nep-geo New Economics Papers
on Economic Geography
Issue of 2019‒11‒25
twelve papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Urban Growth Shadows By Cuberes, David; Desmet, Klaus; Rappaport, Jordan
  2. Regional concentration of university graduates: The role of high school grades and parental background By Eliasson, Kent; Haapanen, Mika; Westerlund, Olle
  3. Commuting to diversity By David C. Maré; Jacques Poot
  4. Local Ties in Spatial Equilibrium By Michael A. Zabek
  5. The influence of bank branch closure on entrepreneurship sustainability By Sin Tian Ho, Cynthia; Berggren, Björn
  6. Explaining the past, predicting the future: the influence of regional trajectories on innovation networks of new industries in emerging economies By Plechero, Monica; Mandar, Kulkarni; Chaminade, Cristina; Balaji, Parthasarathy
  7. Trademarks as an indicator of regional innovation: Evidence from Japanese prefectures By Joern Block; Christian Fisch; Kenta Ikeuchi; Masatoshi Kato
  8. Does long-term proactive agency matter for regional development? By Grillitsch, Markus; Asheim, Bjørn; Nielsen, Hjalti
  9. Quid Pro Quo, Knowledge Spillover and Industrial Upgrading By Jie Bai; Panle Barwick; Shengmao Cao; Shanjun Li
  10. Accessibility of bank branches and new firm formation in Sweden By Sin Tian Ho, Cynthia; Wilhelmsson, Mats
  11. Business travels, multinational firms and international trade By Francesco Bripi
  12. Innovation modes in SMEs: Mechanisms integrating STI-processes into DUI-mode learning and the role of regional innovation policy By Alhusen, Harm; Bennat, Tatjana

  1. By: Cuberes, David; Desmet, Klaus; Rappaport, Jordan (Federal Reserve Bank of Kansas City)
    Abstract: Does a location's growth benefit or suffer from being geographically close to large economic centers? Spatial proximity may lead to competition and hurt growth, but it may also generate positive spillovers and enhance growth. Using data on U.S. counties and metro areas for the period 1840–2017, we document this tradeoff between urban shadows and urban spillovers. Proximity to large urban centers was negatively associated with growth from 1840 to 1920, and positively associated with growth after 1920. Using a two-city spatial equilibrium model with intra-city and inter-city commuting, we show that the secular evolution of commuting costs can account for this and other observed patterns in the data.
    Keywords: Urban Shadows; Agglomeration Economies; Spatial Economics; Urban Systems; City Growth; United States 1840-2017
    JEL: N93 R12
    Date: 2019–11–18
  2. By: Eliasson, Kent (Swedish Agency for Growth Policy Analysis, Östersund, Sweden. Umeå School of Business, Economics and Statistics, Umeå University, Sweden.); Haapanen, Mika (School of Business and Economics, University of Jyväskylä, Finland); Westerlund, Olle (Department of Economics, Umeå University)
    Abstract: In this paper, we analyse long-term changes in the regional distribution and migration flows of university graduates in Finland and Sweden. The study is based on detailed longitudinal population register data, including information on high school grades and parental background. We find a distinct pattern of skill divergence across regions in both countries over the last three decades. The uneven distribution of human capital has been reinforced by the mobility patterns among university graduates, for whom regional sorting by high school grades and parental background is evident. Our findings indicate that traditional measures of human capital concentration most likely underscore actual regional differences in productive skills.
    Keywords: Human capital; university graduates; migration; school grades; parental education; local labour market areas
    JEL: J24 J61 R10 R12 R23
    Date: 2019–11–11
  3. By: David C. Maré (Motu Economic and Public Policy Research); Jacques Poot (Vrije Universiteit)
    Abstract: Does commuting increase workers' exposure to difference and diversity? The uneven spatial distribution of different population subgroups within cities is well documented. Individual neighbourhoods are generally less diverse than cities as a whole. Auckland is New Zealand's most diverse city, but the impacts of diversity are likely to be less if interactions between different groups are limited by spatial separation. Studies of spatial sociodemographic diversity generally measure the diversity of local areas based on who lives in them. In this study, we examine measures of exposure to local cultural diversity based on where people work as well as where they live. Our measure of cultural diversity is based on country of birth, with ethnicity breakdowns for the New Zealand (NZ) born. The study also examines whether the relationship between commuting and exposure to diversity differs between workers with different skills or types of job. The study focuses on diversity and commuting patterns within Auckland, using 2013 census microdata, and using local diversity measures calculated for each census area unit. We find that commuters who self-identify as NZ-born Europeans and residents born in England (together accounting for close to half of all commuters) are, of all cultural groups, the least exposed to diversity in the neighbourhoods where they live. Overall, commuting to the workplace raises exposure to cultural diversity, and to the greatest extent for these two groups.
    Keywords: Cultural diversity; exposure to difference; exposure to diversity; residential segregation; commuting; Auckland
    JEL: J15 R23
    Date: 2019–11
  4. By: Michael A. Zabek
    Abstract: If someone lives in an economically depressed place, they were probably born there. The presence of people with local ties - a preference to live in their birthplace - leads to smaller migration responses. Smaller migration responses to wage declines lead to lower real incomes and make real incomes more sensitive to subsequent demand shocks, a form of hysteresis. Local ties can persist for generations. Place-based policies, like tax subsidies, targeting depressed places cause smaller distortions since few people want to move to depressed places. Place-based policies targeting productive places increase aggregate productivity, since they lead to more migration.
    Keywords: Migration ; Decline ; Economic development, technological change, and growth ; Labor and demographic economics ; Local labor markets
    JEL: J61 R23 E62 R58 H31 D61 J11
    Date: 2019–11–18
  5. By: Sin Tian Ho, Cynthia (Department of Real Estate and Construction Management, Royal Institute of Technology); Berggren, Björn (Department of Real Estate and Construction Management, Royal Institute of Technology)
    Abstract: We study the influence of bank branch closure on new firm formation in Sweden, with a panel database that captures the geographical locations of all the Swedish bank branches from 2000 to 2013. Using spatial econometric analysis at a municipal level, we show that bank proximity to firms is vital for entrepreneurship to thrive and sustain in Sweden. From the Fixed-Effects spatial models, the increase in distance to the banks due to bank branch closure is shown to affect new firm formation negatively. The further a firm is located away from the bank, the higher the monitoring cost is for the banks. The increase in distance also results in an increase in information asymmetries because of the banks’ eroded ability to collect soft information about the borrower firm. Due to high risks associated with the lack of information and uncertainty, banks might not be as willing to loan money to a distant firm compared to a nearby firm. Furthermore, the presence of neighbourhood spillover effects is evidenced through the Moran’s I statistics, which means that the omission of spatial effects in the analysis would have resulted in biased estimates.
    Keywords: bank branches; entrepreneurship; financing; new firm formation; Sweden
    JEL: C31 R10
    Date: 2019–11–14
  6. By: Plechero, Monica (University of Florence); Mandar, Kulkarni (International Institute of Information Technology); Chaminade, Cristina (Lund University); Balaji, Parthasarathy (International Institute of Information Technology)
    Abstract: Economic geographers have recently made important contributions to the relationship between regional transformation, industrial specialisation and innovation networks in the emergence of new industries. However, most contemporary research has focused on the influence of networks on regional trajectories, paying lip service to how regional trajectories also influence network configurations. Furthermore, international comparative research on how specific regional innovation system (RIS) trajectories may shape innovation networks in new industrial sectors is underdeveloped. The paper investigates how the trajectories of Bangalore and Beijing RISs influence the objectives and geographical configuration of innovation networks in the new media industry. The coevolution of the different elements of the RIS trajectory points to the unfolding of politically and institutionally driven trajectory in Beijing and cognitively driven trajectory in Bangalore. These trajectories lead to specific barriers and opportunities for the development of innovation networks in new industries.
    Keywords: RIS trajectories; Innovation networks; New media industry; Beijing; Bangalore
    JEL: O19 O30 R50
    Date: 2019–11–13
  7. By: Joern Block (Faculty of Management, Trier University / Erasmus School of Economics (ESE) and Erasmus Institute of Management (ERIM), Erasmus University Rotterdam); Christian Fisch (Faculty of Management, Trier University / Erasmus School of Economics (ESE) and Erasmus Institute of Management (ERIM), Erasmus University Rotterdam); Kenta Ikeuchi (Research Institute of Economy, and Trade and Industry (RIETI)); Masatoshi Kato (School of Economics, Kwansei Gakuin University)
    Abstract: Regional science has long been concerned with measuring the spatial distribution of innovation activity. While patents are frequently used as an indicator of regional innovation, we introduce trademarks as an additional indicator. Specifically, we explore the spatial distribution of trademark applications using a detailed and comprehensive dataset of 47 Japanese prefectures from 1999 to 2012. In addition to mapping differences in trademarks across regions, we identify correlates at the regional level that provide initial insights into potential determinants of regional innovation. For example, regional trademark activity is positively associated with regional entrepreneurship and with strong private service and finance sectors. Overall, our results reveal associations unique to trademarks that patent-based measures of innovation cannot uncover. With these results, we contribute to research in regional science and to the evolving literature on trademarks of this discipline.
    Keywords: Trademarks; regional innovation; Japan; prefectures; spatial distribution; patents.
    JEL: L80 O34 O53 R12
    Date: 2019–11
  8. By: Grillitsch, Markus (Lund University); Asheim, Bjørn (University of Stavanger); Nielsen, Hjalti (Lund University)
    Abstract: Agency is concerned with the ways and the extent to which individuals, groups of individuals and organisations shape regional development within and beyond the corset of historically developed pathways. Linking the time horizon of agency to the exploration-exploitation trade-off in regional development and the recent literature on industrial path development, we argue that agency becomes more powerful with a long-term perspective. In the long-run knowledge, networks, and institutions can be moulded in a strategic manner, whereas in the short-term these are highly rigid. We illustrate our arguments with an in-depth case study of a labour market in Western Norway, which, over the past 20 years, was subject to two crises and one remarkable growth phase. We show that long-term agency with a focus on innovation shaped the development opportunities and identity of the region. Conversely, short-term agency was mainly about exploiting existing opportunities, often associated with entrepreneurship. The unintended consequence of short-term agency was an increasing vulnerability of the regional economy to changes in demand. This has far-reaching policy implications because short-term pressures and policy cycles often undermine long-term perspectives.
    Keywords: Change agency; exploration exploitation; new industrial path development; regional development; innovation
    JEL: O18 O30 P48 R11 R58
    Date: 2019–11–13
  9. By: Jie Bai (Center for International Development at Harvard University); Panle Barwick; Shengmao Cao; Shanjun Li
    Abstract: Are quid pro quo (technology for market access) policies effective in facilitating knowledge spillover to developing countries? We study this question in the context of the Chinese automobile industry where foreign firms are required to set up joint ventures with domestic firms in return for market access. Using a unique dataset of detailed quality measures along multiple dimensions of vehicle performance, we document empirical patterns consistent with knowledge spillovers through both ownership affiliation and geographical proximity: joint ventures and Chinese domestic firms with ownership or location linkage tend to specialize in similar quality dimensions. The identification primarily relies on within-product variation across quality dimensions and the results are robust to a variety of specifications. The pattern is not driven by endogenous joint-venture network formation, overlapping customer base, or learning by doing considerations. Leveraging additional micro datasets on part suppliers and worker flow, we document that supplier network and labor mobility are important channels in mediating knowledge spillovers. However, these channels are not tied to ownership affiliations. Finally, we calibrate a simple learning model and conduct policy counterfactuals to examine the role of quid pro quo. Our findings show that ownership affiliation facilitates learning but quality improvement is primarily driven by the other mechanisms.
    Keywords: Knowledge spillover
    Date: 2019–11
  10. By: Sin Tian Ho, Cynthia (Department of Real Estate and Construction Management, Royal Institute of Technology); Wilhelmsson, Mats (Department of Real Estate and Construction Management, Royal Institute of Technology)
    Abstract: Drawing on location theory, the local relationships between new firm formation and its determinants are explored in 290 municipalities across Sweden. From the robust geographically weighted regression (GWR) models, mostly positive relationships with new firm formation are shown for firm density, human capital level, industry diversification level and percentage of immigrants living in the area. In contrast, mostly negative relationships are shown for weighted mean distance to the nearest bank branches, establishment size, unemployment rate, industry specialization. Spatially constrained multivariate clustering is also applied to group municipalities with similar conditions. Patterns in the industry composition and the location attributes are then analysed for each cluster.
    Keywords: GWR; new firm formation; entrepreneurship; Sweden
    JEL: C31 G21 M13 R50
    Date: 2019–11–14
  11. By: Francesco Bripi (Bank of Italy)
    Abstract: Business travels are a key driver of growth as they contribute to knowledge diffusion and innovation. They are also a relevant component of services trade. This paper analyzes the determinants of business travels expenditure in Italy, where this phenomenon is relevant and it is concentrated in few Italian regions. Using a “unilateral” gravity approach, I find significant correlations between trade flows, FDI stocks and business travel expenditures. Identification is addressed using inverse measures of offshorable and of routinary tasks, instrumental variables and selection methods. The analysis highlights that the pattern of business travels expenditure is shaped to some extent by the business cycle of partner countries relative to that of Italian regions. Moreover, the pattern is determined to a greater extent by activities that are least intensive in offshorable or routinary tasks. This second result suggests that remote controls systems substituted only more standardized activities. Indeed, broadband diffusion in the partner countries reduced business travels expenditure only in more routinary sectors. Overall this evidence is consistent with the view that business travels have been affected by the recent developments in ICT.
    Keywords: services trade, travel, FDI, knowledge diffusion
    JEL: F14 F20 J61 O33
    Date: 2019–11
  12. By: Alhusen, Harm; Bennat, Tatjana
    Abstract: Innovation processes consist of interactive learning mechanisms that combine different knowledge sources. Using a set of 72 exploratory interviews with small- and medium-sized enterprises (SMEs) and regional innovation consultants, this paper analyzes the combination of STI (science-technology -innovation) and DUI (innovation based on learning-by-doing, -using and -interacting) modes of innovation. We show that SMEs integrate STI-based knowledge into DUI-routines through mechanisms with varying levels of complexity. The mechanisms we describe differ with respect to a) effects on innovativeness, b) the absorptive capacities required and c) incurred costs. Based on these mechanisms, d) cognitive, organizational and financial barriers to combinatorial innovation modes are derived. We find that e) regional innovation consultancies play an important role in fostering combinatorial innovation modes. We therefore explore the role of regional innovation policy and its effects on firms' combination of innovation modes. Our findings point out innovation drivers that facilitate SMEs' capacity to absorb STI-based knowledge. Based on our empirical findings, we derive implications for innovation policy with regards to absorptive capacities in SMEs.
    Keywords: Innovation modes,DUI,Regional Innovation System,R&D cooperation,Knowledge bases,Regional innovation policy
    JEL: D23 D83 L10 L22 O31 O33 O38
    Date: 2019

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