nep-geo New Economics Papers
on Economic Geography
Issue of 2020‒04‒27
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Sinking or swimming in the cluster labour pool? A firm-specific analysis of the effect of specialized labour By Nils Grashof
  2. Resilience in the periphery: What an agency perspective can bring to the table By Kurikka, Heli; Grillitsch, Markus
  3. Complementary Inter-Regional Linkages and Smart Specialization: an Empirical Study on European Regions By Pierre-Alexandre Balland; Ron Boschma
  4. The Geography of Connectivity: Trails of Mobile Phone Data By Erlström, Andreas; Grillitsch, Markus; Hall, Ola
  5. Are New Shopping Centers Drivers of Development in Large Metropolitan Suburbs? The Interplay of Agglomeration and Competition Forces. By Mihaescu, Oana; Korpi, Martin; Öner, Özge
  6. Control theory in infinite dimension for the optimal location of economic activity: The role of social welfare function By Boucekkine, R.; Fabbri, G.; Federico, S.; Gozzi, F.
  7. The effects of supporting local business: evidence from the UK By Overman, Henry G.; Einiö, Elias
  8. Entrepreneurship and the fight against poverty in US Cities By Neil Lee; Andres Rodriguez-Pose
  9. Labor Market Polarization and the Great Divergence: Theory and Evidence By Donald R. Davis; Eric Mengus; Tomasz K. Michalski
  10. Economic modelling to evaluate Smart Specialisation: an analysis on research and innovation targets in Southern Europe By Javier Barbero; Olga Diukanova; Carlo Gianelle; Simone Salotti; Artur Santoalha
  11. Organization and geography of global R&D and innovation activities: insights from qualitative research on leading corporate R&D investors By Mafini Dosso; Paulina Ramirez

  1. By: Nils Grashof (Centre for Regional and Innovation Economics, University of Bremen, Germany)
    Abstract: Human resources are a key factor for firm success, particularly nowadays when most industrial economies face an increasing shortage of qualified labour. With their pooled labour markets, regional clusters have been shown to be a preferable location for firms in order to satisfy their demand for skilled employees. Nevertheless, in light of possible disadvantages (e.g. labour poaching) and the broad field of studies dealing with firm performance differentials, the prevalent assumption that all companies profit equally from the specialized labour pool in clusters must be questioned. Consequently, the aim of this paper is to empirically investigate the conditions and mechanisms through which companies located in clusters can gain, in terms of innovativeness, from the specialized labour pool. By synthesizing theoretical streams from the strategic management (e.g. resource-based view) and the economic geography literature (e.g. cluster approach), variables from three different levels of analysis (micro-level, meso-level and macro- level) are examined separately as well as interactively. Apart from revealing that being located in a cluster indeed increases on average firm innovativeness, one of the central findings is that firms benefit unequally within the cluster environment depending on the specific firm-level, cluster-level, industry-/market-level conditions and their respective interactions.
    Keywords: specialized labour pool, cluster, agglomeration, firm performance differentials, innovation
    JEL: C31 J24 L22 O30 R10 R23
    Date: 2020–04–12
  2. By: Kurikka, Heli (Tampere University); Grillitsch, Markus (CIRCLE, Lund University)
    Abstract: In this chapter, we study the relationship between regional economic resilience and agency. Especially since the 2008 recession, regional resilience has raised a lot of interest in economic geography. However, the resilience research has focused mostly on the structural perspective and the role of agency has gained less attention. Intentional and purposeful human actions can have an effect on regional development trajectories especially in a crisis situation. Economic crises typically are critical junctures where a variety of paths are possible and where the choices, strategies, and actions may have a decisive effect on the future. We are interested in the influence of change agency on different kinds of resilience outputs, especially regional adaptability. Different types of change agency play their own roles in constructing regional resilience. Innovative entrepreneurs are transforming or creating new economic activities through the novel combination of knowledge and resources. Institutional entrepreneurs are actors that challenge and transform existing rules and practices or aim at creating new ones. Finally, place-based leaders are co-ordinating and mobilising different actors and resources for the collective pursuit. Constructing regional resilience calls for this ‘trinity of change agency’. We provide empirical illustrations of our arguments from two peripheral Finish regions that went through similar crises but emerged differently from it. Our findings indicate that the interplay of different types of change agency has a significant role in regional processes of adaptation and adaptability of the region.
    Keywords: resilience; adaptability; change agency; periphery; non-core regions; regional development; crisis; regional policy
    JEL: O30 P48 R10 R58
    Date: 2020–04–14
  3. By: Pierre-Alexandre Balland; Ron Boschma
    Abstract: Regional capabilities are regarded a pillar of Smart Specialization Strategy (S3). There is yet little focus in S3 policy on the role of inter-regional linkages. Our study on 292 NUTS2 regions in Europe finds that inter-regional linkages have a positive effect on the probability of regions to diversify, especially in peripheral regions. What matters is not being connected to other regions per se but being connected to regions that provide complementary capabilities. Finally, we propose a new indicator that enables regions to identify other regions as strategic partners in their S3 policy, depending on the presence of complementary capabilities in other regions.
    Keywords: Smart Specialization, relatedness, inter-regional linkages, regional diversification, complementary capabilities
    JEL: O25 O38 R11
    Date: 2020–04
  4. By: Erlström, Andreas (Lund University); Grillitsch, Markus (CIRCLE, Lund University); Hall, Ola (Lund University)
    Abstract: Connectivity between and within places is one of the cornerstones of human geography. However, the data and methodologies used to capture connectivity are limited due to the difficulty in gathering and analysing detailed observations in time and space. Mobile phone data potentially offers a rich and unprecedented source of data, which is exhaustive in time and space closely following movements and partly communication activities of individuals. This paper discusses the state-of-the-art in the analysis of mobile phone data, identifies methodological challenges, elaborates on key findings for geography, and outlines opportunities for future research on the geography of connectivity.
    Keywords: Connectivity; mobile phone data; human mobility; social networks; regional development
    JEL: B40 J60 O18 R12
    Date: 2020–04–14
  5. By: Mihaescu, Oana (HUI Research); Korpi, Martin (The Ratio Institute); Öner, Özge (University of Cambridge)
    Abstract: We investigate to which extent shopping centers drive local economic development by studying how distance to newly established shopping centers affects the performance of incumbent firms, located in the suburbs of the three Swedish major metropolitan areas Stockholm, Gothenburg, and Malmö, 2000-2016. We use a regression setup with around 27,000 firm-year observations and explore the possible heterogeneity imposed on the results from two main elements of spatial economics theory: the size of the new retail area and the distance from the new retail area to the analyzed incumbents. We observe a clear difference in the direction of the effects of large versus small shopping centers. While competition forces are much stronger in the case of the establishment of large shopping centers, yielding a negative 5% on incumbent firm revenue and negative 3% on firm employment, results indicate the opposite pattern for smaller shopping centers; with firm revenue and firm employment increasing 4% and 3%, respectively. Moreover, we also observe that both agglomeration and competition effects attenuate sharply with distance from the new entrant, confirming one of the central premises of retail location theory. Finally, we observe that the geographical scope of the effects is much wider in the case of larger shopping centers, with estimates becoming statistically insignificant at about 9-10 km from the new entry, as compared to 3-4 km in the case of smaller retail centers.
    Keywords: Shopping centers; firm performance; retail location; agglomeration effects; competition; attenuation of effects
    JEL: D22 L25 P25 R11 R12
    Date: 2020–04–14
  6. By: Boucekkine, R.; Fabbri, G.; Federico, S.; Gozzi, F.
    Abstract: In this paper, we consider an abstract optimal control problem with state constraint. The methodology relies on the employment of the classical dynamic programming tool considered in the infinite dimensional context. We are able to identify a closed-form solution to the induced Hamilton-Jacobi-Bellman (HJB) equation in infinite dimension and to prove a verification theorem, also providing the optimal control in closed loop form. The abstract problem can be seen an abstract formulation of a PDE optimal control problem and is motivated by an economic application in the context of continuous spatiotemporal growth models with capital di usion, where a social planner chooses the optimal location of economic activity across space by maximization of an utilitarian social welfare function. From the economic point of view, we generalize previous works by considering a continuum of social welfare functions ranging from Benthamite to Millian functions. We prove that the Benthamite case is the unique case for which the optimal stationary detrended consumption spatial distribution is uniform. Interestingly enough, we also find that as the social welfare function gets closer to the Millian case, the optimal spatiotemporal dynamics amplify the typical neoclassical dilution population size effect, even in the long-run.
    JEL: R10 O40 C61
    Date: 2020
  7. By: Overman, Henry G.; Einiö, Elias
    Abstract: This paper assesses the effects of a significant place-based intervention that targeted local businesses in deprived areas in the UK. To gain identification, we use data at a fine spatial scale and a regression discontinuity design exploiting the eligibility deprivation rank rule based on a pre-determined deprivation index. We detect no overall effects on employment in treated areas but find a significant displacement of employment from nearby untreated areas, corresponding to around 10% of local employment. The results suggest that indirect displacement effects may substantially weaken the ability of local support programmes targeting the non-tradable sector to reduce economic inequality.
    Keywords: employment; business support; local growth; programme evaluation; displacement; regression discontinuity; ES/J021342/1; ES/G005966/1
    JEL: R11 H25 J20 O40
    Date: 2020–03–03
  8. By: Neil Lee; Andres Rodriguez-Pose
    Abstract: Entrepreneurship is sometimes portrayed as a cure-all solution for poverty reduction. Proponents argue it leads to job creation, higher incomes, and lower poverty rates in the cities in which it occurs. Others, by contrast, posit that many entrepreneurs are actually creating low-productivity firms serving local markets. Yet, despite this debate, little research has considered the impact of entrepreneurship on poverty in cities. This paper addresses this gap using a panel of US cities for the period between 2005 and 2015. We hypothesise that the impact of entrepreneurship depends on whether it occurs in tradeable sectors – and, therefore, is more likely to have positive local multiplier effects – or non-tradable sectors, which may saturate local markets. We find that entrepreneurship in tradeables reduces poverty and increases incomes for non-entrepreneurs. The result is confirmed using an instrumental variable approach, employing the inheritance of entrepreneurial traits as an instrument. In contrast, while there are some economic benefits from non-tradeable entrepreneurship, we find these are not large enough to reduce poverty.
    Keywords: Entrepreneurship, Poverty, Cities, Economic Development, USA
    JEL: M13 J21 J31 O18 R11
    Date: 2020–04
  9. By: Donald R. Davis; Eric Mengus; Tomasz K. Michalski
    Abstract: In recent decades, middle-paid jobs have declined, replaced by a mix of high and low-paid jobs. This is labor market polarization. At the same time, initially skilled and typically larger cities have become even more skilled relative to initially less skilled and typically smaller cities. This is the great divergence. We develop a theory that links these two phenomena. We draw on existing models of polarization and heterogeneous labor in spatial equilibrium, adding to these a sharper interaction of individual- and city-level comparative advantage. We then confront the predictions of the theory with detailed data on occupational growth for a sample of 117 French cities. We find, consistent with our theory, that middle-paid jobs decline most sharply in larger cities; that these lost jobs are replaced two-to-one by high-paid jobs in the largest cities and two-to-one by low-paid jobs in the smallest cities; and that the lost middle-paid jobs are concentrated in an upper tier in the large cities and a lower tier in the smaller cities.
    JEL: J21 R12 R13
    Date: 2020–04
  10. By: Javier Barbero (European Commission - JRC); Olga Diukanova (European Commission - JRC); Carlo Gianelle (European Commission - JRC); Simone Salotti (European Commission - JRC); Artur Santoalha (TIK Centre for Technology, Innovation and culture - UIO)
    Abstract: We make the case for a technology-enabled approach to Smart Specialisation policy making in order to foster its effectiveness by proposing a novel type of economic impact assessment. We use the RHOMOLO model to gauge empirically the general equilibrium effects implied by the Smart Specialisation logic of intervention as foreseen by the policy makers designing and implementing the European Cohesion policy. More specifically, we simulate the macroeconomic effects of achieving the R&D personnel targets planned by a set of Southern European regions. We discuss the implications of the proposed methodology for future assessments of Smart Specialisation.
    Keywords: Rhomolo, Region, Growth, Smart Specialisation; ex-ante policy impact assessment; CGE models; Cohesion policy.
    JEL: C68 O38 R13 R58
    Date: 2020–04
  11. By: Mafini Dosso (European Commission - JRC); Paulina Ramirez
    Abstract: This study examines the on-going structural changes in the international organisation of corporate R&D and innovative (RDI) activities. Insights are mainly drawn from interviews made to innovation representatives and managers of large R&D-investing companies in 2017 in the frame of the European Commission’s project – Industrial Research and Innovation Monitoring and Analysis –. The research intends to complement the quantitative evidence available in the project on the worldwide leading corporate R&D investors in order to better characterize the on-going fragmentation of R&D and innovation activities. The study suggests directions for mapping innovation value chains beyond research and inventive activities and carries out important conceptual and policy implications for the configurations and sustainability of innovation systems in Europe.
    Keywords: R&D and innovation value chains, MNEs, top R&D investors, interviews, qualitative research
    Date: 2020–04

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