nep-geo New Economics Papers
on Economic Geography
Issue of 2019‒09‒16
ten papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Location, industry structure and (the lack of) locally specific knowledge: On the diverging development of rural areas in Germany's East and West By Anne Margarian; Christian Hundt
  2. Fiscal transfers in the spatial economy By Henkel, Marcel; Seidel, Tobias; Südekum, Jens
  3. Geography, Geology, and Regional Economic Development By Kevin Berry; Alexander James; Brock Smith; Brett Watson
  5. Mapping the potential of EU regions to contribute to Industry 4.0 By Pierre-Alexandre Balland; Ron Boschma
  6. Modular structure in labour networks reveals skill basins By Neave O'Clery; Eoin Flaherty; Stephen Kinsella
  7. Cities of Workers, Children or Seniors? Age Structure and Economic Growth in a Global Cross-Section of Cities By Remi Jedwab; Daniel Pereira; Mark Roberts
  8. Animate the cluster or subsidize collaborative R&D? A multiple overlapping treatments approach to assess the impact of the French cluster policy By Mar, M.; Massard, N.
  9. Public Funding and Corporate Innovation By Mathias Beck; Martin Junge; Ulrich Kaiser
  10. Multidimensional relatedness between innovation systems in sustainability transitions By Tuukka Mäkitie; Allan D. Andersen; Jens Hanson

  1. By: Anne Margarian (Thuenen Institute of Rural Studies, Braunschweig); Christian Hundt (Thuenen Institute of Rural Studies, Braunschweig)
    Abstract: Some rural regions in Western Germany have experienced a very positive economic development in terms of employment and incomes in the past decade. This development, however, is in sharp contrast to the the enduring economic lag of many rural regions in Eastern Germany. This paper seeks to find out, to what extent these differences in employment development can be explained by sectoral patterns and region-specific capacities and capabilities. We employ an extended shift-share regression model that explains the employment development in German districts between 2007 and 2016. The model differentiates between Western and Eastern German regions as well as between urban and rural regions by means of spatial location effects. This specification helps us to capture both: the historically evolved differences inherent in the socialist and capitalist past of Eastern and Western Germany and the varying economic environments in urban and rural areas. The extended shift-share regression confirms that simple industry effects, i.e. linear effects of industry shares, only explain a small part of the differences in employment development between rural regions. Most deviations are instead captured in the competitive share effects (CSE) that represents how employment development in a region systematically deviates from the average development of its industries at national level. Further analyses of the CSE reveal that the manufacturing sector, despite its general loss in employment shares, is of crucial importance for rural prosperity. In this regard, the apparent disadvantage of rural districts in Germany’s East can be explained by a lack of locally specific, complementary immobile production capacities and capabilities for manufacturing. These locally specific skills develop endogenously. Urban districts in the East, in contrast, do not have to rely on endogenous factors alone but may overcome their historical disadvantage if they manage to exploit their agglomeration advantages in order to attract knowledge intensive industries and high-skilled workers.
    Keywords: rural regions, urban regions, East Germany, West Germany, employment development, structural change, industry structure, spatial externalities, shift share regression
    JEL: O14 O18 R11
    Date: 2019–09
  2. By: Henkel, Marcel; Seidel, Tobias; Südekum, Jens
    Abstract: Many countries shift substantial public resources across jurisdictions to mitigate spatial economic disparities. We use a general equilibrium model with multiple asymmetric regions, labor mobility, and costly trade to carve out the aggregate implications of fiscal transfers. Calibrating the model for Germany, we find that transfers indeed deliver smaller disparities across regions. This comes at the cost of lower national output, however, because activity is diverted away from core cities and towards remote areas with low productivity. But despite this output loss, national welfare may still increase, because the transfer scheme countervails over-congestion in large cities.
    Keywords: fiscal equalization,regional transfers,migration,spatial economics
    JEL: F15 R12 R13 R23
    Date: 2019
  3. By: Kevin Berry (University of Alaska Anchorage); Alexander James (University of Alaska Anchorage); Brock Smith (Montana State University); Brett Watson (University of Alaska Anchorage)
    Abstract: We examine long-run development effects of regional productivity shocks in the United States. We exploit the timing and location of large resource discoveries to measure exogenous variation in labor demand and consider heterogeneous effects based on environmental amenity and geographic isolation, developing novel measures of both. Using a dynamic event-study analysis we find that productivity shocks increase population both in the short and long-run, but this largely refl ects the experience of low amenity, geographically isolated places that may otherwise struggle to develop. Moreover, this study offers several insights into the observed spatial pattern of development in the United States.
    Keywords: Natural-Resource Discoveries; Regional Development; Long-Run Growth; Geography; Environmental Amenities; Resource Economics
    JEL: Q32 Q33 R11
    Date: 2019–08
  4. By: Inga Ivanova (National Research University Higher School of Economics); Oivind Strand (National Research University Higher School of Economics); Loet Leydesdorff (National Research University Higher School of Economics)
    Abstract: The innovation capacity of Norwegian innovation system, according Triple Helix model of innovations approach, is analyzed in terms of mutual information among geographical, sectorial, and size distributions of firms as dimensions of probabilistic entropy. Negative entropies can be considered as a consequence of synergy among these dimensions. Three different techniques for evaluation of temporal synergy evolution are used: R/S analysis, DFT, and geographical synergy decomposition. The calculations are based on data for all Norwegian firms registered between 2002 and 2014. The results suggest that the synergy at the level of both the country and its seven regions show non-chaotic oscillatory behavior and resonate in a set of natural frequencies.
    Keywords: knowledge base, innovations, triple helix, cyclic processes
    JEL: O10 O30 R11
    Date: 2019
  5. By: Pierre-Alexandre Balland; Ron Boschma
    Abstract: This paper aims to identify the future Industry 4.0 centers of knowledge production in Europe. We expect Industry 4.0 Technologies (I4Ts) to thrive in regions where they can draw on local resources from related technologies. We use OECD-REGPAT data to identify I4T-related technologies, and find that I4Ts are located at the periphery of the knowledge space. Regions with a high potential in terms of I4T-related technologies were more likely to diversify successfully in new I4Ts in the period 2002-2016. We find big differences across EU regions: some show high but most regions show weak I4T potential.
    Keywords: Industry 4.0, relatedness, patents, knowledge space, regional diversification, EU regions
    JEL: B52 O33 R11
    Date: 2019–09
  6. By: Neave O'Clery; Eoin Flaherty; Stephen Kinsella
    Abstract: Labour networks, where industries are connected based on worker transitions, have been previously deployed to study the evolution of industrial structure ('related diversification') across cities and regions. Beyond estimating skill-overlap between industry pairs, such networks characterise the structure of inter-industry labour mobility and knowledge diffusion in an economy. Here we investigate the structure of the network of inter-industry worker flows in the Irish economy, seeking to identify groups of industries exhibiting high internal mobility and skill-overlap. We argue that these industry clusters represent skill basins in which skilled labour circulate and diffuse knowledge, and delineate the size of the skilled labour force available to an industry. Deploying a multi-scale community detection algorithm, we uncover a hierarchical modular structure composed of clusters of industries at different scales. At one end of the scale, we observe a macro division of the economy into services and manufacturing. At the other end of the scale, we detect a fine-grained partition of industries into tightly knit groupings. In particular, we find workers from finance, computing, and the public sector rarely transition into the extended economy. Hence, these industries form isolated clusters which are disconnected from the broader economy, posing a range of risks to both workers and firms. Finally, we develop a methodology based on industry growth patterns to reveal the optimal scale at which labour pooling operates in terms of skill-sharing and skill-seeking within industry clusters.
    Date: 2019–09
  7. By: Remi Jedwab (George Washington University); Daniel Pereira (George Washington University); Mark Roberts (The World Bank)
    Abstract: A large literature documents the positive influence of a city’s skill structure on its rate of economic growth. By contrast, the effect of a city’s age structure on its economic growth has been a hitherto largely neglected area of research. We hypothesize that cities with more working-age adults are likely to grow faster than cities with more children or seniors and set-out the potential channels through which such differential growth may occur. Using data from a variety of historical and contemporary sources, we show that there exists marked variation in the age structure of the world’s largest cities, both across cities and over time. We then study how age structure affects economic growth for a global cross-section of mega-cities. Using various identification strategies, we find that mega-cities with higher dependency ratios - i.e. with more children and/or seniors per working-age adult - grow significantly slower. Such effects are particularly pronounced for cities with high shares of children. This result appears to be mainly driven by the direct negative effects of a higher dependency ratio on the size of the working-age population and the indirect effects on work hours and productivity for working age adults within a city.
    Keywords: Urbanization; Cities; Age Structure; Dependency Ratios; Children; Ageing; Demographic Cycles; Agglomeration Effects; Human Capital; Growth; Development
    JEL: R10 R11 R19 J11 J13 J14 O11 N30
    Date: 2019
  8. By: Mar, M.; Massard, N.
    Abstract: This paper examines the effectiveness of the French competitiveness cluster policy on participating SMEs in terms of innovation and economic performance. Using an original dataset, we construct different measures of treatment with crossover designs. The findings indicate substantial additionality effects on R&D and employment and weak or insignificant effects on other types of economic performance. While only adhering to clusters induces much stronger positive impacts on SMEs than only participating in R&D collaborative projects, the policy is most effective when the two treatments are simultaneously used. To achieve its impact on SMEs, the cluster policy should not overlook low-cost instruments such as animation actions and common services.
    JEL: C14 C21 O32 O38
    Date: 2019
  9. By: Mathias Beck (KOF Swiss Economic Institute, ETH Zurich, Switzerland); Martin Junge (Ministry of Higher Education and Science, Copenhagen, Denmark); Ulrich Kaiser (University of Zurich Department of Business Administration Chair for Entrepreneurship)
    Abstract: We review and condense the body of literature on the economic returns of public R&D on private R&D and find that: (i) private returns to R&D appear to be large and larger than the returns to alternative investments; (ii) private R&D and R&D subsidies are positively correlated and there is no evidence for crowding out; (iii) R&D cooperation increases private R&D; (iv) there appear to exist complementarities between alternative sources of funding; (v) the mobility of R&D workers, particularly of university scientists, is positively related to innovation; (vi) there are many university spin-offs but these are no more successful than non-university spin-offs; (vii) universities constitute important collaboration partners and (viii) clusters enhance collaboration, patents and productivity. Key problems for economic policy advice are that the identification of causal effects is problematic in most studies and that little is known about the optimal design of policy measures.
    Keywords: Keywords: R&D subsidies, R&D tax credits, cooperation, labor mobility, returns to R&D, university spin-offs, R&D clusters, public-private knowledge transfer
    JEL: C54 J6 I28 O3 L52
    Date: 2018–01
  10. By: Tuukka Mäkitie; Allan D. Andersen; Jens Hanson
    Abstract: Recent literature in sustainability transition studies has suggested that established industries may provide resources for innovation in low-carbon technologies. This literature, however, has this far not explained why such resource redeployment takes place. Literature in evolutionary economic geography and management studies, however, have discussed such interactions through the notion of relatedness as an underlying factor. Drawing on these literatures we develop an integrated framework for the analysis of multidimensional relatedness between innovation systems in the context of sustainability transitions. Using semi-structured interviews, we study the technological, institutional and network relatedness between the oil and gas industry and the offshore wind power technology in Norway. Our results show that despite the high relatedness in offshore technologies, low relatedness in terms of institutions has challenged the resource redeployment from the Norwegian oil and gas industry to offshore wind power. We thus suggest that relatedness, understood in multiple structural dimensions, can help to understand why resource redeployment from established industries to technological innovation systems may, or may not, take place.
    Keywords: multidimensional relatedness, innovation systems, sustainability transitions, oil and gas industry, offshore wind power
    JEL: O33 Q55
    Date: 2019–09

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