nep-geo New Economics Papers
on Economic Geography
Issue of 2019‒07‒15
seven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Local Rates of New Firm Formation: An Empirical Exploration using Swedish Data By Andersson, Martin; Lavesson, Niclas; Partridge, Mark D.
  2. FDI Technology Spillovers, Geography, and Spatial Diffusion By Mi Lin; Yum K. Kwan
  3. Industrial clusters in the long run: evidence from Million-Rouble plants in China By Stephan Heblich; Marlon Seror; Hao Xu; Yanos Zylberberg
  4. The Geography of Housing Subsidies By Yashar Blouri, Simon Büchler, Olivier Schöni
  5. "Impacts of High-Speed Rail Construction on Urban Agglomerations: Evidence from Kyushu in Japan" By Chigusa Okamoto; Yasuhiro Sato
  6. Place-Based Innovation Ecosystems: Volvo companies in Gothenburg (Sweden) By Jens Sorvik; Anna Zingmark; Matilda Ardenfors
  7. Calling from the outside: The role of networks in residential mobility By Konstantin Büchel, Maximilian v. Ehrlich, Diego Puga, Elisabet Viladecans-Marsal

  1. By: Andersson, Martin (Department of Economics, Blekinge Institute of Technology); Lavesson, Niclas (CIRCLE, Lund University); Partridge, Mark D. (Ohio State University)
    Abstract: We assess the empirical literature on the determinants of spatial variations in new-firm formation rates by undertaking a systematic empirical analysis of the relative roles of different demand- and supply-side factors. Using instrumental variables to address endogeneity, we find that local growth drives local entrepreneurship exclusively in services industries. Average establishment size has a robust negative influence on local new-firm formation rates, but its effect varies across industries. Local industry diversity is only positive for new-firm formation in high-tech and knowledge-intensive activities. There is also some evidence of that longer distances to urban centers is associated with higher new-firm formation rates. The only local factor with a consistent positive effect on new-firm formation across industries is local density of skilled workers. We conclude that industry structure, geography and agglomeration matter, but in the end, new firms are started by people, so it is unsurprising that the main factor driving local entrepreneurship is the characteristics of the local residents.
    Keywords: Entrepreneurship; New firm formation; Geography; Human capital; Agglomeration; Local growth; Startups
    JEL: L26 M13 R11 R30
    Date: 2019–06–27
  2. By: Mi Lin (University of Lincoln); Yum K. Kwan (City University of Hong Kong)
    Abstract: This paper investigates the geographic extent of FDI technology spillovers and associated spatial diffusion. By adopting a spatiotemporal autoregressive panel model as the platform of our study, the complex impact resulting from FDI penetration is separated into spatial direct and indirect effects while accounting for feedback loops among regions. A set of spatially partitioned summary measures is produced to identify and to quantify FDI spillovers from different channels with distinct geographic scopes. Empirical results based on data from China document that the direct impacts of FDI presence to a specific location itself are likely to be negative. Domestic firms mainly benefit from FDI presence in their neighboring regions through knowledge spillovers that have wider geographic scope. Negative market stealing effect nevertheless has no spatial boundary. Policy implications of these findings are discussed.
    Keywords: FDI spillovers, spatial diffusion, geography, spatial dynamic panel, Chinese economy
    JEL: R12 F21 O33
  3. By: Stephan Heblich; Marlon Seror; Hao Xu; Yanos Zylberberg
    Abstract: This paper exploits a short-lived cooperation program between the U.S.S.R. and China, which led to the construction of 156 “Million-Rouble plants” in the 1950s. We isolate exogenous variation in location decisions due to the relative position of allied and enemy airbases and study the long-run impact of these factories on local economic activity. While the “156” program accelerated industrialization in treated counties until the end of the command-economy era, this significant productivity advantage fully eroded in the subsequent period. We explore the nature of local spillovers responsible for this pattern, and provide evidence that treated counties are overspecialized and far less innovative. There is a large concentration of establishments along the production chain of the Million-Rouble plants, which limits technological spillovers across industries.
    Keywords: industrial clusters, agglomeration economies, specialization
    JEL: R11 R53 J24 N95
    Date: 2019
  4. By: Yashar Blouri, Simon Büchler, Olivier Schöni
    Abstract: We investigate the spatially heterogeneous impact of the US federal mortgage interest deduction (MID) on the location and tenure decisions of households. We develop a general-equilibrium model at the county level featuring an endogenous itemization of housing subsidies. Despite being an important tax expenditure, repealing the MID would only slightly lower homeownership rates while leaving welfare mostly unchanged. The policy is ineffective because it targets locations with congested housing markets, creating a spatial shift of the housing demand toward areas that capitalize the subsidy into higher prices. We provide evidence that a repeal of the MID is to be preferred to an increase of standard tax deductions as recently implemented under President Trump's administration.
    Keywords: housing subsidies, residential location, tenure choice, housing supply
    JEL: R1 R3 H2 H3
    Date: 2019–06
  5. By: Chigusa Okamoto (Graduate School of Economics, The University of Tokyo); Yasuhiro Sato (Faculty of Economics, The University of Tokyo)
    Abstract: High-speed rail integrates regions and cities, and thus can possibly have significant impacts on the distribution of economic activities. Using the opening an d extensions of a high-speed rail, Shinkansen, in Kyushu, Japan, we examine its effect s on the distribution of economic activities across urban agglomerations. We focus on chan ges in land prices and estimate hedonic price equations to conduct a difference-in-differe nce analysis. We find that the large metropolitan areas gained from the high-speed rail by exp eriencing increases in land prices, whereas small metropolitan areas located between the m lost by experiencing decreased land prices. However, such positive effects are shown t o be limited to areas close to Shinkansen stations.
    Date: 2018–10
  6. By: Jens Sorvik; Anna Zingmark; Matilda Ardenfors
    Abstract: There is a revival in the automotive sector in West Sweden, whereby several new companies set around the vehicle industry are attracting fresh capital and expertise into the region. An increasingly dynamic entrepreneurial ecosystem is generating new innovation intermediaries who provide added-value functions. The emergence of these innovation intermediaries is being driven by political, market-related, socio-cultural, relational and technological factors. These include societal challenges and trends that drive political interest, such as environmental issues and climate change. There is also a political interest in adapting to globalisation, to secure regional competitiveness and resilience. New technology developments include the electrification of vehicles, automation and connected vehicles. This is driving an interest from industry and academia in attracting talent and securing competences. There is also a tradition and experience of collaboration in the region. Volvo Group (AB Volvo) and Volvo Cars are very interested in continuing to nurture the regional ecosystem, by attracting other companies to the region. Civil society is eventually involved in the innovation ecosystem as user of technology, where user behaviour is analysed as an input to development processes. A common view among respondents is that it should be the needs of the stakeholders to drive the setting-up of innovation support actors or collaborative projects. These initiatives should support not only single companies but also many actors in the system, and be conducive to collaborative activities.
    Keywords: Place-based, innovation ecosystem, Gothenburg, Sweden, Volvo, quadruple helix, smart specialisation, territorial development, new technologies, automatation, connected vehicles
    Date: 2019–06
  7. By: Konstantin Büchel, Maximilian v. Ehrlich, Diego Puga, Elisabet Viladecans-Marsal
    Abstract: Using anonymised cellphone data, we study the role of social networks in residential mobility decisions. Individuals with few local contacts are more likely to change residence. Movers strongly prefer places with more of their contacts close-by. Contacts matter because proximity to them is itself valuable and increases the enjoyment of attractive locations. They also provide hard-to-find local information and reduce frictions, especially in home-search. Local contacts who left recently or are more central are particularly influential. As people age, proximity to family gains importance relative to friends.
    Keywords: social networks, residential mobility
    JEL: R23 L14
    Date: 2019–03

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