nep-geo New Economics Papers
on Economic Geography
Issue of 2020‒04‒06
ten papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Regional Income Disparities and Convergence Clubs in Indonesia: New District-Level Evidence 2000-2017 By Aginta, Harry; Gunawan, Anang Budi; Mendez, Carlos
  2. Network dependence in multi-indexed data on international trade flows By LeSage, James P.; Fischer, Manfred M.
  3. Measure twice, cut once : entrepreneurial ecosystem metrics By J. Leendertse; M.T. Schrijvers; F.C. Stam
  4. RIOTs in Germany - constructing an interregional input-output table for Germany By Krebs, Oliver
  5. The economic impact of universities: evidence from across the globe By Valero, Anna; Van Reenen, John
  6. How to Attract Highly Skilled Migrants into The Russian Regions By Vera Barinova; Sylvie Rochhia; Stepan Zemtsov
  7. Housing supply elasticity and growth: evidence from Italian cities By Antonio Accetturo; Andrea Lamorgese; Sauro Mocetti; Dario Pellegrino
  8. A Freeway to Prosperity? Evidence from Calabria, South of Italy By Emanuele Ciani; Guido de Blasio; Samuele Poy
  9. Measuring spatial price differentials: A comparison of stochastic index number methods By Weinand, Sebastian
  10. Determinants of Global Value Chain Participation : Cross-Country Evidence By Fernandes,Ana Margarida; Kee,Hiau Looi; Winkler,Deborah Elisabeth

  1. By: Aginta, Harry; Gunawan, Anang Budi; Mendez, Carlos
    Abstract: Reducing regional income disparities is a central challenge for promoting sustainable development in Indonesia. In particular, the prospect for these disparities to be reduced in the post-decentralization period has become a major concern for policymakers in Indonesia. Motivated by this background, this paper re-examines the regional convergence hypothesis at the district level in Indonesia over the 2000-2017 period. Using a novel data set, this study investigates the formation of multiple convergence clubs using non-linear dynamic factor model. The results indicate that Indonesian districts form five convergence clubs, implying that the growth of income per capita in 514 districts can be clustered into five common trends. From the lens of spatial distribution, two common occasions can be observed. First, districts belonging to the the same province tend be in the same club and second, the highest club is dominated by districts with specific characteristic (i.e., big cities or natural resources rich regions). From a policy standpoint, the identification of multiple convergence clubs at significantly different levels of income allows regional policy makers to identify districts facing similar challenges.
    Keywords: regional income inequality, convergence, districts, Indonesia
    JEL: O40 O47 R10 R11
    Date: 2020–03
  2. By: LeSage, James P.; Fischer, Manfred M.
    Abstract: In this paper, we introduce a model of trade flows between countries over time that allows for network dependence in flows, based on sociocultural connectivity structures. We show that conventional multidimensional fixed effects model specifications exhibit cross-sectional dependence between countries that should be modeled to avoid simultaneity bias. Given that the source of network interaction is unknown, we propose a panel gravity model that examines multiple network interaction structures, using Bayesian model probabilities to determine those most consistent with the sample data. This is accomplished with the use of computationally efficient Markov Chain Monte Carlo estimation methods that produce a Monte Carlo integration estimate of the log-marginal likelihood that can be used for model comparison. Application of the model to a panel of trade flows points to network spillover effects, suggesting the presence of network dependence and biased estimates from conventional trade flow specifications. The most important sources of network dependence were found to be membership in trade organizations, historical colonial ties, common currency, and spatial proximity of countries.
    Keywords: origin-destination panel data ows, cross-sectional dependence, MCMC estimation, log-marginal likelihood, gravity models of trade, sociocultural distance
    Date: 2020–03–30
  3. By: J. Leendertse; M.T. Schrijvers; F.C. Stam
    Abstract: An entrepreneurial ecosystem comprises a set of interdependent actors and factors that are governed in such a way that they enable productive entrepreneurship within a particular territory. While the entrepreneurial ecosystem approach is useful to think about regional economies, it currently lacks full-fledged metrics to enable policy. In this paper, we bridge this gap by quantifying and qualifying regional economies using the entrepreneurial ecosystem approach. We operationalize ten elements of entrepreneurial ecosystems for 274 regions in the 28 countries of the European Union. The ecosystem elements show strong and positive correlations between them, confirming the systemic nature of entrepreneurial economies, and the need for a complex systems perspective. Our results show that formal institutions and physical infrastructure take a central position in the interdependence web, providing a first indication of these elements as fundamental conditions of entrepreneurial ecosystems. We then use the elements to calculate an index that measures the quality of entrepreneurial ecosystems. This index is robust and performs well in regressions to predict entrepreneurial output, which we measure using novel data on productive entrepreneurship
    Keywords: entrepreneurial ecosystem, regional dynamics, entrepreneurship, economic development, economic policy, entrepreneurship policy
    Date: 2020–02
  4. By: Krebs, Oliver
    Abstract: This paper shows how to adapt recent methodological advances to derive a shipment based interregional input output table for 402 German counties and 26 foreign partners for 17 sectors that is, for national aggregates, cell-by-cell compatible with the WIOD tables. It far outperforms the standard approach of applying unit values to interregional shipments in replicating observed regional statistics and can be used for improved impact analysis and CGE model calibration. It thereby mitigates the surprising but problematic lack of regional German trade data in the analysis of both, regional effects of aggregate shocks such as trade agreements as well as network effects of regional policies. Moreover, the paper takes an in-depth look at the derived German production structure and trade network at the county level finding a surprisingly vast heterogeneity with respect to specialization, agglomeration and trade partners.
    Keywords: Germany,regional trade,input-output tables,unit values,proportionality
    JEL: R15 R12 F17
    Date: 2020
  5. By: Valero, Anna; Van Reenen, John
    Abstract: We develop a new dataset using UNESCO source materials on the location of nearly 15,000 universities in about 1,500 regions across 78 countries, some dating back to the 11th Century. We estimate fixed effects models at the sub-national level between 1950 and 2010 and find that increases in the number of universities are positively associated with future growth of GDP per capita (and this relationship is robust to controlling for a host of observables, as well as unobserved regional trends). Our estimates imply that a 10% increase in a region's number of universities per capita is associated with 0.4% higher future GDP per capita in that region. Furthermore, there appear to be positive spillover effects from universities to geographically close neighbouring regions. We show that the relationship between GDP per capital and universities is not simply driven by the direct expenditures of the university, its staff and students. Part of the effect of universities on growth is mediated through an increased s
    Keywords: universities; growth; human capital; innovation; ES/M010341/1
    JEL: I23 J24 O10 O31
    Date: 2018–09–14
  6. By: Vera Barinova (RANEPA University); Sylvie Rochhia (Université Côte d'Azur, France; GREDEG CNRS); Stepan Zemtsov (RANEPA University)
    Abstract: In this work, we examine the factors and patterns of attracting highly skilled migrants by the Russian regions. Attracting such specialists is particularly relevant for large developing countries with territories actively losing qualified personnel, and, accordingly, opportunities for long-term development. The results of an econometric study show that there are a number of objective factors that are poorly modifiable but have a significant positive effect on staff recruitment: the demographic potential of neighbouring regions, the size of accessible markets, and the natural comfort of living. Adverse socio-economic conditions in the region, such as high unemployment, negatively affect the possibility of emigration. However, there are factors that the regional authorities and the federal government are able to influence in the medium term. One of the most important determinants remains the income of highly qualified specialists and the availability of housing. Highly qualified specialists also strive to move to regions with a high level of education and a good healthcare system. The creation of favourable conditions for entrepreneurship has a positive effect on attracting active migrants, providing opportunities for new firms' establishments. As recommendations for regional policy, in particular, attracting highly qualified specialists to the Russian rare-populated Far East, efforts are needed to develop rental housing and zero-interest mortgages, create high-performance jobs, especially in education, science and medicine, as well as general improvement of institutional conditions for conducting business.
    Keywords: Russian regions, migration, gravity model, market access, institutions, human development index, regional policy, high-tech sector
    JEL: P23 J61 P36 R23
    Date: 2020–03
  7. By: Antonio Accetturo (Banca d'Italia); Andrea Lamorgese (Banca d'Italia); Sauro Mocetti (Banca d'Italia); Dario Pellegrino (Banca d'Italia)
    Abstract: The paper examines the impact of housing supply elasticity on urban development. Using data for a sample of around one hundred Italian main cities observed over 40 years, we first estimate housing supply elasticities at the city level. Second, we show that differences in the elasticity of housing supply may determine the extent to which a demand shock translates into more intense employment growth or more expensive houses. To address endogeneity of housing supply elasticity, we exploit a synthetic measure of physical constraints to residential development as an instrumental variable. We find that an exogenous increase in labour demand determines a rise in employment and housing prices; however, in cities with a less elastic housing supply the impact on economic growth is significantly lessened while the effects on house prices are greater.
    Keywords: housing supply elasticity, city growth, house prices, physical constraints
    JEL: R11
    Date: 2020–03
  8. By: Emanuele Ciani; Guido de Blasio; Samuele Poy
    Abstract: This paper investigates the impact of the freeway “Salerno-Reggio Calabria” on long-term local economic development. Built between 1962 and 1974, the freeway connected the southernmost region of the Italian peninsula (Calabria) to the national highway network. According to the original plan, the freeway could have been built along three different routes. The final choice was mostly influenced by powerful politicians who lobbied in favor of the path crossing their constituency (the town of Cosenza). In a dif-in-dif framework, we compare the growth of “inconsequentially” treated municipalities – traversed only because they lie on the route connecting Cosenza – with the one of municipalities on the two discarded paths. Our results suggest that the freeway caused a significant reorganization of both economic activity and population from untreated to treated locations. At the same time, the infrastructure does not seem to have helped the convergence of the overall region
    Keywords: highways, transport infrastructure, local development
    JEL: H54 R12 R42
    Date: 2020–02
  9. By: Weinand, Sebastian
    Abstract: Spatial price comparisons rely to a high degree on the quality of the underlying price data that are collected within or across countries. Below the basic heading level, these price data often exhibit large gaps. Therefore, stochastic index number methods like the CPDmethod and the GEKS method are utilised for the aggregation of the price data into higher-level indices. Although the two index number methods produce differing price level estimates when prices are missing, the present paper demonstrates that both can be derived from exactly the same stochastic model. In addition, for a specific case of missing prices, it is shown that the formula underlying these price level estimates differs between the CPD method and the GEKS method only with respect to the weighting pattern applied. Lastly, the impact of missing prices on the efficiency of the price level estimates is analysed in two simulation studies. It can be shown that the CPD method slightly outperforms the GEKS method. Using price data of Germany's Consumer Price Index, it can be observed that more narrowly defined products lead to efficiency gains in the estimation.
    Keywords: Spatial price comparisons,below basic heading,multilateral index number methods,CPD method,GEKS method,product definition
    JEL: C43 E31 R10
    Date: 2020
  10. By: Fernandes,Ana Margarida; Kee,Hiau Looi; Winkler,Deborah Elisabeth
    Abstract: The past decades witnessed big changes in international trade with the rise of global value chains. Some countries, such as China, Poland, and Vietnam, rode the tide, while other countries, many in the Africa region, faltered. This paper studies the determinants of participation in global value chains, based on empirical evidence from a panel data set covering more than 100 countries over the past three decades. The evidence shows that factor endowments, geography, political stability, liberal trade policies, foreign direct investment inflows, and domestic industrial capacity are very important in determining participation in global value chains. These factors affect participation in global value chains more than traditional exports.
    Date: 2020–03–26

This nep-geo issue is ©2020 by Andreas Koch. It is provided as is without any express or implied warranty. It may be freely redistributed in whole or in part for any purpose. If distributed in part, please include this notice.
General information on the NEP project can be found at For comments please write to the director of NEP, Marco Novarese at <>. Put “NEP” in the subject, otherwise your mail may be rejected.
NEP’s infrastructure is sponsored by the School of Economics and Finance of Massey University in New Zealand.