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on Economic Geography |
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Issue of 2019‒02‒25
eight papers chosen by Andreas Koch Institut für Angewandte Wirtschaftsforschung |
| By: | Martin Gornig; Alexander Schiersch |
| Abstract: | This paper analyzes the effect of agglomeration economies on firms’ total factor productivity. We propose the use of a control function approach to overcome the econometric issue inherent to the two-stage approach commonly used in the literature. Estimations are conducted separately for four industry groups, defined by technological intensity, to allow for non-uniform effects of agglomeration economies on firms given their technological level. In addition, R&D is included to account for the firms’ own efforts to foster productivity through creating and absorbing knowledge. Finally, radii as well as administrative boundaries are used for defining regions. The results confirm differences in the strength and even in the direction of agglomeration economies: While urban economies have the largest effect on TFP for firms in high-tech industries, they have no effect on TFP in low-tech industries. For firms in the latter industries, however, the variety of the local economic structure has an impact, while this is irrelevant for the TFP of firms in high-tech industries. Only localization economies have a positive and significant effect on TFP throughout, but the effect increases with technological intensity of industries. Throughout, R&D is also found to have a positive effect that increases with technological intensity. |
| Keywords: | Total factor productivity, manufacturing firms, agglomeration economies, spatial concentration, structural estimation |
| JEL: | R11 R12 R15 D24 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:diw:diwwpp:dp1788&r=all |
| By: | Brülhart, Marius; Cadot, Olivier; Himbert, Alexander |
| Abstract: | Does international trade help or hinder the economic development of border regions relative to interior regions? Theory tends to suggest that trade helps, but it can also predict the reverse. The question is policy relevant as regions near land borders are generally poorer, and sometimes more prone to civil conflict, than interior regions. We therefore estimate how changes in bilateral trade volumes affect economic activity along roads running inland from international borders, using satellite night-light measurements for 2,186 border-crossing roads in 138 countries. We observe a significant 'border shadow': on average, lights are 37 percent dimmer at the border than 200 kilometers inland. We find this difference to be reduced by trade expansion as measured by exports and instrumented with tariffs on the opposite side of the border. At the mean, a doubling of exports to a particular neighbor country reduces the gradient of light from the border by some 23 percent. This qualitative finding applies to developed and developing countries, and to rural and urban border regions. Proximity to cities on either side of the border amplifies the effects of trade. We provide evidence that local export-oriented production is a significant mechanism behind the observed effects. |
| Keywords: | border regions; Economic Geography; night lights data; trade liberalization |
| JEL: | F14 F15 R11 R12 |
| Date: | 2019–02 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13515&r=all |
| By: | Ahlfeldt, Gabriel; Pietrostefani, Elisabetta |
| Abstract: | This paper synthesises the state of knowledge on the economic effects of density. We consider 15 outcome categories and 347 estimates of density elasticities from 180 studies. More than 100 of these estimates have not been previously published and have been provided by authors on request or inferred from published results in auxiliary analyses. We contribute own estimates of density elasticities of 16 distinct outcome variables that belong to categories where the evidence base is thin, inconsistent or non-existent. Along with a critical discussion of the quality and the quantity of the evidence base we present a set of recommended elasticities. Applying them to a scenario that roughly corresponds to an average high-income city, we find that in per-capita present value terms (at a 5% discount rate), a 1%-increase in density implies an increase in wage and rent of $280 and $347. The decrease in real wage net of taxes of $156 is partially compensated for by an aggregate amenity effect of $100 and there is a positive external welfare effect of $60. |
| Keywords: | city; Compact; density; Elasticity; meta-analysis; present value |
| JEL: | R38 R52 R58 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13440&r=all |
| By: | Benjamin Montmartin (Observatoire français des conjonctures économiques); Marcos Herrera (Universidad Nacional de Salta); Nadine Massard (Université Grenoble Alpes) |
| Abstract: | Based on a spatial extension of an R&D investment model, this paper measures the macroeconomic impact of the French R&D policy mix on business R&D using regional data. Our measure takes into account not only the direct effect of policies but also indirect effects generated by the existence of spatial interaction between regions. Using a unique database containing information on the levels of various R&D policy instruments received by firms in French NUTS3 regions over the period 2001–2011, our estimates of a spatial Durbin model with structural breaks and fixed effects reveal the existence of a negative spatial dependence among R&D investments in regions. In this context, while a-spatial estimates would conclude that all instruments have a crowding-in effect, we show that national subsidies are the only instrument that is able to generate significant crowding-in effects. On the contrary, it seems that the design, size and spatial allocation of funds from the other instruments (tax credits, local subsidies, European subsidies) lead them to act (in the French context) as beggar-thy-neighbor policies. |
| Keywords: | Policy mix evaluation; R&D investment; Spatial panel; French NUTS 3 regions |
| JEL: | H25 O31 O38 C23 |
| Date: | 2018–12 |
| URL: | http://d.repec.org/n?u=RePEc:spo:wpmain:info:hdl:2441/4ji8v7q9nt9q0rsm9mqn5dqrrp&r=all |
| By: | LeSage, James P.; Fischer, Manfred M. |
| Abstract: | Past focus in the panel gravity literature has been on multidimensional fixed effects specifications in an effort to accommodate heterogeneity. After introducing conventional multidimensional fixed effects, we find evidence of cross-sectional dependence in flows. We propose a simultaneous dependence gravity model that allows for network dependence in flows, along with computationally efficient Markov Chain Monte Carlo estimation methods that produce a Monte Carlo integration estimate of log-marginal likelihood useful for model comparison. Application of the model to a panel of trade flows points to network spillover effects, suggesting the presence of network dependence and biased estimates from conventional trade flow specifications. The most important sources of network dependence were found to be membership in trade organizations, historical colonial ties, common currency and spatial proximity of countries. |
| Keywords: | origin-destination panel data ows, cross-sectional dependence, log-marginal like- lihood, gravity models of trade, sociocultural distance, convex combinations of interaction matrices |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:wiw:wus046:6828&r=all |
| By: | Brautzsch, Hans-Ulrich; Holtemöller, Oliver |
| Abstract: | We use the World Input Output Database (WIOD) to estimate the potential employment effects of a hard Brexit in 43 countries. In line with other studies we assume that imports from the European Union (EU) to the UK will decline by 25% after a hard Brexit. The absolute effects are largest in big EU countries which have close trade relationships with the UK like Germany and France. However, there are also large countries outside the EU which are heavily affected via global value chains like China, for example. The relative effects (in percent of total employment) are largest in Malta and Ireland. UK employment will also be affected via intermediate input production. Within Germany, the motor vehicle industry and in particular the 'Autostadt' Wolfsburg are most affected. |
| Keywords: | Brexit,employment,European Union,international trade,tariffs |
| JEL: | C67 D57 F16 R15 |
| Date: | 2019 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:iwhdps:42019&r=all |
| By: | Rafael González-Val (Universidad de Zaragoza and Institut d'Economia de Barcelona (IEB)); Fernando Pueyo (Universidad de Zaragoza) |
| Abstract: | In this paper we discuss the relationship between economic growth and natural resources at a global level, taking into account geography. With this aim, our model integrates elements of the theories of endogenous growth, natural resources and new economic geography. We find that an increase in the world growth rate can lead to a higher depletion of the natural resources following an increase in the world demand due to expansion in population. However, the consideration of geography and growth mechanisms make the relationship between growth and natural resources more complex, and can even lead to the opposite conclusion when the forces behind growth are different from world demand. Indeed, either a reduction in transport costs or an increase in R&D productivity appears to be able to generate a faster growth compatible with a lower depletion of natural resources. |
| Keywords: | Industrial Location, Endogenous Growth, Renewable Resource, Geography |
| JEL: | F43 O30 Q20 R12 |
| Date: | 2018–08 |
| URL: | http://d.repec.org/n?u=RePEc:fem:femwpa:2018.26&r=all |
| By: | Rodríguez-Pose, Andrés; von Berlepsch, Viola |
| Abstract: | This paper examines if internal migrants at the turn of the 20th century have influenced the long-term economic development of the counties where they settled over 100 years ago. Using Census microdata from 1880 and 1910, the distance travelled by American-born migrants between birthplace and county of residence is examined to assess its relevance for the economic development of US counties today. The settlement patterns of domestic migrants across the 48 continental states are then linked to current county-level development. Factors influencing both migration at the time and the level of development of the county today are controlled for. The results of the analysis underline the economic importance of internal migration. Counties that attracted American-born migrants more than 100 years ago are significantly richer today. Moreover, distance is crucial for the impact of internal migration on long-term economic development; the larger the distance travelled by domestic migrants, the greater the long-term economic impact on the receiving territories. |
| Keywords: | Counties; distance; economic development; internal migration; long-term; US |
| JEL: | J61 N11 O15 R23 |
| Date: | 2019–01 |
| URL: | http://d.repec.org/n?u=RePEc:cpr:ceprdp:13485&r=all |