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on Economic Geography |
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Issue of 2020‒05‒11
thirteen papers chosen by Andreas Koch Institut für Angewandte Wirtschaftsforschung |
| By: | Hsu, Wen-Tai (School of Economics, Singapore Management University); Lu, Yi (Tsinghua University); Luo, Xuan (INSEAD); Zhu, Lianming (Osaka University) |
| Abstract: | This paper studies the effect of foreign direct investment (FDI) on industrial ag-glomeration. Using the differential effects of FDI deregulation in 2002 in China on different industries, we find that FDI actually affects industrial agglomeration neg-atively. As FDI brings technological spillovers and various agglomeration benefits, other forces must be at work to drive our empirical finding. We propose a simple theory that FDI may discourage industrial agglomeration due to fiercer competition pressure. We find various evidence on this competition mechanism. We also examine an alternative theory based on spatial political competition, but find no evidence sup-porting it. On industrial growth, we find that FDI deregulation is conducive, but the dispersion induced by FDI deregulation reduces the positive effect of FDI on growth rate by 16 to 19%. |
| Keywords: | FDI; deregulation; industrial agglomeration; competition; industrial growth; WTO; China |
| Date: | 2020–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ris:smuesw:2020_011&r=all |
| By: | David Krisztián Nagy |
| Abstract: | I study how geography shaped city formation and aggregate development in the United States prior to the Civil War. To guide my analysis, I first present a conjecture that cities'farm hinterlands fostered both city development and aggregate growth: the hinterland hypothesis. The hinterland hypothesis has rich implications on how various elements of U.S. geography - railroads, changes in U.S. political borders, increasing U.S. population, and international trade - affected city formation and U.S. growth. To quantitatively evaluate the hinterland hypothesis and its implications, I assemble a novel historical dataset on population, trading routes and agricultural productivity at a high spatial resolution, and combine it with a dynamic quantitative model of economic geography. I find evidence for the hinterland hypothesis by showing that the model can quantitatively replicate the key patterns of U.S. urbanization and city formation. Finally, I conduct a series of counterfactuals in the model to quantify the effect of geography on cities and growth, guided by the implications of the hinterland hypothesis. Results indicate that railroads were responsible for 8.2% of urban population in 1860 and for 27% of real GDP growth between 1830 and 1860. The effect of international trade was similar in magnitude, while population growth slowed down urbanization and GDP growth. The effect of political border changes was small during the period. |
| Keywords: | quantitative economic geography, economic growth and development, city formation, transport infrastructure |
| JEL: | O14 O18 O51 R12 R13 |
| Date: | 2020–02 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1717&r=all |
| By: | Hooijen, Inge (RS: GSBE Theme Learning and Work); Bijlsma, Ineke (RS: GSBE other - not theme-related research, ROA / Dynamics of the labour market); Cörvers, Frank (RS: GSBE Theme Learning and Work, RS: SBE - MACIMIDE, ROA / Human capital in the region, RS: FdR Institute ITEM); Poulissen, Davey (RS: GSBE other - not theme-related research, ROA / Training and employment) |
| Abstract: | There is ample evidence from different research disciplines that location factors such as employment opportunities or the availability of amenities and facilities are a powerful predictor of settlement behaviour. Recent research suggests that citizens’ mean personality traits could be an additional predictor of where young people settle. We therefore explore 1) the extent to which recent graduates in the Netherlands are geographically clustered with respect to five different personality traits, 2) whether the geographical clustering of graduates is intensified as they grow older, 3) how regional environmental characteristics are related to personality traits, and 4) the extent to which personality traits play a role in graduates’ location choices. Our results reveal a distinct geographical clustering of personality traits among the different regions in the Netherlands. We also show that this geographical clustering becomes more blurred as graduates age. The results furthermore show robust associations between personality traits and several environmental characteristics with respect to demographic, economic, health, political, sociocultural, crime, and religious outcomes. In addition, we show that personality traits play a role in graduates’ location choices. Economic factors seem to have a larger impact in determining location choices than personality traits. |
| JEL: | J61 R23 D91 |
| Date: | 2020–02–17 |
| URL: | http://d.repec.org/n?u=RePEc:unm:umagsb:2020003&r=all |
| By: | Iammarino, Simona; Rodríguez-Pose, Andrés; Storper, Michael |
| Abstract: | Regional economic divergence has become a threat to economic progress, social cohesion and political stability in Europe. Market processes and policies that are supposed to spread prosperity and opportunity are no longer sufficiently effective. The evidence points to the existence of several different modes of regional economic performance in Europe, responding to different development challenges and opportunities. Both mainstream and heterodox theories have gaps in their ability to explain the existence of these different regional trajectories and the weakness of the convergence processes among them. Therefore, a different approach is required, one that strengthens Europe’s strongest regions but develops new approaches to promote opportunity in industrial declining and less-developed regions. There is ample new theory and evidence to support such an approach, which we have labelled ‘place-sensitive distributed development policy’. |
| Keywords: | Regions; inequality; economic divergence; place-sensitive development; European Union |
| JEL: | R11 R12 R58 |
| Date: | 2019–03–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:87491&r=all |
| By: | Rolf Bergs |
| Abstract: | Power law distributions characterise several natural and social phenomena. The Zipf law for cities is one of those. The study views the question of whether that global regularity is independent of different spatial distributions of cities. For that purpose, a typical Zipfian rank-size distribution of cities is generated with random numbers. This distribution is then cast into different settings of spatial coordinates. For the estimation, the variables rank and size are supplemented by spatial spillover effects in a standard spatial econometric approach. Results suggest that distance and contiguity effects matter. This finding is further corroborated by three country analyses. |
| Date: | 2020–05 |
| URL: | http://d.repec.org/n?u=RePEc:arx:papers:2005.02836&r=all |
| By: | Henriette Ruhrmann (Technical University of Berlin); Michael Fritsch (Friedrich Schiller University Jena, Faculty of Economics); Loet Leydesdorff (Amsterdam School of Communication Research (ASCoR), University of Amsterdam) |
| Abstract: | Employing a quantitative, data-driven tool - the Triple Helix Indicator - to microdata of firms in Germany, we develop an evidence base for innovation-policy strategies. We aim to answer the question which level of government (local, regional, national) might be most effective for strategic innovation policy-making based on smart specialization in Germany. The empirical results show that the country is decentralized to the extent that it cannot be considered a "national" innovation system. More than two-thirds of innovation-system synergy is generated at the lower levels of districts (NUTS3) and Governmental Regions (NUTS2). In high-tech and medium-tech manufacturing, former East and West Germany, as well as North and South Germany, can be considered separate sub-national innovation systems. These findings strengthen the case for region- and context-specific innovation policies. The results illustrate the value of the Triple Helix Indicator for systematic regional mapping and serve as evidence for policy-makers to expand RIS3 policy strategies to the regional and local level in Germany. |
| Keywords: | Innovation systems, Triple Helix, Germany, Redundancy, Synergy |
| JEL: | O30 R11 O38 O52 |
| Date: | 2020–04–22 |
| URL: | http://d.repec.org/n?u=RePEc:jrp:jrpwrp:2020-007&r=all |
| By: | Klaus Desmet; Robert E. Kopp; Scott A. Kulp; David Krisztián Nagy; Michael Oppenheimer; Esteban Rossi-Hansberg; Benjamin H. Strauss |
| Abstract: | Sea-level rise and ensuing permanent coastal inundation will cause spatial shifts in population and economic activity over the next 200 years. Using a highly spatially disaggregated, dynamic model of the world economy that accounts for the dynamics of migration, trade, and innovation, this paper estimates the consequences of probabilistic projections of local sea-level changes under different emissions scenarios. Under an intermediate greenhouse gas concentration trajectory, permanent flooding is projected to reduce global real GDP by an average of 0.19% in present value terms, with welfare declining by 0.24% as people move to places with less attractive amenities. By the year 2200 a projected 1.46% of world population will be displaced. Losses in many coastal localities are more than an order of magnitude larger, with some low-lying urban areas particularly hard hit. When ignoring the dynamic economic adaptation of investment and migration to flooding, the loss in real GDP in 2200 increases from 0.11% to 4.5%. This shows the importance of including dynamic adaptation in future loss models. |
| Keywords: | quantitative economic geography, economic growth and development, climate change |
| JEL: | Q54 R11 R12 R13 |
| Date: | 2019–09 |
| URL: | http://d.repec.org/n?u=RePEc:upf:upfgen:1709&r=all |
| By: | Wang, Hao; Fidrmuc, Jan; Luo, Qi |
| Abstract: | When investigating the relationship between inward FDI and rural-urban inequality, previous studies overlook the inter-regional interactions. Building on the literature that highlights the significant role of rural-urban migration in inequality, this article investigates spatial spillover effect of inward FDI on the rural-urban wage inequality by utilizing the Spatial Durbin Model (SDM) both in the short run and long run. In particular, we carefully consider the heterogeneity of inward FDI and categorize it with respect to entry modes and sectoral distribution. On the basis of a panel dataset covering 30 provinces in China from 2000 to 2016, our results show that overall the inward FDI should not be blamed for the exacerbation of rural-urban wage inequality. We do not find significant relationship between inward FDI in secondary and tertiary sector while the FDI in primary sector has a slight negative effect. When we separate the FDI according to entry modes, we find that WFE is shown to have a negative effect on the rural-urban wage inequality and this effect is more pronounced in the long run when we conduct a period average estimation. This change also similarly applies to the equity joint ventures. |
| Keywords: | Spatial spillovers,foreign direct investment,rural-urban wage inequality,SDM |
| JEL: | C21 F21 O19 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:zbw:glodps:522&r=all |
| By: | Rodríguez-Pose, Andrés |
| Abstract: | Regions and cities face unceasing pressures to adapt in response to processes of globalization, changes in industrial production, and new patterns of migration and trade. At the same time, the dominant development policies are proving less than capable of providing answers to these challenges. Strategies based on a mix of physical and human capital and technology have not succeeded in dealing with growing territorial inequality and its treacherous economic, social and political consequences. There is thus an urgent need to understand why territorial divergence occurs and why there is what seems to be a growing decline in the returns of public intervention targeting economic development. In the search for answers, scholars have turned to the examination of institutions. But despite progress in our grasp of how institutions affect development, crucial knowledge gaps remain. This paper reviews recent progress in our understanding of the role of institutions for development, unveils the most important gaps, and proposes a series of avenues to improve how a better understanding of how institutions shape regional and urban development can lead to more efficient development policies. |
| Keywords: | institutions; government quality; public policies; regions; cities |
| JEL: | R14 J01 N0 |
| Date: | 2020–03–24 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:103831&r=all |
| By: | Michael Irlacher; Michael Koch |
| Abstract: | We use the most recent wave of the German Qualifications and Career Survey and reveal a substantial wage premium in a Mincer regression for workers performing their job from home. The premium persists within narrowly defined jobs and after controlling for workplace activities and accounts to more then 10%. In a next step, we provide evidence on substantial regional variation in the share of jobs that can be done from home across NUTS2 districts in Germany. Our results suggest that the COVID-19 crisis might affect already poorer regions more heavily as a lower share of workers can work from home there. Hence, looking at regional disparities in terms of different types of occupations is central for policy makers in choosing the right economic policies to mitigate the consequences of the crisis. |
| Keywords: | working from home, COVID-19, regional disparities, home office, BIBB-BAuA |
| JEL: | J31 J22 J61 R10 |
| Date: | 2020 |
| URL: | http://d.repec.org/n?u=RePEc:ces:ceswps:_8232&r=all |
| By: | Girum Abebe (EDRI, Ethiopia); Margaret McMillan (Tufts; NBER; IFPRI); Michel Serafinelli (University of Essex; IZA; CReAM; Rimini Centre for Economic Analysis) |
| Abstract: | We use a plant level survey to identify interactions between domestic plants and foreign direct investment (FDI) in Ethiopia's manufacturing sector. One third of Ethiopian plants are linked to FDI through labor sharing, supply chains and competition. Technology upgrading most commonly occurs as a result of competition in output markets and observation and imitation of FDI in the same line of business. Other benefits include enhanced managerial practices and knowledge about exporting. Spillovers from FDI are identified by comparing changes in total factor productivity (TFP) among domestic plants in districts where a large greenfield foreign plant produces and districts where FDI in the same industry and around the same time was licensed but not yet operational. Over the four years starting with the year of the FDI opening, the TFP of domestic plants is 11 percent higher in treated districts, employment in domestic plants increases and more domestic plants open. |
| Keywords: | Foreign Direct Investment, productivity, localized knowledge spillovers, plant-to-plant labor mobility |
| JEL: | F21 R10 D24 |
| URL: | http://d.repec.org/n?u=RePEc:rim:rimwps:20-14&r=all |
| By: | Jean Flemming |
| Abstract: | Even though workers in the UK spent just 1,000 pounds on commuting in 2017, the economic loss may be far higher because of the congestion externality arising from the way in which one worker's commute affects the commuting time of others. I provide empirical evidence that commuting time affects job acceptance, pointing to large indirect costs of congestion. To interpret the empirical facts and quantify the costs of congestion, I build a model featuring a frictional labor market within a metropolitan area. By endogenizing commuting congestion in a labor search model, the model connects labor market responses to urban policies. Workers evaluate job offers based on their productivity and commuting costs, taking congestion as given, but by accepting and commuting to distant jobs, affect other workers' labor market outcomes. Through this mechanism, equilibrium moving decisions, housing rent, and wages are tightly linked to congestion. Calibrating the model to the local labor market around London, I show that the effect of the congestion externality is to significantly decrease welfare and increase wage inequality. I quantify the effects of a congestion tax on labor market outcomes, and show that the welfare-maximizing tax has substantial negative effects on inequality, but comes at a cost of higher unemployment. |
| Keywords: | Job search; Wage distribution; Congestion externality; Commuting |
| JEL: | E24 J32 J62 R13 R41 |
| Date: | 2020–03–27 |
| URL: | http://d.repec.org/n?u=RePEc:fip:fedgfe:2020-25&r=all |
| By: | Kocornik-Mina, Adriana; McDermott, Thomas K.J.; Michaels, Guy; Rauch, Ferdinand |
| Abstract: | Does economic activity relocate away from areas that are at high risk of recurring shocks? We examine this question in the context of floods, which are among the costliest and most common natural disasters. Over the past thirty years, floods worldwide killed more than 500,000 people and displaced over 650,000,000 people. This paper analyzes the effect of large scale floods, which displaced at least 100,000 people each, in over 1,800 cities in 40 countries, from 2003-2008. We conduct our analysis using spatially detailed inundation maps and night lights data spanning the globe’s urban areas, which we use to measure local economic activity. We find that low elevation areas are about 3-4 times more likely to be hit by large floods than other areas, and yet they concentrate more economic activity per square kilometer. When cities are hit by large floods, these low elevation areas also sustain damage, but like the rest of the flooded cities they recover rapidly, and economic activity does not move to safer areas. Only in more recently populated urban areas, flooded areas show a larger and more persistent decline in economic activity. Our findings have important policy implications for aid, development and urban planning in a world with rapid urbanization and rising sea levels. |
| Keywords: | Urbanization; Flooding; Climate change; Urban recovery |
| JEL: | O18 Q54 R11 R58 |
| Date: | 2020–04–01 |
| URL: | http://d.repec.org/n?u=RePEc:ehl:lserod:100031&r=all |