nep-geo New Economics Papers
on Economic Geography
Issue of 2020‒03‒16
ten papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Why some places are left-behind: urban adjustment to trade and policy shocks By Anthony Venables
  2. The Belt and Road Initiative : Reshaping Economic Geography in Central Asia? By Bird,Julia Helen; Lebrand,Mathilde Sylvie Maria; Venables,Anthony J.
  3. High-growth Firm Shares in Austrian Regions: The Role of Economic Structures By Klaus S. Friesenbichler; Werner Hölzl
  4. A Method to Construct Geographical Crosswalks with an Application to US Counties since 1790 By Fabian Eckert; Andrés Gvirtz; Jack Liang; Michael Peters
  5. Does light touch cluster policy work? Evaluating the tech city programme By Nathan, Max
  6. The contribution of the spatial dimension to inequality: A counterfactual analysis for OECD countries By Luis Ayala; Javier Martin-Roman; Juan Vicente
  7. Adding Space to the International Business Cycle By Abate,Girum Dagnachew; Serven,Luis
  8. Should I stay of should I go? Neighbors' effects on university enrollment By Barrios-Fernandez, Andres
  9. Proxying Economic Activity with Daytime Satellite Imagery: Filling Data Gaps Across Time and Space By Patrick Lehnert; Michael Niederberger; Uschi Backes-Gellner
  10. Measuring the "doing-using-interacting mode" of innovation in SMEs - A qualitative approach By Alhusen, Harm; Bennat, Tatjana; Bizer, Kilian; Cantner, Uwe; Horstmann, Elaine; Kalthaus, Martin; Proeger, Till; Sternberg, Rolf G.; Töpfer, Stefan

  1. By: Anthony Venables
    Abstract: Economic adjustment to trade and policy shocks is hampered by the fact that some sectors tend to cluster, so are hard to initiate in new places. This can give rise to persistent spatial disparities between cities within a country. The paper sets out a two-sector model in which cities divide into those producing tradable goods or services subject to agglomeration economies, and those only producing non-tradables for the national market. If import competition destroys some established tradable sectors, then affected cities fail to attract new tradable activities and switch to just produce non-tradables. Full employment is maintained (we assume perfect markets and price flexibility) but disparities between the two types of cities are increased. All non-tradable cities experience real income loss, while remaining tradable cities boom. The main beneficiaries are land-owners in remaining tradable cities, but there may be aggregate loss as the country ends up with too many cities producing non-tradables, and too few with internationally competitive activities. Fiscal policy has opposite effects in the two types of cities, with fiscal contraction causing decline in cities producing non-tradables, increasing activity in cities producing tradable goods, widening spatial disparities, and in the process increasing the share of rent in the economy.
    Keywords: Urban economics, divergence, rebalancing, lagging regions, de-industrialisation, fiscal policy
    JEL: F12 F60 R11 R12
    Date: 2020–03–05
  2. By: Bird,Julia Helen; Lebrand,Mathilde Sylvie Maria; Venables,Anthony J.
    Abstract: This paper develops a computable spatial equilibrium model of Central Asia and uses it to analyze the possible effects of the Belt Road Initiative on the economy of the region. The model captures international and subnational economic units and their connectivity to each other and the rest of the world. Aggregate real income gains from the Belt Road Initiative range from less than 2 percent of regional income if adjustment mechanisms take the form of conventional Armington and monopolistic competition, to around 3 percent if there are localization economies of scale and labor mobility. In the latter case, there are sizeable geographical variations in impact, with some areas developing clusters of economic activity with income increases of as much as 12 percent and a doubling of local populations, while other areas stagnate or even decline.
    Date: 2019–04–08
  3. By: Klaus S. Friesenbichler; Werner Hölzl
    Abstract: This paper explores the structural determinants of high-growth firm shares in Austrian regions. The regional level of analysis allows to uncover regularities which are not detectable in firm-level studies. We find that lower mobility barriers, firm exits and technological opportunities, measured by digitalisation intensities, and, to a lesser extent, agglomeration effects are associated with a larger share of high-growth firms. The results suggest that comparisons of shares of high-growth firms across countries and regions should consider differences in the industrial structures together with the often-emphasised differences in policies and regulations.
    Keywords: high growth firms, industrial structure, ICT, Austria, variety, NUTS-3
    Date: 2020–03–12
  4. By: Fabian Eckert; Andrés Gvirtz; Jack Liang; Michael Peters
    Abstract: Empirical researchers often have to map data provided for a "reporting" spatial unit, say counties in 1900, to a "reference" one, say, counties in 2010. We discuss a general method to create such crosswalks: computing the share of the area of each reporting unit nested in a given reference unit. Using these shares, data can be re-aggregated from the reporting to the reference units. We apply the method to construct a crosswalk for US county-level data since 1790 to present-day counties or commuting zones. We also provide the code to generate other crosswalks given maps of reporting and reference units.
    JEL: A1 N11
    Date: 2020–02
  5. By: Nathan, Max
    Abstract: Despite academic scepticism, cluster policies remain popular with policymakers. This paper evaluates the causal impact of a flagship UK technology cluster programme. I build a simple framework and identify effects using difference-in-differences and synthetic controls on rich microdata. I further test for timing, cross-space variation, scaling and churn channels. The policy grew and densified the cluster, but has had more mixed effects on tech firm productivity. I also find most policy ‘effects’ began before rollout, raising questions about the programme’s added value.
    Keywords: cities; clusters; technology; economic development; synthetic controls
    JEL: L53 O31 R30 R50
    Date: 2019–08
  6. By: Luis Ayala (Universidad Rey Juan Carlos); Javier Martin-Roman (UNED); Juan Vicente (Universidad de Valladolid)
    Abstract: This paper provides recent evidence on the contribution of the spatial dimension to inequality and more specifically accounts for the impact of the changes in the territorial distribution of the population on the recent dynamics of income inequality. We use LIS harmonized microdata for a selected sample of OECD countries. We provide new evidence over a more varied group of countries and a more recent period than in previous studies. We perform different types of decompositions to isolate the contribution of the changes in the territorial distribution of the population. The results show a generalized increase in income inequality, with an interesting “reducing effect†on this trend due to inter-territorial population movements.
    Keywords: income inequality, regional inequality, decomposition methods, counterfactual analysis.
    JEL: D31 D63 P52
    Date: 2020–01
  7. By: Abate,Girum Dagnachew; Serven,Luis
    Abstract: Growth fluctuations exhibit substantial synchronization across countries, which has been viewed as reflecting a global business cycle driven by shocks with worldwide reach, or spillovers resulting from local real and/or financial linkages between countries. This paper brings these two perspectives together by analyzing international growth fluctuations in a setting that allows for both global shocks and spatial dependence. Using annual data for 117 countries over 1970-2016, the paper finds that the cross-country dependence of aggregate growth is the combined result of global shocks summarized by a latent common factor and spatial effects accruing through the growth of nearby countries -- with proximity measured by bilateral trade linkages or geographic distance. The latent global factor shows a strong positive correlation with worldwide TFP growth. Countries'exposure to global shocks rises with their openness to trade and the degree of commodity specialization of their economies. Despite its simplicity, the empirical model fits the data well, especially for advanced countries. Ignoring the cross-country dependence of growth, by omitting spatial effects or common shocks (or both) from the analysis, leads to a marked deterioration of the empirical model's in-sample explanatory power and out-of-sample forecasting performance.
    Date: 2019–03–21
  8. By: Barrios-Fernandez, Andres
    Abstract: This paper investigates whether the decision to attend university depends on university enrollment of close neighbors. I create a unique dataset combining detailed geographic information and educational records from different public agencies in Chile, and exploit the quasi-random variation generated by the rules that determine eligibility for student loans. I find that close neighbors have a large and significant impact on university enrollment of younger applicants. Potential applicants are around 11 percentage points more likely to attend university if a close neighbor enrolled the year before. This effect is particularly strong in areas with low exposure to university and among individuals who are more likely to interact; the effect decreases both with geographic and social distance and is weaker for individuals who have spent less time in the neighborhood. I also show that the increase in university attendance translates into retention and university completion. These effects are mediated by an increase in applications rather than by an improvement on applicants' academic performance. This set of results suggests that policies that expand access to university generate positive spillovers on close peers of the direct beneficiaries.
    Keywords: neighbors' effects; university access; spatial spillovers
    JEL: I21 R23
    Date: 2019–10
  9. By: Patrick Lehnert; Michael Niederberger; Uschi Backes-Gellner
    Abstract: This paper develops a novel procedure for proxying economic activity across time periods and spatial units, for which other data is not available. In developing this proxy, we apply machine-learning techniques to a unique historical time series of daytime satellite imagery dating back to 1984. Compared to night lights intensity, a satellite-based proxy that economists commonly use, our proxy has the advantages of more precisely predicting economic activity over a longer time series and at smaller regional levels. We demonstrate the proxy's usefulness for the example of Germany, where data on economic activity is otherwise unavailable, in particular for the regions belonging to the former German Democratic Republic. However, our procedure is generalizable to other regions and countries alike, and thus yields great potential for analyzing historical developments, evaluating local policy reforms, and controlling for economic activity at highly disaggregated regional levels in econometric applications.
    JEL: E01 E23 O18 R11 R14
    Date: 2020–03
  10. By: Alhusen, Harm; Bennat, Tatjana; Bizer, Kilian; Cantner, Uwe; Horstmann, Elaine; Kalthaus, Martin; Proeger, Till; Sternberg, Rolf G.; Töpfer, Stefan
    Abstract: The 'doing-using-interacting mode' of innovation (DUI) is considered an important component of innovative activity. It describes informal innovative activities and thus complements the 'science-technology-innovation mode' (STI) based on research and development. While empirical measurement of the STI mode is well established, proxies for measuring DUI activities are still underdeveloped and no consensus has emerged concerning which intra- and extra-firm processes primarily constitute the DUI mode and how they should be measured. Based upon 81 in-depth interviews with German SMEs and regional innovation consultants, we propose a comprehensive set of 47 indicators comprising both established and new DUI processes for future empirical measurement. We argue that this measurement approach can lead to a more holistic understanding and ultimately quantifiable measurement of DUI innovativeness, which can guide further research and policymaking.
    Keywords: DUI,Innovation indicators,learning processes,modes of innovation,STI
    JEL: O3 O30 O31 R10
    Date: 2019

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