labour market reforms have been fruitless in this respect, we explore whether such groups of regions react differently to key drivers of employment and wage setting. We find that the low income (high unemployment) regions are more reactive to capital accumulation, and thus to a growth strategy based on estimulating investment. In turn, the high income (low employment) ones are more sensitive to the wage-productivity gap, and thus to the strategy that keeps unit labour costs (ULC) low. Such patterns call for more region-specific policies and discard standard labour market reforms as a unique toolto manage the unemployment rate problem. Further, to the extent that investment serves both at fostering capital accumulation and labour productivity (which, in turn, reduces the ULC), regionally-targeted soft credit lines and capital taxes could be helpful in breaking regional sluggishness.
    Keywords: Employment, Wage setting, Labour income share, Capital stock
    JEL: R11 E24 E22 J23 J31
    Date: 2017–09–15
  7. By: Samuel Bazzi; Amalavoyal V. Chari; Shanthi Nataraj; Alexander D. Rothenberg
    Abstract: Despite the importance of agglomeration externalities in theoretical work, evidence for their nature, scale, and scope remains elusive, particularly in developing countries. Identification of productivity spillovers between firms is a challenging task, and estimation typically requires, at a minimum, panel data, which are often not available in developing country contexts. In this paper, we develop a novel identification strategy that uses information on the network structure of producer relationships to provide estimates of the size of productivity spillovers. Our strategy builds on that proposed by Bramoulle et al. (2009) for estimating peer effects, and is one of the first applications of this idea to the estimation of productivity spillovers. We improve upon the network structure identification strategy by using panel data and validate it with exchange-rate induced trade shocks that provide additional identifying variation. We apply this strategy to a long panel dataset of manufacturers in Indonesia to provide new estimates of the scale and size of productivity spillovers. Our results suggest positive productivity spillovers between manufacturers in Indonesia, but estimates of TFP spillovers are considerably smaller than similar estimates based on firm-level data from the U.S. and Europe, and they are only observed in a few industries.
    Date: 2017–03
  8. By: Alexander D. Rothenberg; Samuel Bazzi; Shanthi Nataraj; Amalavoyal V. Chari
    Abstract: Beyond the role of economic forces, many theories of economic geography emphasize the way politics can shape the spacial configuration of economic activity. We investigate the impact of changes in political regimes on industrial concentration using 30 years of data on Indonesian manufacturers. These data span both the reign of Suharto, one of the strongest central governments in Southeast Asia, and its collapse and the subsequent decentralization of power. Using the canonical measure of Ellison and Glaeser, we show that in the mid 1980s, Indonesia's firms exhibited a similar degree of agglomeration as seen in the United States. Spatial concentration then declined until the 1998 Asian Financial Crisis, and has since begun to rise during the decentralization period. We also measure concentration using the continuous measure developed by Duranton and Overman (2005 ), and find that the agglomeration exhibited by Indonesian firms is also broadly similar to that documented by Duranton and Overman (2005 ) for the United Kingdom, although localization drops off more gradually in Indonesia than in the United Kingdom. Using this continuous measure of agglomeration, we identify 32 manufacturing clusters in Indonesia, and investigate the correlates of concentration. We find that the most robust drivers of agglomeration have been natural resources and supply chain linkages, especially with respect to explaining long-term changes in spatial concentration.
    Date: 2017–01
  9. By: Groß, Marcus; Rendtel, Ulrich; Schmid, Timo; Bömermann, Hartmut; Erfurth, Kerstin
    Abstract: Map-based regional analysis is interested to detect areas with a large concentration of certain populations. Here kernel density estimates (KDE) offer advantages over classical choropleth maps. However, kernel density estimation needs exact geo-coordinates. In a recent paper Groß et al. (2017) have proposed a measurement error model which uses local aggregates for kernel density estimation. Their algorithm simulates "exact" geo-coordinates which reflect the information on the aggregates. In this article we suggest two extensions of this approach. First, we consider boundary constraints, which are usually ignored in the KDE framework. This concerns not only the outer limits of a municipality but also unsettled regions within a city like parks, lakes and industrial areas. Without a boundary correction standard KDEs underestimate the density in the vicinity of boundaries. Here we propose a modification of the original algorithm which uses rescaled kernel functions. Regional maps often display local percentages, for example, voters for a special party among all voters in each voting district. Here we derive a smooth representation of percentages which is based on the ratio of two densities. Again, the original algorithm is modified to cope with the estimation of a ratio of two densities. Our empirical examples refer to voting results from Berlin. It is shown that the proposed methodology reveals a lot of regional insight which is not produced by standard choropleth maps.
    Keywords: Regional Analysis,Choropleths,Kernel Density Estimation,Geo-Coordinates,Open data
    Date: 2018
  10. By: Groß, Marcus; Rendtel, Ulrich; Schmid, Timo; Tzavidis, Nikos
    Abstract: The transformation of area aggregates between non-hierarchical area systems is a standard problem of official statistics. We introduce a new method which is based on kernel density estimates. It is a modification of the SEM algorithm proposed by Gross et al. (2016), which was used for the transformation of totals on rectangular areas to kernel densities estimates. As a by-product of the routine one obtains simulated geo-coordinates for each unit. With the help of these geo-coordinates it is possible to calculate case numbers for a new area system. The method is applied to student resident figures from Berlin. These are known only at the level of ZIP codes but they are needed for administrative planning districts. Our method is evaluated on a similar, simulated data set with known exact geo-coordinates. In the empirical part results for changes in the student residential areas between 2005 and 2015 are presented. It is demonstrated that the transformation via kernel density estimates offers additional useful features to display concentration areas.
    Keywords: Choropleths,Grid Maps,Kernel Density Estimation,Geo-Coordinates
    Date: 2018

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