nep-geo New Economics Papers
on Economic Geography
Issue of 2020‒08‒24
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. The geography of innovation and development: global spread and local hotspots By Crescenzi, Riccardo; Iammarino, Simona; Ioramashvili, Carolin; Rodríguez-Pose, Andrés; Storper, Michael
  2. Distance (Still) Hampers Diffusion of Innovations By Georg von Graevenitz; Stuart J. H. Graham; Amanda Myers
  3. Explaining the dynamics of relatedness: the role of co-location and complexity By Sándor Juhasz; Tom Broekel; Ron Boschma
  4. Smart Specialization Strategy: any relatedness between theory and practice? By E. Marrocu; R. Paci; D. Rigby; S. Usai
  5. Innovation in risky markets: ownership and location advantages in the UK regions By Gagliardi, Luisa; Iammarino, Simona
  6. How happy are my neighbours? Modelling spatial spillover effects of well-being By Thanasis Ziogas; Dimitris Ballas; Sierdjan Koster; Arjen Edzes
  7. Spatial diffusion of local economic shocks in social networks: evidence from the US fracking boom By Diemer, Andreas
  8. Spanish regions in Global Value Chains: How important? How different? By Elvira Prades-Illanes; Patrocinio Tello-Casas
  9. The Geography of Technology Legitimation. How multi-scalar legitimation processes matter for path creation in emerging industries By Jonas Heiberg; Christian Binz; Bernhard Truffer
  10. Taxing Billionaires: Estate Taxes and the Geographical Location of the Ultra-Wealthy By Moretti, Enrico; Wilson, Daniel J
  11. Fiscalité locale et dynamique d'emploi des territoires : analyse empirique sur les communes françaises (Version preprint) A paraitre dans la Revue d'Economie Régionale et urbaine, 2021 By Matthieu Chtioui Cepn; Nadine Levratto

  1. By: Crescenzi, Riccardo; Iammarino, Simona; Ioramashvili, Carolin; Rodríguez-Pose, Andrés; Storper, Michael
    Abstract: Through successive industrial revolutions, the geography of innovation around the globe has changed radically, and with it the geography of wealth creation and prosperity. Since the Third Industrial Revolution, high incomes are increasingly metropolitan, leading to a renewal of inter-regional divergence within countries. These metropolitan areas are also hotbeds of innovation. At the same time, global networks for the production and delivery of goods and services have expanded greatly in recent decades. The globalization of production is mirrored in the globalization of innovation. The paper argues that the emerging geography of innovation can be characterised as a globalized hub-to-hub system, rather than a geography of overall spread of innovation and illustrates these trends using patent data. Although much attention has been given to explaining the rise and growth of innovation clusters, there is as yet no unified framework for the micro-foundations of the agglomeration and dispersion of innovation. In addition, there appear to be strong links between growing geographical inequality of innovation and prosperity, particularly within countries. This is particularly relevant in the context of declining overall research productivity, which could be driving growing geographical concentration. All in all, there is a rich agenda for continuing to investigate the relationship between the geography of innovation, economic development and income distribution.
    Keywords: geography of innovation; clusters; networks; inequality
    JEL: O33 R12
    Date: 2020–06
  2. By: Georg von Graevenitz (Queen Mary University London, School of Business and Management); Stuart J. H. Graham (Georgina Institute of Technology); Amanda Myers (United States Patent & Trademark Office)
    Abstract: This paper introduces a new innovation data source to re-examine how spatial distance affects the diffusion of ideas and innovations in an economy. We exploit the descriptions of products and services contained in U.S. trademark registrations during 1980-2012 to identify terms (tokens) not previously used by firms to describe products and services. From these we select tokens frequently re-used by follower firms. By linking the new tokens to the business addresses of innovator and follower firms, our data encompass all instances in which innovations captured by trademark tokens arise within and diffuse across the United States. We aggregate innovations at the year and ZIP code level and estimate Poisson models of the likelihood and intensity of diffusion between locations. After endogenising the creation of new diffusion links between ZIP codes, our results show that spatial distance no longer affects the creation of diffusion links within the US after 1996. However, contingent on previous diffusion from a sending to a receiving ZIP code, we find persistent, strong and negative effects of greater spatial distance on the intensity (extent) of diffusion for existing transfer links between locations within the US.
    Keywords: Innovation, Diffusion, Rate of Diffusion, Distance, Innovation Index, Trademarks, Patents
    JEL: O3 O51 R1 R32
    Date: 2019–08–01
  3. By: Sándor Juhasz; Tom Broekel; Ron Boschma
    Abstract: Relatedness has become a key concept for studying the diversification of firms, regions, and countries. However, studies tend to treat relatedness as being time-invariant or, alternatively, consider its evolution as exogenously given. This study argues that relatedness is inherently dynamic and endogenous to technological and economic developments. Using patent data, we test the extent to which relatedness between technologies developed along co-location and differences in technological complexity in the period 1980-2010. Our results show that co-located technologies are more likely to become related over time. Moreover, our results suggest that co-location and complexity of technologies are conducive to the intensification of relatedness over time.
    Keywords: co-agglomeration, complexity, Geography, relatedness
    JEL: O33 R12
    Date: 2020–08
  4. By: E. Marrocu; R. Paci; D. Rigby; S. Usai
    Abstract: The smart specialization strategy (S3) has been at the core of European Cohesion Policy supporting regions to identify the technologies and economic sectors that might comprise sustainable growth paths. Most regions have included S3 in their development policies and devoted a share of available EU resources to their Regional Operational Programmes for the period 2014-2020. This paper provides one of the first attempts in the literature to assess empirically whether the choices made by European regions in selecting their S3 sectors are consistent, directly and indirectly, with their current specialisation patterns. The latter refer to the regional economy as a whole and not just to the manufacturing sector. Previous contributions that have focused on patent data may be biased because of the concentration of patenting within manufacturing. Analysis of S3 strategies draws from the EC official S3 website, where all regions were compelled to disclose their industrial and technological targets. Results show that regional strategies are heterogeneous. There are a few regions that have chosen a new S3 path rooted both in current sectors within which they enjoy comparative advantage and on related activities. However, overall, regions have not selected sectors highly associated with their current specialization or closely related to it, indicating a limited potential for S3 to activate successful growth trajectories that leverage existing capabilities.
    Keywords: Smart Specialization Strategy;regional development;capabilities;revealed comparative advantage;relatedness
    Date: 2020
  5. By: Gagliardi, Luisa; Iammarino, Simona
    Abstract: This article analyses the relationship between firm’s perception of market risk and engagement in innovation. We conceptualise this relationship by integrating insights from the management literature on innovation barriers with those derived from the international business and economic geography perspectives on the interplay of ownership and location advantages. By exploiting a firm-level panel dataset based on the UK Innovation Survey for the period 2002–2008, we test the relationship between perception of market risk and innovation behaviour in relation to firm ownership—i.e. multinational enterprises (MNEs) versus single domestic enterprises—and location—across regional contexts characterised by different degrees of technological dynamism. Our main results show that ownership advantages operate as a moderator by fundamentally affecting the direction of the relationship: while MNEs react positively to risk perception, single domestic firms reduce their innovation engagement as a strategy to cope with market uncertainty. Yet, ownership advantages play a pivotal role only in relatively inert or stable contexts, as in technologically dynamic regions differences between domestic firms and MNEs disappear.
    Keywords: Risk perception; Innovation behaviour; Ownership and Location advantages; Community Innovation Survey; UK Regions
    JEL: F23 O31 R11
    Date: 2018–09–01
  6. By: Thanasis Ziogas; Dimitris Ballas; Sierdjan Koster; Arjen Edzes
    Abstract: This article uses data of subjective Life Satisfaction aggregated to the community level in Canada and examines the spatial interdependencies and spatial spillovers of community happiness. A theoretical model of utility is presented. Using spatial econometric techniques, we find that the utility of community, proxied by subjective measures of life satisfaction, is affected both by the utility of neighbouring communities as well as by the latter's average household income and unemployment rate. Shared cultural traits and institutions may justify such spillovers. The results are robust to the different binary contiguity spatial weights matrices used and to the various econometric models. Clusters of both high-high and low-low in Life Satisfaction communities are also found based on the Moran's I test
    Date: 2020–07
  7. By: Diemer, Andreas
    Abstract: There is little evidence on the relevance of social networks in the aggregate spatial diffusion of localised economic shocks. This paper uses novel data on the universe of online friendships in the US to uncover how plausibly exogenous surges in the local demand for jobs in the oil and gas industry can affect the economy of spatially distant but socially proximate places. Although most of the diffusion is limited to geographically proximate areas, social networks matter too. According to 2SLS estimates, a million dollar per capita increase in oil and gas extraction raises per capita wages by over 5,000 dollars for workers reporting their incomes in counties located as far as 1,200 km away from the drilling site, but strongly socially connected to it. This effect is likely explained by the relocation of transient workers within the industry, providing new aggregate evidence in support of the literature on job information networks.
    Keywords: social networks; fracking; spatial diffusion; job search
    JEL: J61 J64 L71 Q33 R12 R23 Z13
    Date: 2020–08
  8. By: Elvira Prades-Illanes (Banco de España); Patrocinio Tello-Casas (Banco de España)
    Abstract: The recent release of EUREGIO, a novel global input-output database with regional detail for EU countries, allows to analyze the participation of EU regions in Global Value Chains and their implications for the propagation of sector-specific shocks. We focus on Spanish regions to exploit the granular information embedded in this database. We first characterize foreign and domestic trade inter-linkages of Spanish regions and sectors. Using an extended version of the Leontief scheme, we compute upstream output and value added multipliers. Then, we calculate indicators developed in the Global Value Chain literature to breakdown each region trade flows, both exports and outflows, into value added components. Finally, by means of examples, we analyze the role of networks (domestic or foreign) in the propagation of demand shocks (from customers to suppliers), to evaluate the heterogeneous impact across regions and to illustrate the potential of this approach. Our findings indicate that Spanish regions participate differently in Global Value Chains and this fact may have important implications in the propagation of shocks. According with our results, the strongest user-supplier linkages are usually within the same sector, and, in general, with industries within the same region or other Spanish regions. The Basque Country is the region with sectors with the largest total output-multipliers and Catalonia with the lowest ones. Concerning their participation in Global Value Chains, the Basque Country is the most integrated region in the backward segment of the value chain, closely followed by Madrid, while Catalonia –and a lesser extent Canary Islands– shows a comparatively low participation. Concerning the forward participation, Catalonia shows the largest one on exports, while Madrid and the Basque Country in outflows.
    Keywords: Global Value Chains, input-output structure, networks, EUREGIO
    JEL: F14 F15
    Date: 2020–08
  9. By: Jonas Heiberg; Christian Binz; Bernhard Truffer
    Abstract: Research in economic geography has recently been challenged to adopt more institutional and multi-scalar perspectives on industrial path development. This paper contributes to this debate by integrating insights from (evolutionary) economic geography, as well as transition and innovation studies into a conceptual framework of how path creation in emerging industries depends on the availability of both knowledge and legitimacy. Unlike the extant literature, we argue here, that not only the former but also the latter may substantially depend on non-local sources, which hithero have largely been overseen. Conceptually, we distinguish between multi-scalar export, attraction and absorption of legitimacy. Coupled with conventional knowledge indicators, this approach enables us to reconstruct how not only external knowledge sourcing but also multi-scalar institutional dynamics contribute to countries’ ability to leverage the potential of different path creation constellations in an emerging industry. Methodologically, we develop legitimation indicators from a global media database, which was built around the case of modular water technologies. Cross-comparing the evidence from six key countries (India, Israel, Singapore, South Africa, UK, USA) with differing path creation constellations allows us to hypothesize how multi-scalar legitimation influences a country’s prospects for creating a radically new industrial path.
    Keywords: Evolutionary economic geography, path creation, legitimation, institutional dynamics, multi-scalarity, modular water technologies
    JEL: O33 O31 D85 L95
    Date: 2020–08
  10. By: Moretti, Enrico; Wilson, Daniel J
    Abstract: We study the effect of state-level estate taxes on the geographical location of the Forbes 400 richest Americans and its implications for tax policy. We use a change in federal tax law to identify the tax sensitivity of the ultra-wealthy's locational choices. Before 2001, some states had an estate tax and others didn't, but the tax liability for the ultra-wealthy was independent of their domicile state due to a federal credit. In 2001, the credit was phased out and the estate tax liability for the ultra-wealthy suddenly became highly dependent on domicile state. We find the number of Forbes 400 individuals in estate tax states fell by 35% after 2001 compared to non-estate tax states. We also find that billionaire's sensitivity to the estate tax increases significantly with age. Overall, billionaires' geographical location appears to be highly sensitive to state estate taxes. We then estimate the effect of billionaire deaths on state tax revenues. We find a sharp increase in tax revenues in the three years after a Forbes billionaire death, totaling $165 million for the average billionaire. In the last part of the paper, we study the implications of our findings for state tax policy. We estimate the revenue costs and benefits for each state of having an estate tax. The benefit is the one-time tax revenue gain when a wealthy resident dies, while the cost is the foregone income tax revenues over the remaining lifetime of those who relocate. Surprisingly, despite the high estimated tax mobility, we find that the benefit exceeds the cost for the vast majority of states.
    Date: 2019–10
  11. By: Matthieu Chtioui Cepn; Nadine Levratto (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)
    Abstract: Local taxation and capital expenditure are important levers available to local authorities to promote territorial development and economic growth. This article analyzes whether, and to what extent, the changes in employment computed at the municipal level are determined by the taxes that apply to businesses. To this end, it relies on French data structured by municipalities during the period 2011-2015, which begins when a profound reform of local business taxation took place. Our results show that the tax system has little or no influence on the fluctuations of employment, but that the latter are sensitive to the capital expenditure of municipalities. In part, they confirm the thesis that taxes locally collected are used to achieve expenditures that are beneficial to all production units in a territory.
    Abstract: La fiscalité locale et les dépenses d'équipement font partie des leviers d'action dont disposent les pouvoirs locaux pour favoriser le développement du territoire et la croissance économique. Cet article analyse si, et dans quelle mesure, les variations de l'emploi observées localement sont déterminées par les taxes qui s'appliquent aux entreprises. Il s'appuie pour ce faire sur des données françaises structurées par communes au cours de la période 2011-2015 qui débute au moment où est intervenue une profonde réforme de la fiscalité locale. Nos résultats montrent que la fiscalité n'exerce que peu, voire pas, d'influence sur les fluctuations de l'emploi mais que ces dernières sont en revanche sensibles aux dépenses d'équipement des communes. Ils confirment en partie la thèse selon laquelle les taxes collectées localement servent à réaliser des dépenses bénéfiques pour l'ensemble des unités de production présentes sur un territoire.
    Keywords: local taxes,employment,growth,fiscalité locale,emploi,économies d'agglomération,croissance
    Date: 2020–07–17

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