nep-geo New Economics Papers
on Economic Geography
Issue of 2021‒01‒18
twenty-two papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Cities, Productivity, and Trade By Alvaro Garcia Marin; Andrei V. Potlogea; Nico Voigtländer; Yang Yang
  2. Roads to innovation: evidence from Italy By Bottasso, Anna; Conti, Maurizio; Robbiano, Simone; Santagata, Marta
  3. Frictional Spatial Equilibrium By Benoît Schmutz; Modibo Sidibé
  4. Analysing the spatio-temporal diffusion of economic change - advanced statistical approach and exemplary application By Sven Wardenburg; Thomas Brenner
  5. Hybrid Organizations from the Global South embedded in Global Value Chains (GVCs): Their neglected contribution to Social Innovation By Simone Strambach; Stephen Momanyi; ; ;
  6. CAN FOUNDATIONAL ECONOMY SAVE REGIONS IN CRISIS? By Mikhail Martynovich; Teis Hansen; Karl-Johan Lundquist; ;
  7. Hops, Skip & a Jump: The Regional Uniqueness of Beer Styles By Ryan M. Hynes; Bernardo S. Buarque; Ronald B. Davies; Dieter F. Kogler;
  8. This Town Ain't Big Enough? Quantifying Public Good Spillovers By Nicolas Jannin; Aurelie Sotura
  9. Do research universities boost regional economic development? - Evidence from China By Chu, Shuai; Liu, Xiangbo
  10. Commuting in Europe: An Inter-regional Analysis on its Determinants and Spatial Effects By Castelli, Chiara; Parenti, Angela
  11. People, Places and Politics By Henry G. Overman
  12. Racing ahead or lagging behind? Territorial cohesion in human development around the globe. By Iñaki Permanyer; Nicolai Suppa
  13. Federal Reserve District County Shapefiles By Colton Tousey
  14. Global systems of innovation: introductory notes on a new layer and a new hierarchy in innovation systems By Jorge Nogueira de Paiva Britto; Leonardo Costa Ribeiro; Eduardo da Motta e Albuquerque
  15. Idea Diffusion and Property Rights By Boyan Jovanovic; Zhu Wang
  16. Borders within Europe By Marta Santamaría; Jaume Ventura; Ugur Yesilbayraktar
  17. Spatial and Externality Determinants of Co-operatives and their Growth Dynamics in Morocco By Adil Outla; Koraich Almahdi; Moustapha Hamzaoui
  18. The Local Impact of University Decentralization in France By Paul Charruau
  19. The Making and Consolidation of the First National Trademark System: Diffusion of Trademarks across Spanish Regions (1850–1920) By Patricio Saiz; Jose Luis Zofio; ; ;
  20. Problem on the Plains: College Earnings Premiums in Small Metropolitan Areas By Winters, John V.
  21. Reducing socio-economic differences between municipalities in Israel By Gabriel Machlica
  22. Regional development in Lithuania: A tale of two economies By Hansjörg Blöchliger; Roland Tusz

  1. By: Alvaro Garcia Marin; Andrei V. Potlogea; Nico Voigtländer; Yang Yang
    Abstract: We document a novel stylized fact: Using data for several countries, we show that export activity is disproportionately concentrated in larger cities – even more so than overall economic activity. We account for this fact by marrying elements of international trade and economic geography. We build a model with agglomeration economies where firms with heterogeneous productivity sort across city sizes and select into exporting. The model allows us to study the geographic implications of trade policy, as well as the international trade effects of urban policies. We show that (i) lifting restrictions on housing supply raises not only the aggregate productivity of the economy but also its aggregate export intensity, by allowing more firms to locate in larger cities and profit from agglomeration effects; (ii) conversely, while opening up to trade has complex overall economic geography implications, within sectors it tends to shift employment towards larger cities. We structurally estimate the model using data for the universe of Chinese manufacturing firms and study the general equilibrium effects of trade liberalization and of urban policies. We find that the effects of these policies are quantitatively different from those predicted by trade models that ignore economic geography, and by economic geography models that omit international trade (both of which are nested in our framework).
    JEL: F23 F6 R13 R31
    Date: 2020–12
  2. By: Bottasso, Anna; Conti, Maurizio; Robbiano, Simone; Santagata, Marta
    Abstract: In this study we leverage on the ancient Roman roads network as a source of exogenous variation in order to identify the causal effect of the modern highways network on innovation using Italian NUTS-3 regional data. Our results suggest that a 10 percent increase in the highways stock in a region causes an increase in the number of patents of about 2-3 percent over a five years period. We document that this positive effect on innovation might in part be explained by a reduction in travel costs that foster collaborations between inventors living in different regions. We also find that the innovation enhancing effect of highways declines over time, possibly because of the introduction of ICT, or the increasing congestion over the Italian network. Finally, we find also evidence of important heterogeneous treatment effects associated to region population density and we cannot rule out the existence of negative spillovers across regions, suggesting possible reorganization of innovative activity across space.
    Keywords: transport infrastructure; innovation; regional growth; policy evaluation
    JEL: L91 O33 O47 R11 R41
    Date: 2020–12–15
  3. By: Benoît Schmutz (Ecole Polytechnique and CREST); Modibo Sidibé (Duke University)
    Abstract: This paper proposes a theory of cities based on a general equilibrium search and matching model where heterogeneous firms and workers continuously decide where to locate within a set of imperfectly connected local labor markets and engage in wage bargaining using both local and remote match opportunities as threat points. The model allows us to introduce the structural origins of workers’ sorting, firms’ selection and matching-based agglomeration economies into a unified framework and discuss their relationship with the city size distribution. Simulations show that power laws in city size do not require increasing returns to scale in matching or production, but may simply result from the combination of imperfect labor mobility, positive assortative matching between labor and capital, and agglomeration economies in the matching between workers and firms. By-products include sufficient statistics to identify sorting and agglomeration using city-level variation and a rationale for the geographic diversity of urban networks.
    Keywords: city size; local labor market; frictions; on-the-job search; migration
    JEL: R1 J2 J3 J6
    Date: 2021–01–04
  4. By: Sven Wardenburg (Philipps-University Marburg); Thomas Brenner (Philipps-University Marburg)
    Abstract: This article presents a spatio-temporal panel vector-autoregressive approach (SptpVAR) as an extended spatial econometric method for analysing spillover effects of regional economic change in time and space. The approach aims to extend the spatial dimension of SpVAR models by capturing the overall cross-regional spillover dynamics over time through additional estimations of effects into neighbouring re- gions and backward spillover to the source region. By showing how local economic dynamics trigger spillover dynamics in economically linked regions, the results are of particular interest to policy makers. To demonstrate the functioning of the SptpVAR approach, it is applied to 361 German regions using a regional growth model and a regional panel data set in the time-period 2000-2017 in an exemplary application.
    Keywords: : Economics dynamics, Spatial spillover, Spatial econometrics, SpVAR
    Date: 2021–01
  5. By: Simone Strambach; Stephen Momanyi; ; ;
    Abstract: Alternative economic forms are credited with great potential to contribute to social innovation and sustainability transitions. Hybrid organizations, combining multiple institutional logics, emerge in different forms in many regional contexts. There are, however, limited insights on the emergence and unfolding of hybrid organizational fields in different spatial contexts, especially in the spaces of the Global South. This paper contributes to this shortcoming by investigating the institutional dynamics of the emerging field of impact sourcing service providers (ISSPs) in Kenya. Impact sourcing can be considered as a social innovation. These hybrids follow a social mission to promote the integration of disadvantaged youth in the labor market by building IT capabilities, simultaneously striving for financial sustainability for the organization. The findings of this study reveal the multi-scalarity of the field configuring processes; furthermore, they reveal the necessity for Global South hybrids to flexibly combine the weight of both economic and social logics in their business models. This enables them to cope with the double burden of building legitimacy for new practices in the local environment, and the global value chains (GVCs), simultaneously. By combining neo- institutional organization theory, with insights from economic geography and social innovation theory, this paper provides a deeper understanding of the complex institutional dynamics in the emergence and formation of fields of hybrid organizations located in the Global South and their social impacts, enabled due to embeddedness in GVCs.
    Keywords: Hybrid organizations, Global South, Social innovation, Organizational and institutional change, Global Value Chains
    Date: 2020–12
  6. By: Mikhail Martynovich; Teis Hansen; Karl-Johan Lundquist; ;
    Abstract: We perform an explorative analysis of employment patterns in the foundational economy producing mundane everyday necessities and providing welfare services across Swedish regional labour markets between 2007 and 2016. We focus specifically on hierarchical patterns in spatial distribution of foundational activities and their association – direct and through integration with other economic activities – with regional employment dynamics in times of crisis, recovery, and growth. Our findings suggest the foundational economy plays an important role as employment provider to a substantial number of Swedish workers, particularly in non-metropolitan regions. Besides, it appears to be associated with improved ability of regions to retain employment in the most acute phases of economic crisis, but only if it is well integrated into regional industrial profiles. However, its overall contribution to regional resilience in the long term appears to be rather limited.
    Keywords: foundational economy; everyday economy; employment; regional resilience; crisis; recovery; Sweden
    JEL: E32 J21 L16 R11 R12 R23
    Date: 2020–12
  7. By: Ryan M. Hynes; Bernardo S. Buarque; Ronald B. Davies; Dieter F. Kogler;
    Abstract: Perhaps more than any other product, beer evokes the place it was made. Weißbier and Germany, dubbels and Belgium, and most of all, Guinness and Ireland. Part of what makes these beers so memorable is what sets them apart and gives them their ‘taste of place’. Many studies have tried to place that taste, and due to a lack of detailed data, have relied largely on qualitative methods to do so. We introduce a novel data set of regionalized beer recipes, styles, and ingredients collected from a homebrewing website. We then turn to the methods of evolutionary economic geography to create regional ingredient networks for recipes within a style of beer, and identify which ingredients are most important to certain styles. Along with identifying these keystone ingredients, we calculate a style’s resiliency or reliance on one particular ingredient. We compare this resiliency within similar styles in different regions and across different styles in the same region to isolate the effects of region on ingredient choice. We find that while almost all beer styles have only a handful of key ingredients, some styles are more resilient than others due to readily available substitute ingredients in their region.
    Keywords: Beer, Economic Geography, Network Analysis
    JEL: Q10 R11
    Date: 2020–12
  8. By: Nicolas Jannin; Aurelie Sotura
    Abstract: Despite long-standing theoretical interest, empirical attempts at investigating the appropriate level of decentralization remain scarce. This paper develops a simple and flexible framework to test for the presence of public good spillovers between fiscally autonomous jurisdictions and to investigate potential welfare gains from marginal fiscal integration. We build a quantitative spatial equilibrium model with many local jurisdictions, mobile households and endogenous local public goods causing spillovers across jurisdictional boundaries. We show how one can exploit migration and housing price responses to shocks in local public goods at different geographic scales to reveal the intensity of spillovers. Applying our framework to the particularly fragmented French institutional setting, we structurally estimate the model using a unique combination of municipal administrative panel datasets. Estimation relies on plausibly exogenous variations in government subsidies to instrument changes in the supply of public goods. We find that public goods in a municipality account for 4--11\% of the local public good bundle enjoyed by its residents, and that public goods in each neighbor municipality account for an average 3.2--3.5\% of this bundle. Finally, we simulate the effect of a reform increasing fiscal integration and find substantial welfare gains.
    Keywords: Local Public Service, Spillover Effect, Spatial General Equilibrium, Tiebout, Welfare Economics, State Governments Subsidies
    JEL: D16 H41 H71 H72 H73 R13
    Date: 2020
  9. By: Chu, Shuai; Liu, Xiangbo
    Abstract: This paper studies whether research universities can boost regional economic development through an exogenous shock of a forced relocation of a research university in China. We analyze the development in the treated regions compared with a set of control regions that are created using the synthetic control method and find that research universities can have negative effects on local economic development. We then perform a series of robustness checks. Our main results carry through. By employing a more exogenous shock and more reliable identification strategies, our study provides evidence that research universities do not necessarily promote regional economic development.
    Keywords: Research Universities,Regional Economic Development,Synthetic Control Method
    JEL: O15 O18 R11
    Date: 2021
  10. By: Castelli, Chiara; Parenti, Angela
    Abstract: Commuting shapes countless everyday-lives around the world, with dynamics varying from city to regional and cross regional level. Taking as reference the free-movement EU-28 area (plus Switzerland and Norway), the analysis considers a total sample of 195 NUTS2 regions over the decade 2007-2017 to depict regional cross-border dynamics, thus including the impacts of the 2008 financial crisis. The tested presence of spatial interactions among regions leads to the adoption of the Spatial Durbin Model in a panel context, thus including fixed effects in order to eliminate any time influence on variables as well as any regional idiosyncrasy (i.e. cultural, institutional etc.). The outcoming analysis highlights the potentiality of temporary contracts in preserving jobs during crisis, as they offer a flexible tool for employment adjustments. Moreover, the regional specialization in the knowledge sector is found to be an important attractor of external workers as well as a relatively effective retaining factor of the domestic labour force. But there are also other factors affecting mobility. For instance, the perceived commuting distance significantly depends on the time needed to reach the corresponding workplace and this study finds that the more diffused is the transportation system (in terms of highways’ density) the higher the commuting outflow. A similar impact is found with respect to housing costs, that is the cheaper is the relative house price of the region of residence with respect to the surrounding territories, the more travel-to-work becomes an attractive option, even in its extend of long-distance commute. Finally, a last strong push factor of mobility is found in the lack job opportunities, here expressed as the unemployment rate differential for each single territory with respect to its surroundings. Indeed, the higher the lack of job opportunities in the domestic market with respect to its neighbours, the higher the share of workers that will try to seek their fortune crossing the regional border.
    Keywords: Community/Rural/Urban Development
    Date: 2020–12–16
  11. By: Henry G. Overman
    Abstract: Economic performance varies widely between the towns, cities and regions of the UK. On some measures, this variation has widened since the financial crisis. These disparities have already proved to be a key theme in the run-up to the 2019 general election. This briefing summarises evidence on spatial disparities from the Centre for Economic Performance (CEP), as well as the broader evidence base.
    Keywords: spatial disparities, skills, cities, left-behind places, 2019 General Election
    Date: 2019–11
  12. By: Iñaki Permanyer (Centre for Demographic Studies, Autonomous University of Barcelona); Nicolai Suppa (Centre for Demographic Studies, Autonomous University of Barcelona)
    Abstract: This paper investigates whether global improvements in human development involve sub-national regions in a territorially cohesive way. For that purpose, we use a sub-national human development index for over 1765 regions within162 countries over three decades, and propose measures for relative over- and under-performance. We observe that under- and over-development within countries tends to disappear over time around the world. In contrast, from a global perspective, we detect the presence of a non-negligible set of under-developing sub-national regions spanning across 20+ countries that, in the last two decades, have failed to catch-up with the world average human development.
    Keywords: human development, inequality, regional disparities, territorial cohesion
    JEL: I31 O15 D63 R11
    Date: 2021–01
  13. By: Colton Tousey
    Abstract: Federal Reserve District boundaries have been discussed many times since they were first defined and have been set for some time now. However, an easily accessible and accurate delineation of the boundaries does not currently exist in a central location. This may create challenges for Regional Banks of the Federal Reserve System, which attempt to provide an accurate picture of the economy in their region. Many times, state-level data are all that are available; however, when county-level data are available, FRS staff can produce more precise estimates of what is happening in a Federal Reserve District. This paper documents the current boundary information and the process used to create a new up-to-date and accurate visual representation of the Federal Reserve Districts. County-level shapefiles are created in ArcGIS for each Federal Reserve District, and access to these files is made available with the release of this paper.
    Keywords: Arc Map; Federal Reserve; Shapefiles; Arc GIS
    Date: 2019–04–17
  14. By: Jorge Nogueira de Paiva Britto (Universidade Federal Fluminense); Leonardo Costa Ribeiro (Cedeplar/UFMG); Eduardo da Motta e Albuquerque (Cedeplar/UFMG)
    Abstract: This paper revisits the pioneers of innovation systems in the 1980s to evaluate their perception of international forces tensioning national boundaries of those systems. The development of multinational enterprises and consequent changes in their operation beyond national borders is discussed, looking at the formation of a network of international knowledge flows. Those changes are connected to the internationalization of science and consequent formation of another network of international knowledge flows. Both networks, one firm-led and the other university-led, are pushed by the revolutions in information and communication technologies. The combination, overlapping and intertwinement of those two networks of international knowledge flows constitute a new layer in innovation systems - an emergent global innovation system. This new layer rearranges the roles of regional, sectoral and national innovation systems.
    Keywords: innovation systems, international knowledge flows, layers of innovation systems
    JEL: O30
    Date: 2021–01
  15. By: Boyan Jovanovic; Zhu Wang
    Abstract: We study the innovation and diffusion of technology at the industry level. We derive the full dynamic paths of an industry’s evolution, from birth to its maturity, and we characterize the impact of diffusion on the incentive to innovate. The model implies that protection of innovators should be only partial due to the congestion externality in meetings in which idea transfers take place. We fit the model to the early experiences of the automobile and personal computer industries both of which show an S-shaped growth of the number of firms.
    Keywords: Technology; Innovation
    Date: 2020–08–29
  16. By: Marta Santamaría; Jaume Ventura; Ugur Yesilbayraktar
    Abstract: Are country borders still an impediment to trade flows within Europe? Using a rich microlevel survey with 3 million annual shipments of goods by road across 269 European regions, we construct a matrix of bilateral trade flows for 12 industries from 2011 to 2017. We then use the causal inference framework to design an identification strategy to estimate the causal effect of country borders on trade flows. Take two similar region pairs, the first one containing regions in different countries and the second one containing regions in the same country. The market share of the origin region in the destination region for the international pair is only 17.5 percent that of the intranational pair. We refer to this estimate as the average border effect. When we look at each industry separately, we find border effects that range from 12.3 to 38.9 percent. When we look at recent borders, i.e. created after 1910, we find a border effect of 28.8 percent, which is smaller than the average border effect but still quite large. The implication is clear: Europe is far from having a single market.
    Keywords: border effect, European integration, regional trade
    JEL: D71 F15 F55 H77 O57
    Date: 2020–12
  17. By: Adil Outla (UAE - Université Abdelmalek Essaâdi); Koraich Almahdi (UAE - Université Abdelmalek Essaâdi); Moustapha Hamzaoui (UAE - Université Abdelmalek Essaâdi)
    Abstract: Drawing on the literature on business dynamics, entrepreneurship and the spatial determinants of firms' creation, this study use Exploratory spatial data analysis and spatial panel data to test the spatial patterns and dynamics of cooperatives growth in Morocco. The results confirm the existence of spatial concentration of cooperatives, a global spatial autocorrelation and local spatial autocorrelation with different spatial typologies. The results also show that the main positive spatial determinants for cooperatives growth are the existence of cooperatives culture, the males' unemployment rate, and the density of population. However, there are also negative spatial determinants on the growth and dynamics of cooperatives. These include coops density, firm's density, male activity, Business turnover, population growth, Higher education, primary education, and urbanization.
    Keywords: Co-operatives growth,spatial determinants,spatial distribution,social entrepreneurship
    Date: 2020–12–28
  18. By: Paul Charruau (Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres, LEDa - Laboratoire d'Economie de Dauphine - Université Paris Dauphine-PSL - PSL - Université Paris sciences et lettres)
    Abstract: We measure the effects on human-capital accumulation at the local level of the "new universities" created as part of the U2000 Plan implemented in France in the early 1990s. Established in 1990, this national program resulted in the creation of eight universities (spread over 15 sites), including four outside the Paris region (over 10 sites). Using the synthetic control method, we show that the opening of "new universities" has led to a significant increase in the local share of higher-educated people (not including those in school). On average, the creation of "new universities" increased this share by 3 p.p. within 25 years, though the effect differs across cases. Our estimates provide reliable results in six of the treated-zones, with positive effects between 2 and 5 p.p. within 25 years (which represents around 8,000 more higher-educated individuals on average, in comparison with the counterfactual). Moreover, exploring the employment implications of "new universities" creation, we found credible evidence that, on average, human-capital gains co-occurred with gains in skilled employment.
    Keywords: Human capital HC,Higher education in France,Regional Development,Public policy evaluation
    Date: 2020–12–09
  19. By: Patricio Saiz; Jose Luis Zofio; ; ;
    Abstract: This article studies the creation and consolidation of a trademark system tantamount to market integration and commercial specialization of Spanish regions from 1850 to 1920. We analyze the first 47,000 registrations, their geographical distribution, and the drivers behind this trademark expansion. By using a lineal probability model, we find knowledge spillovers across regions are associated with their relative trademark specialization and diversification. We incorporate the role played by transport infrastructure by calculating generalized transport costs. Our results clarify the origins and evolution of geographical differences in commercial innovation and regional specialization in the first country to institute modern trademark legislation.
    Keywords: Trademarks/Branding; Specialization/Diversification; Generalized Transport Costs; Regional History; Makets; Spain
    JEL: N93 O34 C25 R12
    Date: 2020–12
  20. By: Winters, John V. (Iowa State University)
    Abstract: I use the American Community Survey to examine how college earnings premiums differ across small metropolitan statistical areas (MSAs) in the U.S. I document that the West North Central Division (Plains Region) has especially low average college earnings premiums. Controlling for observable MSA characteristics via regression explains some of the difference between the Plains and other regions, but large and important differences remain. The low return to education for small MSAs in the Plains suggests that they will face special challenges building and retaining human capital in the near future. These areas may especially struggle to attract college-educated in-migrants.
    Keywords: college earnings premiums, college graduates, human capital, returns to education
    JEL: J20 J30 R10
    Date: 2020–12
  21. By: Gabriel Machlica
    Abstract: Despite being one of the smallest countries in the OECD, Israel is marked by significant socio-economic disparities, which have a clear spatial dimension. Ethnic and religious groups with weak socio-economic outcomes are not benefitting from the thriving high-tech sector in the centre of the country. As a result, there is a persistent lack of employment opportunities in the peripheral areas alongside skills shortages in the dynamic centre. Inequalities between municipalities are the highest in the OECD. Moreover, the current pandemic has hit poorer Haredi neighbourhoods particularly hard. The government should reduce barriers that prevent segments of the population from fully participating in the economic process and give everyone a similar chance to succeed, regardless of where he or she was born. This will require equal access to high-quality education, affordable housing, reasonable public transportation and improved urban planning in every municipality to reduce spatial divides and segregation of disadvantaged households. Local authorities can play a significant role, since good municipal government and effective policies to achieve national priorities are the best means to improve the outcomes of residents of poor areas.
    Keywords: education, fiscal decentralisation, housing, infrastructure, municipalities, regional inequality
    JEL: H52 H53 H54 H71 H72 O18 R11 R52 R58
    Date: 2020–12–22
  22. By: Hansjörg Blöchliger; Roland Tusz
    Abstract: Regional differences in GDP per capita, productivity, employment and poverty in Lithuania are among the largest in the OECD, and they have increased over the last decade. The country still recovers from the legacy of the Soviet planning system which aimed at balanced geographical distribution of industrial activity and left many unviable firms and jobs particularly in rural areas. Unemployment is high in many regions, while mobility of excess labour towards economically stronger areas remains insufficient. Some regions feature "surplus infrastructure", while others lack investment. This paper looks at potential reasons for persisting disparities and assesses recent policy initiatives to reduce them. Stark gaps in education outcomes between rural and urban areas should be addressed, mainly by reorganising the municipal school network and by fostering firm-based learning, i.e. apprenticeships. The digital infrastructure is weak in rural regions and should be strengthened to allow access to high-quality jobs in all parts of the country, including through teleworking. Housing supply in economically strong areas should be increased, while urban sprawl should be avoided. Finally, municipal governments should be given more fiscal power, while the planned functional regions should help foster inter-municipal coordination.
    Keywords: education, fiscal decentralisation, labour mobility, Lithuania, regional development, regional infrastructure, regional productivity
    JEL: D24 H70 I24 J24 J61 O31 J65
    Date: 2020–12–22

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