nep-geo New Economics Papers
on Economic Geography
Issue of 2019‒09‒02
ten papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. STRUCTURAL CHANGE IN CITY SYSTEMS EVOLUTION: CITY GROWTH IN SWEDEN 1810-2010 By Andersson, Martin; Johansson, Börje; Niedomysl, Thomas
  2. Spatial pattern and city size distribution By Tomoya Mori
  3. Social Connectedness in Urban Areas By Bailey, Michael; Farrell, Patrick; Kuchler, Theresa; Ströbel, Johannes
  4. Do mining activities foster regional development? Evidence from Latin America in a spatial econometric framework By Luckeneder, Sebastian; Giljum, Stefan; Krisztin, Tamás
  5. The birth and development of the Italian automotive industry (1894-2015) and the Turin car cluster. By Enrietti, Aldo; Geuna, Aldo; Nava, Consuelo R.; Patrucco, Pier Paolo
  7. Does decentralization of governance promote urban diversity? Evidence from Spain By Jorge Diaz-Lanchas; Raymond J.G.M. Florax; Peter Mulder
  8. Ease vs. noise: Long-run changes in the value of transport (dis)amenities By Ahlfeldt, Gabriel; Nitsch, Volker; Wendland, Nicolai
  9. The Implications of Brexit for UK and EU Regional Competitiveness By Mark Thissen; Frank van Oort; Philip McCann; Rauel Ortega-Argilés; Trond Husby
  10. Evil deeds in urban economics By Berliant, Marcus; Fujita, Masahisa

  1. By: Andersson, Martin (Department of Industrial Economics, Blekinge Institute of Technology (BTH), Karlskrona, and CIRCLE, Lund University); Johansson, Börje (Jönköping International Business School (JIBS) & Centre of Excellence for Science and Innovation Studies (CESIS)); Niedomysl, Thomas (Department of Human Geography, Lund University)
    Abstract: This paper analyses city system dynamics, based on a theoretical framework relating interaction potentials to agglomeration economies and density externalities. It employs new historical time series data on population size of cities in Sweden over two centuries (1810-2010) and introduces two schematic growth factors: (i) the intra-city potential and (ii) the extra-city potential located in in rings encircling each city. The first factor is measured by each city’s population size, while the second is a vector of distance discounted population size for each of a city’s urban rings. In this way we can explain a city’s growth as a function of its interaction potential inside the city, s well as inside the first, second hand third ring. A robust finding is that cities with large ring potentials follow different development paths than those with small ring potentials. We also find clear evidence of structural change between the two centuries (1810-1910 and 1910-2010. In the first period, city growth is positively impacted by the size of the intra-city potential, whereas the same potential dampens or reduces the growth in the second period. Moreover, the Ring I and Ring II potentials tend to switch from having negative growth stimulation in the first period to having positive stimulation in the second period. The regressions are checked for robustness by yielding consistent results when growth is measured as relative as well as absolute change.
    Keywords: city systems; evolution; urban growth; size distribution; spatial interaction; spatial interdependence; city networks
    JEL: C21 L84 R11 R12 R30
    Date: 2019–05–01
  2. By: Tomoya Mori
    Abstract: Many large cities are found at locations with certain first nature advantages. Yet, those exogenous locational features may not be the most potent forces governing the spatial pattern of cities. In particular, population size, spacing and industrial composition of cities exhibit simple, persistent and monotonic relationships. Theories of economic agglomeration suggest that this regularity is a consequence of interactions between endogenous agglomeration and dispersion forces. This paper reviews the extant formal models that explain the spatial pattern together with the size distribution of cities, and discusses the remaining research questions to be answered in this literature. To obtain results about explicit spatial patterns of cities, a model needs to depart from the most popular two-region and systems-of-cities frameworks in urban and regional economics in which there is no variation in interregional distance. This is one of the major reasons that only few formal models have been proposed in this literature. To draw implications as much as possible from the extant theories, this review involves extensive discussions on the behavior of the many-region extension of these models. The mechanisms that link the spatial pattern of cities and the diversity in city sizes are also discussed in detail.
    Date: 2019–08
  3. By: Bailey, Michael; Farrell, Patrick; Kuchler, Theresa; Ströbel, Johannes
    Abstract: We use anonymized and aggregated data from Facebook to explore the spatial structure of social networks in the New York metro area. We highlight the importance of transportation infrastructure in shaping urban social networks by showing that travel time and travel costs are substantially stronger predictors of social connectedness between zip codes than geographic distance is. We also document significant heterogeneity in the geographic breadth of social networks across New York zip codes, and show that much of this heterogeneity is explained by the ease of access to public transit, even after controlling for socioeconomic characteristics of the zip codes' residents. When we group zip codes with strong social ties into hypothetical communities using an agglomerative clustering algorithm, we find that geographically non-contiguous locations are grouped into socially connected communities, again highlighting that geographic distance is an imperfect proxy for urban social connectedness. We also explore the social connections between New York zip codes and foreign countries, and highlight how these are related to past migration movements.
    Keywords: Agglomeration externalities; Social Connectedness; Transportation Infrastructure
    JEL: R1 R2 R3
    Date: 2019–06
  4. By: Luckeneder, Sebastian; Giljum, Stefan; Krisztin, Tamás
    Abstract: Against the backdrop of steadily increasing global raw material demand, the socio-economic implications of metal ore extraction in developing countries are of major interest in academic and policy debates. This work investigates whether mining activities relate to the economic performance of mining regions and their surrounding areas. Usually, subnational impact assessments of mining activities are conducted in the form of qualitative in-field case studies and focus on a smaller sample of mining properties and regions. In contrast, we exploit a panel of 32 Mexican, 24 Peruvian and 16 Chilean regions over the period 2008 - 2015 and, in doing so, relate mine-specific data on extraction intensity to regional economic impacts. The study employs a Spatial Durbin Model (SDM) with heteroskedastic errors to provide a flexible econometric framework to measure the impact of natural resource extraction. The results suggest that mining intensity does not significantly affect regional economic growth in both short-run and medium-run growth models. Popular arguments of the mining industry that the extractive sector would trigger positive impulses for regional economic development cannot be verified. Rather, the findings support narratives that mining regions do not benefit from their wealth in natural resources due to low labour intensity, loose links to local suppliers and profit outflows.
    Date: 2019–07
  5. By: Enrietti, Aldo; Geuna, Aldo; Nava, Consuelo R.; Patrucco, Pier Paolo (University of Turin)
    Abstract: By discussing the relation between the traditional Marshallian/Jacobian approach and Klepper’s concept of spinoffs and their role, this paper tries to explain the early genesis and later evolution of the Italian automotive industry, based on the for mation of the Torino’s car cluster from the late nineteenth century. Historical analysis and econometric models are integrated to identify key factors that enabled the creation and success of the automotive industry in Turin. Specifically, we investigate agglomeration economies, the role of spinoffs and institutional factors such as the level and importance of local education. Based on original archival research, we built a new database of all Italian automobile companies. Replication of Klepper’s (2007) and Boschma and Wenting’s (2007) models shows no particular influence of the Turin cluster and no early entry advantages. Our model, which integrates and extends previous contributions, confirms the existence of a spinoffs effect, and in particular the positive effect of inherited technical skills embedded in pilots. We find support also, for positive agglomeration effects at the regional level and inter industry externalities from aeronautics, a metropolitan cluster effect and the significance of metropolitan education.
    Date: 2019–04
  6. By: Klaesson, Johan (Centre of Entrepreneurship and Spatial Economics (CEnSE) at Jönköping International Business School (JIBS) & Centre of Excellence for Science and Innovation Studies (CESIS)); Johansson, Börje (Jönköping International Business School (JIBS) & Centre of Excellence for Science and Innovation Studies (CESIS))
    Abstract: During the period 2007-2016 in Sweden we can observe how the share of business (producer) services gradually increases as an aggregate phenomenon. The service categories are partitioned into ordinary (OBS), knowledge-intensive (KIBS), and very knowledge-intensive business services (VKIBS). The growth is faster in local and regional economies that have large demand potentials. Other sectors grow faster when located in places where the business-service supply potential is larger. We outline a theoretical framework where service suppliers locate their capacity in response to the size of the service-demand potential, whereas other sectors of the economy, locate and expand in response to the service-supply potentials, for each of the three service categories OBS-services, KIBS-services and VKIBS-services. These model alternatives are assessed in a series of dynamic econometric exercises. A major assumption is that business-service firms operate in a context of monopolistic competition, which means that when the capacity to supply and deliver business services increases, then the number of service varieties also increases, and thus adds to the multiplicity of varieties in local economies (municipalities) that have a large demand potential. In the model framework the service suppliers are selling innovation-relevant information to customer firms in a region, and thereby also unintentionally spread information and knowledge among firms in the region. In this way, business-service suppliers become knowledge providers and important actors in the relevant regional innovation system.
    Keywords: Random choice; business services; demand and supply potentials; co-evolution
    JEL: C23 L84 R11 R12 R30
    Date: 2019–06–01
  7. By: Jorge Diaz-Lanchas (European Commission - JRC); Raymond J.G.M. Florax (Dept. of Agricultural Economics, Purdue University & Department of Spatial Economics, Vrije Universiteit Amsterdam); Peter Mulder (Department of Spatial Economics, Vrije Universiteit Amsterdam)
    Abstract: The worldwide trend to decentralize the responsibilities and budgets of governments impacts local firm dynamics in various ways. We use the example of Spain to test empirically whether the decentralization of governance has been conducive to increased diversification and a more even city-size distribution in the Spanish urban system during a period of continuous reductions in transport costs. To this end we develop a bivariate probit regression framework to assess the probability that cities diversify or specialize over time, using a sample of 69 urban areas in Spain during the period 1995-2007. We exploit unique firm-level and time-varying transport-cost data to control for the role of a city’s market potential, city size, transport costs, labor-force skill composition, product standardization and historical patterns of specialization. We find a high probability that a city will diversify if it is the capital of a regional government or located in a relatively decentralized region, while the opposite is true for the probability that a city will specialize. Also, we find that a city's status as a regional capital reinforces the positive effect of a high (low) internal market potential on the probability of diversification (specialization). A high (low) external market potential only increases the probability that a city will become specialized (diversified) if it is a regional capital. We argue that the link between decentralization and specialization patterns in the urban system deserves more attention in the empirical literature on decentralization's impact on economic growth, income inequality and regional disparities.
    Keywords: Rhomolo, Region, Growth, Decentralization, urban diversity, specialization, generalized transport costs, Spain
    JEL: R12 R58 C35
    Date: 2019–08
  8. By: Ahlfeldt, Gabriel; Nitsch, Volker; Wendland, Nicolai
    Abstract: For a complete cost-benefit analysis of durable infrastructures, it is important to understand how the value of non-market goods such as transit time and environmental quality changes as incomes rise in the long-run. We use difference-in-differences and spatial differencing to estimate the land price capitalization effects of metro rail in Berlin, Germany today and a century ago. Over this period, the negative effect of rail noise tripled in percentage terms. Our results imply long-run income elasticities of the value of noise reduction and transport access of 2.2 and 1.4, substantially exceeding cross-sectional contingent valuation estimates.
    Keywords: accessibility; Difference-in-Differences; income elasticity; land price; noise; Spatial differencing
    JEL: N73 N74 R12 R14 R41
    Date: 2019–06
  9. By: Mark Thissen (Netherlands Environmental Assessment Agency (PBL)); Frank van Oort (Erasmus University Rotterdam); Philip McCann (Sheffield University); Rauel Ortega-Argilés (University of Birmingham); Trond Husby (Netherlands Environmental Assessment Agency (PBL))
    Abstract: Any form of Brexit will impact heterogeneously in terms of sectors and regions on the competitiveness of firms in both the UK and Europe. The ongoing uncertainty about the conditions under which the UK will be leaving the EU, creates difficulties in structurally estimating these impacts. Using uniquely-detailed interregional trade data on goods and services for the EU, we apply a novel methodology that disentangles region-sector sensitivities (elasticities) of firms’ competitiveness to (non)tariff barriers from the implications of different post-Brexit UK-EU trade scenarios. This enables us to derive the impact of Brexit on the competitiveness of firms along with the degree of uncertainty that surrounds these impacts, independently from the scenarios. Our analysis demonstrates that the adverse international competitiveness shocks on UK firms are much larger than those on the rest of the EU due to the dependency of the UK on the EU via global value chains. The competitiveness shocks mean that within the UK, Brexit is likely to increase both interregional inequalities and also intra-regional inequalities. In contrast interregional inequalities across Europe may actually fall, depending on the nature of the post-Brexit UK-EU trading arrangements.
    Keywords: Brexit, competitiveness, impact analysis, international trade, regional economics, IO analysis
    JEL: P25 R13
    Date: 2019–08–21
  10. By: Berliant, Marcus; Fujita, Masahisa
    Abstract: The purpose of this note is to update an ancient controversy over the comparison between discrete and continuous agent models of land use and agent location in urban economics. Berliant (1985) shows that that the following statement is self-contradictory: "There is a continuum of agents, each of whom owns or is endowed with a positive Lebesgue measure of land." A corollary follows: "As the number of agents tends to infinity, the set of agents who own a positive Lebesgue measure of land shrinks to zero." The basic question is this: Under what circumstances, if any, can we reconcile the two models?
    Keywords: Large urban economies, Continuous and discrete agent models
    JEL: D51 R13 R14
    Date: 2019–08–18

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