nep-geo New Economics Papers
on Economic Geography
Issue of 2020‒11‒30
nine papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Institutions and the uneven geography of the first wave of the COVID-19 pandemic By Andres Rodriguez-Pose; Chiara Burlina; ; ;
  2. Credit Constraints, Labor Productivity and the Role of Regional Institutions: Evidence from Manufacturing Firms in Europe By Andres Rodriguez-Pose; Roberto Ganau; Kristina Maslauskaite; Monica Brezzi;
  3. Estimating foreign and national trade elasticities in the EU internal market using Generalised Transport Costs By Jose L. Zofio; Jorge Diaz-Lanchas; Damiaan Persyn; Javier Barbero
  4. How ‘smart’ are Smart Specialisation strategies? By Marco Di Cataldo; Vassilis Monastiriotis; Andres Rodriguez-Pose; ;
  5. Stochastic stability of agglomeration patterns in an urban retail model By Minoru Osawa; Takashi Akamatsu; Yosuke Kogure
  6. Cross-border mergers and acquisitions and inter-urban gravity By Ito, Banri
  7. Assessing State Economic Development from Motion Picture and Television Production Incentives: Standardizing the Industry for Analysis By Rickman, Dan; Wang, Hongbo
  8. Multidimensional Poverty in Morocco: An Exploratory Spatial Approach By Haddad, Eduardo; Araújo, Inácio; Sijelmassi-Idrissi, Zineb; Ihezagire, Chanelle; El-Bouazzaoui, Youness
  9. Industrielle Strukturen und Potentiale im Norden: Eine regionale Analyse der deutsch-dänischen Industrielandschaft By Schrader, Klaus; Laaser, Claus-Friedrich

  1. By: Andres Rodriguez-Pose; Chiara Burlina; ; ;
    Abstract: This paper examines the uneven geography of COVID-19-related excess mortality during the first wave of the pandemic in Europe, before assessing the factors behind the geographical differences in impact. The analysis of 206 regions across 23 European countries reveals a distinct COVID-19 geography. Excess deaths were concentrated in a limited number of regions —expected deaths exceeded 20% in just 16 regions— with more than 40% of the regions considered experiencing no excess mortality during the first six months of 2020. Highly connected regions, in colder and dryer climates, with high air pollution levels, and relatively poorly endowed health systems witnessed the highest incidence of excess mortality. Institutional factors also played an important role. The first wave hit regions with a combination of weak and declining formal institutional quality and fragile informal institutions hardest. Low and declining national government effectiveness, together with a limited capacity to reach out across societal divides, and a frequent tendency to meet with friends and family were powerful drivers of regional excess mortality.
    Keywords: COVID-19, pandemic, institutions, regions, Europe
    JEL: H75 O43 R58
    Date: 2020–11
  2. By: Andres Rodriguez-Pose; Roberto Ganau; Kristina Maslauskaite; Monica Brezzi;
    Abstract: This paper examines the relationship between credit constraints − proxied by the investment-to-cash flow sensitivity – and firm-level economic performance − defined in terms of labor productivity – during the period 2009-2016, using a sample of 22,380 manufacturing firms from 11 European countries. It also assesses how regional institutional quality affects productivity at the level of the firm both directly and indirectly. The empirical results highlight that credit rationing is rife and represents a serious barrier for improvements in firm-level productivity and that this effect is far greater for micro and small than for larger firms. Moreover, high-quality regional institutions foster productivity and help mitigate the negative credit constraints-labor productivity relationship that limits the economic performance of European firms. Dealing with the European productivity conundrum thus requires greater attention to existing credit constraints for micro and small firms, although in many areas of Europe access to credit will become more effective if institutional quality is improved.
    Keywords: Credit Constraints; Labor Productivity; Manufacturing Firms; Regional Institutions; Cross-Country Analysis; Europe
    JEL: C23 D24 G32 H41 R12
    Date: 2020–11
  3. By: Jose L. Zofio (Universidad Autónoma de Madrid, Spain); Jorge Diaz-Lanchas (European Commission - JRC); Damiaan Persyn (European Commission - JRC); Javier Barbero (European Commission - JRC)
    Abstract: This paper undertakes the simultaneous estimation of import elasticities of substitution (trade elasticities) within European Union (EU) regions, differentiating between imports from regions belonging to the same country (national or interregional trade) and regions belonging to other EU countries (international trade within the EU). We use a nested CES utility structure to derive the corresponding trade gravity equations and estimate them by way of Poisson pseudo-maximum likelihood regression. As the EU is a single market, the usual approach followed in the international trade literature that relies on changes in bilateral tariffs cannot be used to identify the trade elasticities. To address this issue, a very detailed definition and calculation of the ad valorem specification of transport costs is performed. The methodology takes into account the transport engineering and logistic characteristics of road freight transportation, which allows us to obtain a reliable measure of the generalized transport costs between regions. Trade elasticities are calculated at several levels of industrial aggregation, including individual sectors at 2-digit CPA classification, and their higher-level categories corresponding to agriculture, mining, and manufacturing. Results show that the trade elasticity increases the closer are the trading partners; i.e., national vs. foreign elasticities, thereby providing the first evidence of this widely presumed hypothesis. National trade elasticities are broadly double the value of their foreign counterparts. We also find that trade elasticities substantially decrease as commodities are considered at a higher level of aggregation. Our calculated trade elasticities can be adopted in a wide array of models of international trade, or spatial economic models such as Regional Computable General Equilibrium models (e.g. the RHOMOLO model), improving the results obtained from simulations aimed at policy analysis.
    Keywords: Gravity equation, trade elasticities, interregional trade, international trade, generalized transportation costs
    JEL: C21 C68 F12 F17 R41
    Date: 2020–11
  4. By: Marco Di Cataldo; Vassilis Monastiriotis; Andres Rodriguez-Pose; ;
    Abstract: The introduction of Smart Specialisation (S3) as a fundamental pillar of the 2014 reform of the European Union (EU) Cohesion Policy has represented a significant strategic shift in European development intervention. S3 strategies are aimed at mobilising the economic potential of each country and region of the EU, by allowing a more place-based and bottom-up approach to development. However, despite the salience that S3 has acquired in a short period of time, there has been no European-wide evaluation of the extent to which S3 strategies truly reflect the economic characteristics and potential of the territories where they are being implemented. This paper examines the characteristics of S3 strategies across Europe – by focusing on their development axes, economic/scientific domains, and policy priorities – to assess whether this is the case. The results show that S3 strategies display a proliferation of objectives, a problem which particularly affects those areas with weaker government quality. Moreover, strategies are generally loosely connected with the intrinsic conditions of each region and mostly mimic what neighbouring areas are doing. The lack of more concise and focused S3 strategies is likely to undermine the effectiveness of what is, otherwise, a very interesting and worthwhile policy experiment.
    Keywords: Smart specialisation, EU policy, regions, Europe
    JEL: R58 O52
    Date: 2020–11
  5. By: Minoru Osawa; Takashi Akamatsu; Yosuke Kogure
    Abstract: We consider a model of urban spatial structure proposed by Harris and Wilson (Environment and Planning A, 1978). The model consists of fast dynamics, which represent spatial interactions between locations by the entropy-maximizing principle, and slow dynamics, which represent the evolution of the spatial distribution of local factors that facilitate such spatial interactions. One known limitation of the Harris and Wilson model is that it can have multiple locally stable equilibria, leading to a dependence of predictions on the initial state. To overcome this, we employ equilibrium refinement by stochastic stability. We build on the fact that the model is a large-population potential game and that stochastically stable states in a potential game correspond to global potential maximizers. Unlike local stability under deterministic dynamics, the stochastic stability approach allows a unique and unambiguous prediction for urban spatial configurations. We show that, in the most likely spatial configuration, the number of retail agglomerations decreases either when shopping costs for consumers decrease or when the strength of agglomerative effects increases.
    Date: 2020–11
  6. By: Ito, Banri
    Abstract: Cross-border mergers and acquisitions (M&As) have grown rapidly in recent years and are a major part of foreign direct investment (FDI). However, M&A distribution is highly skewed, with most of the activity concentrated in certain countries and even in certain cities. Only a handful of cities account for most M&As. Unlike many previous studies that have relied on a gravity model approach using the bilateral volume of FDI, this study examines the determinants of cross-border M&As by applying an FDI gravity model to inter-city investment flows in the world. The empirical results, which are based on panel data of M&A flows across 44 major cities in the world from 2010 to 2017, show that besides the basic attributes used in conventional gravity models, such as market size and distance between origin city and destination city, urban-specific attributes such as the agglomeration of the world’s top-ranked firms and the number of foreign residents have a statistically significant explanatory power for inward M&As.
    Keywords: Gravity model, M&As, border effects, inter-city investment, agglomeration
    JEL: F14 F21 F23 R12
    Date: 2020–11–16
  7. By: Rickman, Dan; Wang, Hongbo
    Abstract: Studies of the economics of state fiscal incentives for the motion picture and television industry lack consistency in methodology. A key inconsistency is the use of differing levels of industry aggregation. This study unpacks aggregate sector multipliers for 48 states and shows how use of aggregated measures for the motion picture and television industry can lead to inaccurate input-output multipliers and empirical estimates of the role of incentives in the location of the industry. In practice, regional input-output models need to be modified to reflect the economic differences across activities in the aggregate sector, particularly for states that contain little of the targeted activity. A case study shows that a practical alternative is to use aggregate multipliers from similar states with large concentrations of the industry.
    Keywords: state film incenetives; input-output multipliers, economic development
    JEL: H25 H71 R12 R58
    Date: 2020–10–26
  8. By: Haddad, Eduardo (Departamento de Economia, Universidade de São Paulo); Araújo, Inácio (Departamento de Economia, Universidade de São Paulo); Sijelmassi-Idrissi, Zineb; Ihezagire, Chanelle; El-Bouazzaoui, Youness
    Abstract: In spite of the overall decrease in poverty in Morocco in the recent past, the pace of change did not affect regions equally. Poorer provinces faced slower reductions, increasing the relative gap in poverty indicators. In this paper, we explore the results of a multidimensional poverty indicator produced by the High Commission for Planning (HCP), the Moroccan official statistical agency, for the period 2004-2014. The Multidimensional Poverty Index (IPM) allows investigating the spatial aspects of different dimensions of poverty in the country. We find a clear spatial process underlying the distribution of the IPM. Moreover, the analysis undertaken at the province level suggests a persistent poverty hot spot in the northeast part of the country associated with poor infrastructure. Other poverty areas are more heavily associated with low quality of public services, particularly education and health. We provide a typology of geographically targeted sectoral policies, showing that there is no single recipe for all regions, since structural features matter.
    Keywords: Spatial analysis; Multidimensional poverty; Policy targeting; Morocco
    JEL: R10
    Date: 2020–11–14
  9. By: Schrader, Klaus; Laaser, Claus-Friedrich
    Abstract: In der Studie, die im Rahmen des nordwärts-Projekts erstellt wurde, wird das in Norddeutschland zu beobachtende Gefälle bei der Wirtschaftskraft mit strukturellen Ursachen erklärt. Aufgrund der relativ hohen Wachstumsbeiträge des Verarbeitenden Gewerbes und der unternehmensnahen Dienstleistungen bleiben die industrieschwachen Flächenländer Schleswig-Holstein und Mecklenburg-Vorpommern hinter dem Bundesdurchschnitt zurück, woran auch die Schwäche der Industrie während Pandemie und abflauender Weltkonjunktur wenig ändert. Die Autoren zeigen, dass diese grundlegenden Zusammenhänge der Wirtschaftsentwicklung auch in Dänemark zu beobachten sind, wo hinter der deutsch-dänischen Grenze in Jütland das industrielles Zentrum Dänemarks liegt. Trotz struktureller Unterschiede ergeben sich in der deutsch-dänischen Nachbarschaft relevante industrielle Schnittstellen auf Branchenebene, etwa bei Ernährung und Maschinenbau. Eine regional tiefergehende Analyse auf Kreisebene zeigt, dass in Schleswig-Holstein die regionale Bedeutung des Verarbeitenden Gewerbes in den Kreisen des Hamburger Umlands am größten ist, während im Landesteil Schleswig, aber auch im östlichen Holstein die Industrie ein geringes Gewicht hat. Erst in den jütländischen Festlandsregionen ist der Industrialisierungsgrad wieder deutlich höher. Die Unterschiede bei den Wirtschaftsstrukturen in der deutsch-dänischen Grenzregion werden auch mit der Landesgrenze als regulativer Trennmauer erklärt. Die Autoren empfehlen eine stärkere wirtschaftspolitische Kooperation, die Ansatzpunkte in der industrienahen Bildungslandschaft, der Wirtschaftsförderung und der Regulierungspraxis finden könnte.
    Keywords: Regionalpolitik,Schleswig-Holstein,Bundesländer,Dänemark,Verarbeitendes Gewerbe,Wirtschaftsintegration,Regional Policy,Schleswig-Holstein,Federal States,Denmark,Manufacturing Industry,Economic Integration
    Date: 2020

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.