nep-geo New Economics Papers
on Economic Geography
Issue of 2021‒02‒01
fourteen papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Trade and geography By Redding, Stephen
  2. Automotive regions in transition: preparing for connected and automated vehicles By Michaela Trippl; Simon Baumgartinger-Seiringer; Elena Goracinova; David A. Wolfe
  3. Reconsidering structural conditions: Institutional infrastructure for innovation-based industrial path renewal By Simon Baumgartinger-Seiringer; Lea Fuenfschilling; Johan Miörner; Michaela Trippl
  4. Commuting in Europe: An Inter-regional Analysis on its Determinants and Spatial Effects By Chiara Castelli; Angela Parenti
  5. The Overlooked Insights from Correlation Structures in Economic Geography By Matias Nehuen Iglesias; ;
  6. The impact of production intensity on agricultural land prices By Grau, Aaron; Jasic, Svetlana; Ritter, Matthias; Odening, Martin
  7. The Fragmented United States of America: The impact of scattered lock-down policies on country-wide infections By Jacek Rothert; Ryan Brady; Michael Insler
  8. What about the regional level? Regional configurations of Technological Innovation Systems By Sebastian Rohe; Jannika Mattes
  9. Why have house prices risen so much more than rents in superstar cities? By Christian A. L. Hilber; Andreas Mense
  10. Incubators, accelerators and urban economic development By Madaleno, Margarida; Nathan, Max; Overman, Henry G.; Waights, Sevrin
  11. Addressing territorial digital divides through ICT strategies: Are investment decisions consistent with local needs? By Reggi, Luigi; Gil-Garcia, J. Ramon
  12. Policy mixes for just sustainable regional development in industrially overspecialized regions: the case of two Norwegian petro-maritime regions By Samson Afewerki; Asbjørn Karlsen
  13. Economic Analysis and Infrastructure Investment By Edward L. Glaeser; James M. Poterba
  14. Did railways affect literacy? Evidence from India By Chaudhary, Latika; Fenske, James

  1. By: Redding, Stephen
    Abstract: This paper reviews recent research on geography and trade. One of the key empirical findings over the last decade has been the role of geography in shaping the distributional consequences of trade. One of the major theoretical advances has been the development of quantitative spatial models that incorporate both exogenous first-nature geography (natural endowments) and endogenous secondnature geography (the location choices of economic agents relative to one another) as determinants of the distribution of economic activity across space. These models are sufficiently rich to capture firstorder features of the data, such as gravity equations for flows of goods and people. Yet they remain sufficiently tractable as to permit an analytical characterization of the properties of the general equilibrium and facilitate counterfactuals for realistic policy interventions. We distinguish between models of regions or systems of cities (where goods trade and migration take center stage) and models of the internal structure of cities (where commuting becomes relevant). We review some of key empirical predictions of both sets of theories and show that they have been remarkably successful in rationalizing the empirical findings from reduced-form research. Looking ahead, the combination of recent theoretical advances and novel geo-coded data on economic interactions at a fine spatial scale promises many interesting avenues for further research, including discriminating between alternative mechanisms for agglomeration, understanding the implications of new technologies for the organization of work, and assessing the causes, consequences and potential policy implications of spatial sorting.
    JEL: F10 J40 R10 R40
    Date: 2020–09
  2. By: Michaela Trippl; Simon Baumgartinger-Seiringer; Elena Goracinova; David A. Wolfe
    Abstract: The advent of ‘connected and automated vehicles’ (C/AV) is posing substantial transformation challenges on traditional automotive regions across the world. This paper seeks to examine both conceptually and empirically how automotive regions reconfigure their industrial and support structures to promote new path development in the C/AV field. Drawing on recent conceptual advances at the intersection of evolutionary economic geography and innovation system studies, we develop an analytical framework that casts light on how regional preconditions provide platforms for asset modification that underpin different routes of transformation. We distinguish between a reorientation route and an upgrading route. The framework is applied to a comparative analysis of industrial path development and system reconfiguration towards C/AV in two automotive regions, namely Ontario (Canada) and the Austrian automotive triangle.
    Keywords: regional restructuring, new path development, asset modification, innovation system reconfiguration, connected and automated vehicles
    JEL: O33 R11 R58
    Date: 2020
  3. By: Simon Baumgartinger-Seiringer; Lea Fuenfschilling; Johan Miörner; Michaela Trippl
    Abstract: This paper aims to develop a more elaborated understanding of innovation-based renewal of industries from a structural perspective. Current perspectives offer rather simplistic views on the role of structural conditions in regional industrial renewal process. In order to overcome this limitation, we draw on the concept of ‘institutional infrastructure’ to examine the ensemble of structural elements for industrial path development in regional contexts. The institutional infrastructure and its conditions, i.e. its elaboration and coherence, are seen as important factors for industrial change. To illustrate this approach, we investigate renewal processes in two traditional automotive regions in Austria and Sweden.
    Keywords: Path renewal, institutional infrastructure, structures, elaboration, coherence
    JEL: O33 R11 R58
    Date: 2020
  4. By: Chiara Castelli (Università degli Studi di Brescia); Angela Parenti (Università degli Studi di Pisa)
    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: Cross-border Commuting Outflows, Regional Economics, Panel Analysis, Fixed Effects, Spatial Econometrics
    JEL: C51 C54 C55 J21 J61 J62 R11 R12
    Date: 2020–11
  5. By: Matias Nehuen Iglesias; ;
    Abstract: Measures of cooccurrence computed from cross sectional data are used to rationalize connections among economic activities. In this work we show the grounds for unifying a multiplicity of similarity techniques applied in the literature and we precise the identification of cooccurrence to actual coexistence in space, when one side of the cross section are small administrative areas. All the similarity techniques studied here are akin to a correlation structure computed from spatial intensity, also known as locational correlation. We argue that these correlations offer objective tools to detect spatial patterns. Indeed we show that when applied to data of employment by industry and county in United States (from 2002-7) the communities of networks derived from locational correlations detect spatial patterns long acknowledged in economic geography. By addressing critical open issues on the interpretation of cooccurrence indices, this work o↵ers technical guides for their exploitation in Economic Geography studies.
    Keywords: Economic geography, co-location, spatial analysis, areal data, point data, correlation structures, distribution of economic activities
    Date: 2021–01
  6. By: Grau, Aaron; Jasic, Svetlana; Ritter, Matthias; Odening, Martin
    Abstract: This paper is one of the first attempts to utilize the theoretical framework of the new economic geography for explaining agricultural land prices. We adopt a model proposed by Pflüger and Tabuchi (2010), which allows to consider land as a production factor. We derive a short-run equilibrium that relates land rental prices to production intensity. The latter is measured as labor intensity, i.e., the ratio of labor cost and land used for agricultural production and additionally by livestock density. The model is applied to the agricultural sector in West Germany using county level price and cost data of the FADN. A spatial lag model clearly rejects the null hypothesis of no impact of labor and livestock intensity on land rental prices.
    Keywords: New economic geography,agglomeration,production clusters,Germany
    JEL: O41 Q11 R12
    Date: 2019
  7. By: Jacek Rothert (United States Naval Academy); Ryan Brady (United States Naval Academy); Michael Insler (United States Naval Academy)
    Abstract: Fragmented by policies, united by outcomes: This is the picture of the United States that emerges from our analysis of the spatial diffusion of Covid-19 and the scattered lock-down policies introduced by individual states to contain it. We first use spatial econometric techniques to document direct and indirect spillovers of new infections across county and state lines, as well as the impact of individual states’ lock-down policies on infections in neighboring states. We find consistent statistical evidence that new cases diffuse across county lines, holding county level factors constant, and that the diffusion across counties was affected by the closure policies of adjacent states. Spatial impulse response functions reveal that the diffusion across counties is persistent for up to ten days after an increase in adjacent counties. We then develop a spatial version of the epidemiological SIR model where new infections arise from interactions between infected people in one state and susceptible people in the same or in neighboring states. We incorporate lock-down policies into our model and calibrate the model to match both the cumulative and the new infections across the 48 contiguous U.S. states and DC. Our results suggest that, had the states with the less restrictive social distancing measures tightened them by one level, the cumulative infections in other states would be about 5% smaller. In our spatial SIR model, the spatial containment policies such as border closures have a bigger impact on flattening the infection curve in the short-run than on the cumulative infections in the long-run.
    Date: 2020–08
  8. By: Sebastian Rohe; Jannika Mattes
    Abstract: Regional innovation policy must not only strive for economic competitiveness, but also push novel and more sustainable technological solutions. The complex and multi-scalar process of developing and diffusing new technologies is captured by the Technological Innovation Systems (TIS) frame-work. However, the approach neglects regional variety and lacks a nuanced and systematic under-standing of how technological change plays out differently across places. We thus complement TIS with insights from the literature on Regional Innovation Systems (RIS), which offers manifold com-parisons and typologies of institutional contexts for regional innovation. We argue that three ideal-typical configurations – localist-grassroots, interactive-networked, and globalist-dirigiste – exist at the intersection between a technological and specific regional innovation system. We discuss how these regional configurations contribute differently to the development and functioning of the overall TIS and point to the innovation-related challenges they are confronted with. We illustrate our conceptual arguments with a brief comparative case study on three regions in the TIS for on-shore wind energy. Overall, this paper contributes to the literature on the geographies of innova-tion and sustainability transitions, introduces a framework for analyzing regional variety in TIS, and enables more fine-grained and place-specific policy interventions directed at fostering specific technologies at the regional level.
    Keywords: Technological Innovation System, Regional Innovation System, Innovation Policy, Geography of Sustainability Transitions, Onshore Wind Energy
    Date: 2021
  9. By: Christian A. L. Hilber; Andreas Mense
    Abstract: In most countries - particularly in supply constrained superstar cities - house prices have risen much more strongly than rents over the last two decades. We provide an explanation that does not rely on falling interest rates, changing credit conditions, unrealistic expectations, rising inequality, or global investor demand. Our model distinguishes between short- and long-run supply constraints and assumes housing demand shocks exhibit serial correlation. Employing panel data for England, our instrumental variable-fixed effect estimates suggest that in Greater London labor demand shocks in conjunction with supply constraints explain two-thirds of the 153% increase in the price-to-rent ratio between 1997 and 2018.
    Keywords: house prices, housing rents, price-to-rent ratio, price and rent dynamics, housing supply, land use regulation
    JEL: G12 R11 R21 R31 R52
    Date: 2021–01
  10. By: Madaleno, Margarida; Nathan, Max; Overman, Henry G.; Waights, Sevrin
    Abstract: We combine theory and evidence on incubator and accelerator programmes, and their effects on urban economic development. These structured co-working programmes have grown rapidly. However, a rich descriptive literature reveals little about their impact on participants or surrounding urban areas. We situate programmes in a conceptual framework of co-location tools, theorise objectives and benefits, and report findings from systematic, OECD-wide reviews of the evaluation literature. These evaluations provide evidence that accelerators and incubators raise participant employment, with accelerators also aiding access to finance. Ecosystem features such as university involvement and urban economic conditions also influence programme outcomes. However, evaluation evidence is less clear on detailed intervention design. We consider wider lessons and lay out an agenda for future research.
    Keywords: incubators; accelerators; clusters; urban economic development; evaluation; ES/L003945/1
    JEL: N0
    Date: 2021–01–25
  11. By: Reggi, Luigi; Gil-Garcia, J. Ramon
    Abstract: Governments around the world are investing a great amount of resources in the development of an information society. These investments are particularly important as an attempt to close digital divides among countries and regions within countries. However, there is no clear evidence that suggests that current Information and Communication Technology (ICT) policies are helping align investments with the actual needs of the local contexts. Based on data about the allocation of 2014-2020 EU Funds, this paper analyzes the relationship between local needs and investment decisions aiming at bridging territorial digital divides. The results identify four different regional strategies developed around four policy goals: broadband, digital inclusion, digital government services, and the use of ICTs in enterprises. The results also show that unlike the past 2007-13 period, the allocations to these goals appear to be consistent with the ICT local context, i.e. funding for a given goal is higher in the regions that need it the most. Therefore, our main recommendation for the European Commission and Member States is to keep existing requirements for developing evidence-informed “Digital Growth” strategies for the next 2021-27 period. We also suggest to strengthen existing support tools for regional governments.
    Keywords: Digital divide, Broadband, Technology Policy, Smart City, European Policy, Regional Planning, European Funds
    JEL: O2 O38 R58
    Date: 2021
  12. By: Samson Afewerki; Asbjørn Karlsen
    Abstract: Just sustainable regional development has become an all-important policy agenda in regions overspecialized in carbon-intensive industries. Just sustainable regional development requires coherent innovation policies and legitimacy to simultaneously address long-term and short-term climate, social and economic goals. We argue that an evolutionary perspective emphasizing institutional legacies (and the concept of institutional layering) is productive for analysing and designing just and sustainable policies. Drawing on a longitudinal case study of two Norwegian oil and gas-dependent regions, we shed light on the multi-scalar policy mixes and underlying political dynamics designed to shape the process. We reveal that, underpinned by the Norwegian tripartite cooperation model, the focus of the multi-scalar policy mixes in the regions has been primarily on the decarburization of the sector, rather than on its active phase-out, along with the development of the renewable energy sector, mainly through technology-push instruments. While supporting business as usual in the short term, this approach may facilitate the growth of the emerging renewable technologies and thereby meet the long-term ‘life-after-oil’ ambitions, reducing the negative impacts of transitions. In light of the urgency for a sustainability transition, we make policy recommendations that can contribute to rapid regional low-carbon transitions while ensuring long-term job security.
    Keywords: Just sustainable transition, tripartite collaboration, coordinated market economy, evolutionary approach, institutional layering
    Date: 2021
  13. By: Edward L. Glaeser; James M. Poterba
    Abstract: This paper summarizes economic research on investment in public infrastructure and introduces the findings of several new studies on this topic. It begins with a review of several potential justifications for the public sector’s involvement in building, financing, and operating infrastructure, including limitations of private capital markets, externalities, and the control of natural monopolies. It then describes the conditions that characterize an optimal infrastructure investment program, emphasizing the need to extend project-based microeconomic cost-benefit analysis to incorporate the value of economy-wide macroeconomic and other externalities. It notes the importance of efficient use of infrastructure capital, and discusses three areas -- procurement, project management, and expenditure on externality mitigation – where further research could identify paths to efficiency improvement. It concludes by identifying several trends that have emerged since outbreak of the COVID-19 pandemic that may have long-term effects on the role of both physical and digital infrastructure in the U.S. economy.
    JEL: H44 H76 R42 R53
    Date: 2020–12
  14. By: Chaudhary, Latika (Graduate School of Defense Management, Naval Postgraduate School); Fenske, James (Department of Economics, University of Warwick)
    Abstract: We study the effect of railroads, the single largest public investment in colonial India, on human capital. Using district-level data on literacy, we find railroads had positive effects on literacy, in particular on male and English literacy. We employ two identification strategies. First, we exploit synthetic panel variation contained in cohort-specific literacy rates due to differences in the timing of railroad exposure of different cohorts within the same district and census year. We find a one standard deviation increase in railroad exposure raises literacy by 0.29 standard deviations. Second, we use distance from an early railway plan as an instrument for district railway exposure in the cross section and find results of similar magnitude. We show that railroads increased literacy by raising secondary, rather than primary, schooling. Our mediation analysis suggests that non-agricultural income and opportunities for skilled employment are important mechanisms, while agricultural income is not.
    Keywords: Colonialism ; Railways ; Literacy JEL codes: N75 ; N35 ; R40
    Date: 2020

This nep-geo issue is ©2021 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.
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