nep-geo New Economics Papers
on Economic Geography
Issue of 2021‒07‒12
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Assessing the impact of megatrends on regional industrial transformations By Emanuela Sirtori; Louis Colnot
  2. Regional collaboration to enhance recruitment to rural regions By Nyström, Kristina
  3. Do Universities Improve Local Economic Resilience? By Howard, Greg; Weinstein, Russell; Yang, Yuhao
  4. The drivers of SME innovation in the regions of the EU By Jose Luis Hervas-Oliver; Mario Davide Parrilli; Andres Rodriguez-Pose; Francisca Sempere-Ripoll
  5. The strength of weak and strong ties in bridging geographic and cognitive distances By Abbasiharofteh, Milad; Kinne, Jan; Krüger, Miriam
  6. Searching through the Haystack: The relatedness and complexity of priorities in smart specialisation strategies By Jason Deegan; Tom Broekel; Rune Dahl Fitjar
  7. When history does not matter? The rise of Quebec’s wine industry By Simon Baumgartinger-Seiringer; David Doloreux; Richard Shearmur; Michaela Trippl
  8. Local inequalities of the COVID-19 crisis By Cerqua, Augusto; Letta, Marco
  9. Do preferences for urban amenities really differ by skill? By Arntz, Melanie; Brüll, Eduard; Lipowski, Cäcilia
  10. Local House Price Effects of Internal Migration in Queensland: Australia’s New Interstate Migration Capital By Isil Erol; Umut Unal
  11. Generalized Spatial and Spatiotemporal ARCH Models By Philipp Otto; Wolfgang Schmid

  1. By: Emanuela Sirtori (CSIL Centre for Industrial Studies); Louis Colnot (CSIL Centre for Industrial Studies)
    Abstract: Megatrends are long-term, ubiquitous, global and robust transformations influencing the developments of business, environment, economy, society, cultures and citizens' lives on a local and global scale. There is an important grey literature focusing on these megatrends and their impacts. However, this analysis is often not territorialized, despite the gradient of consequences that megatrends might have at the regional level. This working paper proposes a methodological approach combining qualitative insights (including foresight scenarios) and quantitative data to regionalize the impacts of a series of megatrends and types of impacts. This approach is then applied to a sample of megatrends and types of impacts at the EU level. Findings suggest that the megatrends' impacts are not place-neutral in the EU context and that patterns of the most/least affected regions depend on the individual megatrend. Indeed, different patterns can be observed (e.g., North/South, East/West, urban/non-urban, quasi-homogeneous impacts), often in opposite directions for different megatrends. Moreover, the regional level of development cannot be used as a reliable predictor of the impacts, as the correlation may be positive, negative or even inexistent depending on the megatrend.
    Keywords: megatrends, EU regions, foresight analysis, impact assessment, technological change, sustainable development, trans-portation, cities
    JEL: O18 R11 R58
    Date: 2020–01–01
  2. By: Nyström, Kristina (The Ratio Institute)
    Abstract: The purpose of this paper is to study how municipalities work at the regional level with issues concerning skills shortages and recruitment. What information channels are used to obtain information about these shortcomings? How and with whom do the municipalities collaborate? This study provides a mapping of how collaboration between employers, regional policymakers, and other institutions works with regional recruitment. As such, this study provides important information and possible inspiration. The empirical findings obtained based on a survey targeted to the business sections in Swedish municipalities suggest that companies in rural regions turn to municipalities to a greater extent than companies in non-rural municipalities in regard to skills shortages and recruitment. In addition, it is perceived that there is a higher degree of cooperation between businesses and local politicians in regard to recruitment in rural municipalities compared to other municipalities. Even cooperation to develop competence at the regional level is thought to take place to a greater extent in rural municipalities than in non-rural municipalities.
    Keywords: Recruitment; regional development; regional policy
    JEL: R23 R58
    Date: 2021–06–24
  3. By: Howard, Greg (University of Illinois); Weinstein, Russell (University of Illinois at Urbana-Champaign); Yang, Yuhao (University of Illinois)
    Abstract: We use a novel identification strategy to investigate whether regional universities make their local economies more resilient to adverse economic shocks. Our strategy is based on state governments assigning normal schools (to train teachers) and insane asylums to counties between 1830 and 1930. Normal schools later became much larger regional universities while asylum properties mostly continue as small state-owned psychiatric health facilities. Because site selection criteria were similar for these two types of institutions, comparing counties assigned a normal school versus an insane asylum identifies the effect of a regional university. We find that having a regional university roughly offset the negative effects of exposure to manufacturing declines, and we attribute a significant share of this resilience to the resilience of regional public university spending.
    Keywords: manufacturing decline, universities and economic growth, resilience
    JEL: R10 I23 J20
    Date: 2021–05
  4. By: Jose Luis Hervas-Oliver; Mario Davide Parrilli; Andres Rodriguez-Pose; Francisca Sempere-Ripoll
    Abstract: European Union (EU) innovation policies have for long remained mostly research driven. The fundamental goal has been to achieve a rate of R&D investment of 3% of GDP. Small and medium-sized enterprise (SME) innovation, however, relies on a variety of internal sources —both R&D and non-R&D based— and external drivers, such as collaboration with other firms and research centres, and is profoundly influence by location and context. Given this multiplicity of innovation activities, this study argues that innovation policies fundamentally based on a place-blind increase of R&D investment may not deliver the best outcomes in regions where the capacity of SMEs is to benefit from R&D is limited. We posit that collaboration and regional specificities can play a greater role in determining SME innovation, beyond just R&D activities. Using data from the Regional Innovation Scoreboard (RIS), covering 220 regions across 22 European countries, we find that regions in Europe differ significantly in terms of SME innovation depending on their location. SMEs in more innovative regions benefit to a far greater extent from a combination of internal R&D, external collaboration of all sorts, and non-R&D inputs. SMEs in less innovative regions rely fundamentally on external sources and, particularly, on collaboration with other firms. Greater investment in public R&D does not always lead to improvements in regional SME innovation, regardless of context. Collaboration is a central innovation activity that can complement R&D, showing an even stronger effect on SME innovation than R&D. Hence, a more collaboration-based and place-sensitive policy is required to maximise SME innovation across the variety of European regional contexts.
    Keywords: regional innovation; SMEs; R&D; place-based; collaboration; EU regions
    JEL: O31 O32 L11
    Date: 2021–06
  5. By: Abbasiharofteh, Milad; Kinne, Jan; Krüger, Miriam
    Abstract: The proximity framework has attracted considerable attention in a scholarly discourse on the driving forces of knowledge exchange tie formation. It has been discussed that too much proximity is negatively associated with the effectiveness of a knowledge exchange relation. However, little is known about the key factors that trigger the formation of the boundaryspanning knowledge ties. Going beyond the "dyadic" perspective on proximity dimensions, this paper argues that the key factor in bridging distances may reside at the "triadic" level. We build on the notion of "the strength of weak ties" and its recent development by investigating the innovative performance and relations of more than 600,000 German firms. We explored and extracted information from the textual and relational content of firms' websites by using machine learning techniques and hyperlink analysis. We thereby proxied the innovative performance of firms using a deep learning text analysis approach and showed that the triadic property of bridging dyadic relations is a reliable predictor of firms' innovativeness. Relations embedded in cliques (i.e., strong ties) that connect cognitively distant firms are more strongly associated with firms' innovation, whereas inter-regional relations connecting different parts of a network (i.e., weak ties) are positively associated with firms' innovative performance. Also, the results suggest that a combination of strong inter-community and weak inter-regional relations are more positively related with firms' innovativeness compared to the combination of other relation types.
    Keywords: weak and strong ties,proximity,knowledge exchange,innovation,web mining,natural language processing
    JEL: C81 D83 L14 O31
    Date: 2021
  6. By: Jason Deegan; Tom Broekel; Rune Dahl Fitjar
    Abstract: This paper examines which economic domains regional policy-makers aim to develop in regional innovation strategies, focusing in particular on the complexity of those economic domains and their relatedness to other economic domains in the region. We build on the economic geography literature that advises policy-makers to target related and complex economic domains (e.g. Balland et al. (2018a), and assess the extent to which regions actually do this. The paper draws on data from the smart specialisation strategies of 128 NUTS-2 regions across Europe. While regions are more likely to select complex economic domains related to their current economic domain portfolio, complexity and relatedness figure independently, rather than in combination, in choosing priorities. We also find that regions in the same country tend to select the same priorities, contrary to the idea of a division of labour across regions that smart specialisation implies. Overall, these findings suggest that smart specialisation may be considerably less place-based in practice than it is in theory. There is a need to develop better tools to inform regions’ priority choices, given the importance of priority selection in smart specialisation strategies and regional innovation policy more broadly.
    Keywords: Smart Specialisation, Regional Policy, Complexity, Relatedness, Innovation Policy, European Cohesion Policy
    JEL: O25 O38 R11
    Date: 2021–06
  7. By: Simon Baumgartinger-Seiringer; David Doloreux; Richard Shearmur; Michaela Trippl
    Abstract: This article contributes to the debate on new regional path development, proposing an analytical framework that accounts for new industries arising almost ex nihilo in places with weakly developed preconditions. The paper explores how seemingly adverse initial conditions can be translated into a new development path over time and casts light on the interplay between structure and agency in such settings. We find that new path development processes are not necessarily conditioned by past trajectories or by prior regional and technological capabilities, but can be initiated by forward-looking, entrepreneurial pioneers and consolidated by actors who develop the wider institutional and organizational structures to facilitate further growth of the new industry. We study the case of the wine industry in Southern Quebec, which emerged despite weakly developed preconditions and developed into a fully established, legitimized and supported path over the past forty years.
    Keywords: path development, structure, agency, wine industry, Quebec
    Date: 2021
  8. By: Cerqua, Augusto; Letta, Marco
    Abstract: This paper assesses the impact of the first wave of the pandemic on the local economies of one of the hardest-hit countries, Italy. We combine quarterly local labor market data with the new machine learning control method for counterfactual building. Our results document that the economic effects of the COVID-19 shock are dramatically unbalanced across the Italian territory and spatially uncorrelated with the epidemiological pattern of the first wave. The heterogeneity of employment losses is associated with exposure to social aggregation risks and pre-existing labor market fragilities. Finally, we quantify the protective role played by the labor market interventions implemented by the government and show that, while effective, they disproportionately benefitted the most developed Italian regions. Such diverging trajectories and unequal policy effects call for a place-based policy approach that promptly addresses the uneven economic geography of the current crisis.
    Keywords: impact evaluation,counterfactual approach,machine learning,local labor markets,COVID-19,Italy
    JEL: C53 D22 E24 R12
    Date: 2021
  9. By: Arntz, Melanie; Brüll, Eduard; Lipowski, Cäcilia
    Abstract: City-level policies often aim at attracting skilled workers by improving urban amenities. However, due to endogeneity problems, studies relying on revealed preferences have difficulties in providing evidence for the basic premise that skilled workers place a higher value on urban amenities than less skilled individuals. Therefore, we use a stated- preference experiment to directly examine preferences for urban amenities. In a custom survey, we elicit hypothetical job choices between two cities that differ in wages and a set of urban amenities. We find that amenities are important determinants of city choice, with respondents willing to forgo a significant fraction of their wage to live in a city with better amenities. Most strikingly, we do not find any preference heterogeneity between workers differing by education or creative class membership. Instead, we uncover large heterogeneities mainly along family-related mobility constraints and unobserved dimensions. Our results imply that there is not much scope for amenity-oriented policies to improve the local skill mix. Rather, the urban skill bias reflects the incapability of less skilled individuals to afford living in and moving to their preferred places, resulting in significant welfare losses.
    Keywords: Urban amenities,regional policy,internal migration,skill selective migration
    JEL: R12 R22 R58
    Date: 2021
  10. By: Isil Erol (University of Reading); Umut Unal (University of Marburg)
    Abstract: This paper examines the causal impact of internal migration on house price changes in Queensland – Australia’s new capital of interstate migration. We study annual housing price growth across 82 Statistical Areas Level 3 (SA3) regions between 2014 and 2019 by employing a spatial correlation approach. We also estimate the impact of the increasing share of migrants from New South Wales on the local housing markets in Queensland. The main findings are summarised as follows: (1) an annual increase in the inflow of migrants equal to 1% of a region's initial population leads to a 0.6%–0.7% annual increase in Queensland’s house prices across different empirical specifications; (2) internal migration inflow increases house prices in Greater Brisbane metropolitan area, whereas internal migration has a negative impact on housing price changes in the Rest of State regions; (3) migrants tend to move towards SA3 regions where house prices grow more slowly conditional on the local area controls and the time fixed effects; (4) the increasing share of migration from New South Wales does not have a significant effect on house price growth in Queensland. Our findings have important policy implications related to sustainable local economic development since sustainable development is, for the most part, achieved by attracting newcomers to the cities/towns and completed through the involvement of migrants in local housing and labour markets.
    Keywords: Housing prices; Internal Migration; Shift-share instrument; Australia; Queensland
    JEL: R12 R23 R31
    Date: 2021
  11. By: Philipp Otto; Wolfgang Schmid
    Abstract: In time-series analyses, particularly for finance, generalized autoregressive conditional heteroscedasticity (GARCH) models are widely applied statistical tools for modelling volatility clusters (i.e., periods of increased or decreased risk). In contrast, it has not been considered to be of critical importance until now to model spatial dependence in the conditional second moments. Only a few models have been proposed for modelling local clusters of increased risks. In this paper, we introduce a novel spatial GARCH process in a unified spatial and spatiotemporal GARCH framework, which also covers all previously proposed spatial ARCH models, exponential spatial GARCH, and time-series GARCH models. In contrast to previous spatiotemporal and time series models, this spatial GARCH allows for instantaneous spill-overs across all spatial units. For this common modelling framework, estimators are derived based on a non-linear least-squares approach. Eventually, the use of the model is demonstrated by a Monte Carlo simulation study and by an empirical example that focuses on real estate prices from 1995 to 2014 across the ZIP-Code areas of Berlin. A spatial autoregressive model is applied to the data to illustrate how locally varying model uncertainties (e.g., due to latent regressors) can be captured by the spatial GARCH-type models.
    Date: 2021–06

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