nep-geo New Economics Papers
on Economic Geography
Issue of 2020‒03‒09
twelve papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Innovation without regional development? The complex interplay of innovation, institutions and development By Marques, Pedro; Morgan, Kevin
  2. Local knowledge spillovers and innovation persistence of firms By Holl, Adelheid; Peters, Bettina; Rammer, Christian
  3. How do occupational relatedness and complexity condition employment dynamics in periods of growth and recession? By Emelie Hane-Weijman; Rikard H. Eriksson; David Rigby
  4. Change in urban concentration and economic growth By Frick, Susanne A.; Rodríguez-Pose, Andrés
  5. The Effect of Migration Policy on Growth, Structural Change, and Regional Inequality in China By Tongtong Hao; Ruiqi Sun; Trevor Tombe; Xiaodong Zhu
  6. In what sense left behind by globalisation? Looking for a less reductionist geography of the populist surge in Europe By Gordon, Ian R.
  7. Superstar cities and left-behind places: disruptive innovation, labor demand, and interregional Inequality By Kemeny, Thomas; Storper, Michael
  8. Regional needs, regional targeting, and regional growth: an assessment of EU Cohesion Policy in the UK regions By Di Cataldo, Marco; Monastiriotis, Vassilis
  9. The Economics of International Student and Scholar Mobility : Directions for Research By Chellaraj,Gnanaraj
  10. Economic outcomes predicted by diversity in cities By Chong, Shi Kai; Bahrami, Mohsen; Chen, Hao; balcisoy, Selim; Bozkaya, Burcin; Pentland, Alex 'Sandy'
  11. How large are road traffic externalities in the city? The highway tunneling in Maastricht, the Netherlands By Joep Tijm; Thomas Michielsen; Peter Zwaneveld; Raoul van Maarseveen
  12. Producto regional en Uruguay durante la Primera Globalización (1872-1908): desigualad decreciente y convergencia entre regiones By Pablo Castro Scavone; Henry Willebald

  1. By: Marques, Pedro (Universitat Politècnica de Valencia); Morgan, Kevin (Cardiff University)
    Abstract: This paper argues that the development of regional innovation concepts drawing primarily on the experiences of advanced regions, has meant that the dominant narratives about regional development are not adequate to explain the experiences of less developed regions (LDRs). Drawing on the extensive experience of the authors doing research in LDRs, the paper develops three main arguments: first, the emphasis put on networks and systems means that not enough attention is paid to the internal capabilities of organisations, including those of firms, Universities and the public sector. These capabilities shape the strategies of these organisations regarding innovation and collaboration, and therefore influence the nature and content of innovation systems. Second, the paper argues that too much attention has been paid to the importance of informal institutions, rather than analysing the dynamic interaction between formal and informal institutions. The latter approach allows us to avoid culturally deterministic interpretations of under-development and to think about ways in which formal policies could help to improve innovation environments. Third, the paper argues that innovation at the firm level does not always lead to improvement in productivity and economic growth at the aggregate scale. This is partly due to the effects of the dynamics discussed in the two previous points, but is also because advanced regions benefit from a socio-economic ecosystem which supports the translation of new ideas into economic activity. This means that though innovation is fundamental for long-term economic growth, it is not sufficient without mechanisms that ensure its dissemination through the entirety of the economic system.
    Keywords: Less developed regions; Innovation; Productivity; Organisational capabilities; Institutions; Regional Development
    JEL: O31 O43 P48 R11
    Date: 2020–02–26
  2. By: Holl, Adelheid; Peters, Bettina; Rammer, Christian
    Abstract: Recent empirical evidence has shown that firm's innovation behavior exhibits high persistency but not much is known about potential contingencies affecting the degree of persistence. This paper focuses on the role of the local knowledge environment and asks how local knowledge spillovers affect firms' innovation persistence. The empirical analysis draws upon a representative panel data set of firms in Germany from 2002-2016, complemented by detailed geographic information of patent activity over discrete distances to proxy local knowledge spillovers. Based on correlated random effects probit models that control for state dependence, unobserved individual heterogeneity and endogenous initial conditions, our results corroborate former evidence that persistency in innovation is driven by true state dependence. More importantly, we find that the local patenting activity positively moderates firms' degree of persistency in innovation behavior. This is a novel firm-level mechanism that can explain the widening of spatial disparities in innovation performance. Estimations with different distance bands show that the strength of knowledge spillovers that contribute to innovation persistence via true state dependence declines rather rapidly with increasing distance.
    Keywords: innovation,persistence,location,knowledge spillovers
    JEL: O31 R1 D22
    Date: 2020
  3. By: Emelie Hane-Weijman; Rikard H. Eriksson; David Rigby
    Abstract: Related diversification has generated considerable interest in policy (smart specialisation) and academic (related branching) circles, linking regional path creation strategies to the capabilities of regions. While previous studies have tended to focus on knowledge- or industry-spaces in regions, we explore the occupation-space. Occupational relatedness and complexity indicators are deployed as independent variables in spatial panel models that account for annual variations in regional employment growth rates in Sweden between 2002 to 2013. Our findings show that in periods of economic expansion, exit from related occupations and entry into complex occupations decreases regional employment growth. These effects are dampened in periods of economic slowdown.
    Keywords: related branching, occupation-space, occupational relatedness, complexity, smart specialization, employment growth
    JEL: R11 J21 J24 J62
    Date: 2020–03
  4. By: Frick, Susanne A.; Rodríguez-Pose, Andrés
    Abstract: The paper investigates (1) the evolution of urban concentration from 1985 to 2010 in 68 countries around the world and (2) the extent to which the degree of urban concentration affects national economic growth. It aims to overcome the limitations of existing empirical literature by building a new urban population dataset that allows the construction of a set of Herfindahl-Hirschman-Indices which capture a country’s urban structure in a more nuanced way than the indicators used hitherto. We find that, contrary to the general perception, urban concentration levels have on average decreased or remained stable (depending on indicator). However, these averages camouflage diverging trends across countries. The results of the econometric analysis suggest that there is no uniform relationship between urban concentration and economic growth. Urban concentration is beneficial for economic growth in high-income countries, while this effect does not hold for developing countries. The results differ from previous analyses that generally underscore the benefits of urban concentration at low levels of economic development. The results are robust to accounting for reverse causality through IV analysis, using exogenous geographic factors as instruments
    Keywords: Agglomeration; urban primacy; economic growth; high-income countries; low-income countries
    JEL: R11 R12
    Date: 2018–05–01
  5. By: Tongtong Hao; Ruiqi Sun; Trevor Tombe; Xiaodong Zhu
    Abstract: Between 2000 and 2015, China's aggregate income quadrupled, its provincial income inequality fell by a third, and its share of employment in agriculture fell by half. Worker migration is central to this transformation, with almost 300 million workers living and working outside their area or sector of hukou registration by 2015. Combining rich individual-level data on worker migration with a spatial general equilibrium model of China's economy, we estimate the reductions in internal migration costs between 2000 and 2015, and quantify the contributions of these cost reductions to economic growth, structural change, and regional income convergence. We find that over the fifteen-year period China's internal migration costs fell by forty-five percent, with the cost of moving from agricultural rural areas to non-agricultural urban ones falling even more. In addition to contributing substantially to growth, these migration cost changes account for the majority of the reallocation of workers out of agriculture and the drop in regional inequality. We compare the effect of migration policy changes with other important economic factors, including changes in trade costs, capital market distortions, average cost of capital, and productivity. While each contributes meaningfully to growth, migration policy is central to China's structural change and regional income convergence. We also find the recent slow-down in aggregate economic growth between 2010 and 2015 is associated with smaller reduction in inter-provincial migration costs and a larger role of capital accumulation.
    Keywords: Migration, Structural Change, Regional Income Convergence, China
    JEL: E24 J61 O15 O41 O47 R12 R23
    Date: 2020–02–26
  6. By: Gordon, Ian R.
    Abstract: Brexit, the wider populist surge in Europe and Trumpism all seem to involve interesting geographies that have been taken as clues to the worrying puzzle facing a political/academic establishment about what’s driving the surge and how might it be abated. One major theme has been that of the places left behind economically by an opening up to competition from cheap (migrant or overseas) labour – counterpointed by the idea that specific types of people have been left behind culturally. This paper attempts a less reductive approach, starting with examination of oddities in the Brexit geography and then investigating how populist support across European regions is influenced by the interaction of economic/demographic change with varying cosmopolitan/localist influences
    Keywords: populist politics; spatial divisions of Labour; Brexit; European regions
    JEL: J24 P16 R23
    Date: 2018–03–10
  7. By: Kemeny, Thomas; Storper, Michael
    Abstract: After a long period of convergence, around 1980, inter-place gaps in economic well-being in the United States began to increase. This rising inequality offers a rich terrain to explore causality in regional economics and development theory. This paper presents new, long-run evidence on interregional inequality that highlights the need to situate the current moment in a context of episodic alternations between convergence and divergence. In light of this evidence, the paper revisits the theoretical literature, finding gaps in existing supply- and demand-side models. A demand-led perspective can be strengthened by integrating a primary role for disruptive technological change. We posit a theory of alternating waves, where major technology shocks initially concentrate, and eventually deconcentrate, demand for skilled workers performing complementary tasks. Labor supply responds to these centripetal and centrifugal forces. These reversals yield the observed patterns of rising and falling interregional inequality. We trace out the implications of this theory in both academic and policy terms.
    Keywords: cities; income; inequality; economic geography; regional development; convergence
    JEL: R11 R12 O33 N90
    Date: 2020–02
  8. By: Di Cataldo, Marco; Monastiriotis, Vassilis
    Abstract: With the prospective exit of the UK from the European Union, a crucial question is whether EU Structural Funds have been beneficial for the country and which aspects of Cohesion Policy should be maintained if EU funds are to be replaced. This paper addresses this question through a twofold investigation, assessing not only whether but also how EU funds have contributed to regional growth in the UK from 1994 to 2013. We document a significant and robust effect of Cohesion Policy in the UK, with higher proportions of Structural Funds associated to higher economic growth both on the whole and particularly in the less developed regions of the country. In addition, we show that the strategic orientation of investments also plays a distinct role for regional growth. While concentration of investments on specific pillars seems to have no direct growth effects, unless regions can rely on pre-existing competitive advantages in key development areas, we unveil clear evidence that targeting investments on specific areas of relative regional need has a significant and autonomous effect on growth. These findings have important implications for the design of regional policy interventions in Britain after Brexit.
    Keywords: EU Cohesion Policy; UK; Structural Funds; regional policy design; Brexit
    JEL: O18 R11 R53
    Date: 2018–08–03
  9. By: Chellaraj,Gnanaraj
    Abstract: International trade in higher education services in the form of international student mobility has increased sharply since the 1960s and especially from Eastern Europe and Central Asia since the fall of the Soviet Union. Many international students, especially those with graduate degrees, stay on in the host country after graduation. Although their impact on labor markets has been investigated by economists, geographers, and regional scientists in recent years, most studies on international students focus on education and spatial issues, with very little economic analysis. Furthermore, the application of a trade in services framework to international student mobility is virtually nonexistent. Four areas of research have emerged that need further investigation, particularly for the Europe and Central Asia region. First is the research gap on host and source country pull and push factors affecting the demand and supply of international students. Second, there is little or no understanding of the impact of foreign direct investment in higher education services, both through the establishment of branch campuses as well as direct investment by multinationals in universities. Third, there is virtually no study on the impact of international student and scholar mobility on global collaborative patents. Fourth, there are very few field experiments in international student ormigration research. These issues need to be understood for the development of appropriate policies in industrialized, emerging and developing economies, on the global mobility of students as well as establishment of branch campuses abroad.
    Date: 2019–05–07
  10. By: Chong, Shi Kai; Bahrami, Mohsen; Chen, Hao; balcisoy, Selim; Bozkaya, Burcin; Pentland, Alex 'Sandy'
    Abstract: Much recent work has illuminated the growth, innovation, and prosperity of entire cities, but there is relatively less evidence concerning the growth and prosperity of individual neighborhoods. In this paper we show that diversity of amenities within a city neighborhood, computed from openly available points of interest on digital maps, accurately predicts human mobility ("flows") between city neighborhoods and that these flows accurately predict neighborhood economic productivity. Additionally, the diversity of consumption behaviour or the diversity of flows together with geographic centrality and population density accurately predicts neighborhood economic growth, even after controlling for standard factors such as population, etc. We develop our models using geo-located purchase data from Istanbul, and then validate the relationships using openly available data from Beijing and several U.S. cities. Our results suggest that the diversity of goods and services within a city neighborhood is the largest single factor driving both human mobility and economic growth.
    Date: 2020–02–19
  11. By: Joep Tijm (CPB Netherlands Bureau for Economic Policy Analysis); Thomas Michielsen (CPB Netherlands Bureau for Economic Policy Analysis); Peter Zwaneveld (CPB Netherlands Bureau for Economic Policy Analysis); Raoul van Maarseveen
    Abstract: Infrastructure projects are increasingly aiming to improve liveability, in particular in urban areas. We analyse a specifi c case in which an existing highway in an urban area was moved underground in order to improve intercity traffic flows and to reduce traffic externalities. As travel times within the city hardly changed, this allows for a clean identifi cation of the value of traffic externalities. We find that the liveability bene fits of such integrated infrastructure are substantial relative to the construction costs. Each halving of distance to the tunneled segment is associated with 3.5% more appreciation in house prices since the start of the project.
    JEL: R12 J24 J31
    Date: 2018–05
  12. By: Pablo Castro Scavone (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Henry Willebald (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía)
    Abstract: We present estimates of regional products in Uruguay during the First Globalization (from the 1870s to the years previous to the World War I). Our results show a decreasing and irregular trend in the regional inequality which is consistent with a process of income convergence between provinces. The irregularity of the trajectory would be evidence of the performance of centrifugal and centripetal forces that alternated influences during the period. The forces that trended to decentralize production were the combination of abundant natural resources suitable for livestock production throughout the territory with the reduction of transport costs that made possible to access more easily to Montevideo and, through its port, to the global market. Centripetal forces would have responded to a process characterized by the increasing importance of Montevideo as urban and administrative center, a huge market of goods and services and a dynamic centre of labour market. In addition, Montevideo evidenced the increasing importance of commercial and financial activities (and its potential for making industrial development more flexible), which was only interrupted by the economic and financial crisis of 1890-1891. In facts, the crisis constituted one of the main equalizing forces of the period. The result was to start the twentieth century with levels of regional inequality lower than those recorded in the 1870s-1880s.
    Keywords: regional inequality, regional convergence, Uruguay
    JEL: N5 N6 N9 R12
    Date: 2019–12

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