nep-geo New Economics Papers
on Economic Geography
Issue of 2022‒02‒21
twelve papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. No inventor is an island: social connectedness and the geography of knowledge flows in the US By Diemer, Andreas; Regan, Tanner
  2. Firm innovation and generalized trust as a regional resource By Bischoff, Thore Sören; Hipp, Ann; Runst, Petrik
  3. Local Public Goods and the Spatial Distribution of Economic Activity By Arthur Guillouzouic--Le Corff; Emeric Henry; Joan Monras
  4. Defaulting Alone: The Geography of Sme Owner Numbers and Credit Risk in Hungary By Csaba Burger
  5. The urban-rural wage gap in Germany By Brixy, Udo; Brunow, Stephan; Ochsen, Carsten
  6. Efficient Regional Taxes in the Presence of Mobile Creative Capital By Batabyal, Amitrajeet; Nijkamp, Peter
  7. Rebuilding a Cluster While Protecting Knowledge within Low-Medium-Tech Supplier SMEs: A Spanish and French Comparison By Martine Gadille; Juan Gallego-Bono
  8. Measuring the effect of distance on the network topology of the Global Container Shipping Network By Dimitrios Tsiotas; César Ducruet
  9. Towards a sustainable, negotiated mode of strategic regional planning: a political economy perspective By Gordon, Ian R.; Champion, Tony
  10. The long shadow of local decline: birthplace economic conditions, political attitudes, and long-term individual economic outcomes in the UK By McNeil, Andrew; Lee, Neil; Luca, Davide
  11. Firms' perceptions of barriers to innovation and resilience: the Italian region of Friuli Venezia Giulia during the crisis By Iammarino, Simona; Sodano, Tiziana; Vittorino, Giovanni
  12. Bayesian Estimation of Multivariate Panel Probits with Higher-order Network Interdependence and an Application to Firms' Global Market Participation in Guangdong By Badi H. Baltagi; Peter H. Egger; Michaela Kesina

  1. By: Diemer, Andreas; Regan, Tanner
    Abstract: Do informal social ties connecting inventors across distant places promote knowledge flows between them? To measure informal ties, we use a new and direct index of social connectedness of regions based on aggregate Facebook friendships. We use a well-established identification strategy that relies on matching inventor citations with citations from examiners. Moreover, we isolate the specific effect of informal connections, above and beyond formal professional ties (co-inventor networks) and geographic proximity. We identify a significant and robust effect of informal ties on patent citations. Further, we find that the effect of geographic proximity on knowledge flows is entirely explained by informal social ties and professional networks. We also show that the effect of informal social ties on knowledge flows is greater for new entrepreneurs or ‘garage inventors’, for older or ‘forgotten’ patents, and for flows across distant technology fields. It has also become increasingly important over the last two decades.
    Keywords: diffusion; informal networks; knowledge flows; social connectedness; PhD Studentship
    JEL: O33 R12 Z13
    Date: 2022–03–01
  2. By: Bischoff, Thore Sören; Hipp, Ann; Runst, Petrik
    Abstract: Generalized trust within regions represents an important firm resource. We provide empirical evidence on the impact of trust among people in regions on innovation using two distinct data sets. The first one contains firm-level data and is used to analyze how trust affects firm-level innovation in small and medium sized enterprises (SMEs). The second data set is used to analyze the trust-innovation relationship within regions. It allows us to capture innovation in the form of patents and explore spatial patterns. Our observation period ranges from 2004 to 2019. We apply a multilevel approach, panel data models as well as spatial techniques. The results show that generalized trust has a positive impact on a firm's innovativeness, which is particularly strong for small and medium-sized firms and in regions with relatively low levels of trust.
    Keywords: Trust,innovation,regional innovation systems,SMEs
    JEL: D02 D83 O12 O18 O31
    Date: 2022
  3. By: Arthur Guillouzouic--Le Corff (IPP - Institut des politiques publiques); Emeric Henry (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, CEPR - Center for Economic Policy Research - CEPR); Joan Monras (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique, UPF - Universitat Pompeu Fabra [Barcelona])
    Abstract: Using French data, we provide: a) causal evidence that a drop in local public goods provision decreases private sector activity, and b) evidence consistent with monopsony power of the public sector in local labor markets. We introduce a public sector with these two key characteristics in an otherwise standard spatial equilibrium model, and show that it delivers the main stylized facts established in our data, in particular, that the share of the public sector relative to the private is independent of the productivity of the city. We emphasize the tradeoffs between allowing governments to freely choose local public employment and wages (as in most of the US public sector), versus imposing rules that constrain public sector pay with some indexation to the local cost of living (as in many European countries). We show that wage indexation limits monopsony power – leading to a larger public sector – and is optimal if the indexation is sufficiently strong.
    Keywords: Local public goods,Public service,Market power,Spatial economics
    Date: 2021–06–01
  4. By: Csaba Burger (Magyar Nemzeti Bank (Central Bank of Hungary))
    Abstract: The transition from the state ownership to market mechanisms in Hungary fundamentally altered the geography of domestic micro, small, and medium enterprises (SMEs). This study investigates the spatial and temporal evolution of owner numbers, using data on all Hungarian SMEs between 1991 and 2019 and across 175 regional districts. Then it explores the relationship between the number of owners and the probability of credit default by joining data from the Credit Registry (KHR) for the period between 2007 and 2019. The number of owners at an average SME sank from four in 1991 to two in 2019, with consistently higher averages in less populated regions. Meanwhile, SMEs with one owner only have up to twice as high credit default probability as SMEs with more owners over all geographies in all years. Therefore, regionally varying ownership structures mean regionally differing ownership and management practices and hence risk levels. These could be mitigated with targeted regional policy measures.
    Keywords: financial geography, ownership structures, credit risk, SMEs
    JEL: G21 G3 R3 R11 R1
    Date: 2022
  5. By: Brixy, Udo (Institute for Employment Research (IAB), Nuremberg, Germany); Brunow, Stephan (HdBA); Ochsen, Carsten (HdBA ; Univ. Rostock)
    Abstract: "We compare real wage differences between centralized and peripheral areas and highly centralized and peripheral areas using vast information of German administrative data that contains more than 2.8 Million individuals and 660,000 firms. We provide substantial empirical evidence that most of the wage gaps can be explained by differences in endowments of individual and firm characteristics, particularly when unobserved individual and firm heterogeneity is appropriately accounted for. Our interpretation is that the selectivity of workers and firms in space explains most of the real wage gap between peripheral and (highly) centralized regions, and returns to characteristics are honoured rather equally in all regional types." (Author's abstract, IAB-Doku) ((en))
    Keywords: IAB-Open-Access-Publikation
    JEL: J31 R12
    Date: 2022–02–14
  6. By: Batabyal, Amitrajeet; Nijkamp, Peter
    Abstract: We study interregional competition for mobile creative capital between regions A and B. Regional authorities (RAs) in both regions use tax policy to attract the creative capital possessing members of the creative class to their region. The resulting tax revenues help RAs finance other objectives such as the provision of one or more public goods. In this setting, we accomplish five tasks. First, we explain the significance of a parameter ζ that is related to the marginal product of creative capital. Second, we compute the Nash equilibrium tax rates when each RA chooses its tax rate to maximize tax revenue. Third, we discuss how a decline in ζ affects the Nash equilibrium tax rates. Fourth, we determine the two efficient tax rates. Finally, we discuss the implications of our analysis for a policy that raises revenue by taxing creative capital.
    Keywords: Competition, Creative Capital, Efficiency, Mobility, Tax Revenue
    JEL: H20 R11 R50
    Date: 2021–11–13
  7. By: Martine Gadille (LEST - Laboratoire d'économie et de sociologie du travail - AMU - Aix Marseille Université - CNRS - Centre National de la Recherche Scientifique, CNRS - Centre National de la Recherche Scientifique); Juan Gallego-Bono (Department of Applied Economics II, University of Valencia, Avda. dels Tarongers s/n, Valencia 46022 - affiliation inconnue)
    Abstract: Most of SMEs are engaged in open innovation practices, but they do not benefit from open innovation or from patenting in the same way as larger firms do. At the same time SMEs, as territorialized suppliers, play a crucial role within evolving regional specialization. In this context the purpose of our study is to examine how low and medium technology supplier SMEs learn and organize themselves at a territorial level to address the challenge of IP protection in an open innovation paradigm. We used a qualitative method with a longitudinal multi-case study involving 27 companies with a historical lance to compare the territorial dynamics of knowledge protection within clustered supplier SMEs in two European regions. The results show they protect their knowledge by learning how to design, in a direct relationship with clients, customized complex technological products to develop a new organizational matrix of multidisciplinary knowledge that reveals itself difficult to imitate within the clusters. They also cope with other supplier firms across sectors even if they show societal path dependencies in the way to build cooperation. This dynamic has given birth to changing structural relationships among regionally clustered SMEs and between them and large firms.
    Keywords: intellectual property,low-medium tech suppliers SMEs,regional clusters,cooperation,organizational matrix,regional specialization,societal path dependency
    Date: 2021–10
  8. By: Dimitrios Tsiotas (Agricultural University of Athens); César Ducruet (EconomiX - UPN - Université Paris Nanterre - CNRS - Centre National de la Recherche Scientifique)
    Abstract: This paper examines how spatial distance affects network topology on empirical data concerning the Global Container Shipping Network (GCSN). The GCSN decomposes into 32 multiplex layers, defined at several spatial levels, by successively removing connections of smaller distances. This multilayer decomposition approach allows studying the topological properties of each layer as a function of distance. The analysis provides insights into the hierarchical structure and (importing and exporting) trade functionality of the GCSN, hub connectivity, several topological aspects, and the distinct role of China in the network's structure. It also shows that bidirectional links decrease with distance, highlighting the importance of asymmetric functionality in carriers' operations. It further configures six novel clusters of ports concerning their spatial coverage. Finally, it reveals three levels of geographical scale in the structure of GCSN (where the network topology significantly changes): the neighborhood (local connectivity); the scale of international connectivity (mesoscale or middle connectivity); and the intercontinental market (large scale connectivity). The overall approach provides a methodological framework for analyzing network topology as a function of distance, highlights the spatial dimension in complex and multilayer networks, and provides insights into the spatial structure of the GCSN, which is the most important market of the global maritime economy.
    Date: 2021–10–28
  9. By: Gordon, Ian R.; Champion, Tony
    Abstract: The need to give strategic direction to complex regional systems has never been greater, but reinstating a classic strategic plan model that failed to secure consistently positive impacts, or even sustain its own practice, is a mistaken route. With a mix of conceptual analysis, critical review of past experience and examination of population dynamics across England’s Wider South East and its fringes, this paper argues for a decentred form of strategic governance based on the development of a capacity for negotiated collaboration and realistic engagement with powerful market and institutional processes on a sustained basis.
    Keywords: strategic regional planning; regional governance; metropolitan regions; migration; London; Wider South East
    JEL: R23 R50 R52 R58
    Date: 2021–01–02
  10. By: McNeil, Andrew; Lee, Neil; Luca, Davide
    Abstract: Does growing up in a high-unemployment area matter for individual economic and political outcomes? Despite a significant focus upon the links between place of residence, life outcomes and political attitudes of individuals, there is less evidence on how local economic conditions at birth shape individual wages and political attitudes over the longterm. This paper links the British Household Panel Survey (BHPS) micro data from English and Welsh respondents with historic localised information on unemployment. Our results, which control for composition effects, family background, and sorting of people across places, show that being born into a high-unemployment Local Authority has a significant, long-term impact on individual’s economic outcomes, decreasing earnings in adulthood. Even accounting for individual economic outcomes, being born into a local authority of high unemployment makes individuals more economically left-wing, with a greater belief in an obligation for the government to provide jobs, but also less culturally tolerant. These results contribute to the debate on the nature and rationales of placebased policy solutions.
    Keywords: place of birth; unemployment; territorial inequality; lifetime mobility; political attitutes; place-based policies
    JEL: J31 J38 J62 R11 R23
    Date: 2022–02
  11. By: Iammarino, Simona; Sodano, Tiziana; Vittorino, Giovanni
    Abstract: This paper connects the literature on obstacles to innovation to the concept of regional economic resilience by empirically assessing the relationship between the intensity of firms’ engagement in innovative activities and self-reported obstacles to innovation during the unfolding of the latest economic and financial downturn. The analysis is grounded on a unique dataset on firm-level accounting data (CAD) and information from two waves (2008-10 and 2010-12) of the Community Innovation Survey (CIS) for a representative sample of firms in the Italian region of Friuli Venezia Giulia. The main results support the existence of severe deterring barriers in the region, and suggest that during the economic and financial crisis after 2008 firms’ uncertainty about the market demand became dominant.
    Keywords: obstacles to innovation; engagement in innovative activities; regional resilience; economic crisis; financial crisis
    JEL: R14 J01 N0
    Date: 2020–07–07
  12. By: Badi H. Baltagi (Center for Policy Research, Maxwell School, Syracuse University, 426 Eggers Hall, Syracuse, NY 13244); Peter H. Egger (ETH Zürich, CEPR, CESifo, GEP); Michaela Kesina (University of Groningen)
    Abstract: This paper proposes a Bayesian estimation framework for panel-data sets with binary dependent variables where a large number of cross-sectional units is observed over a short period of time, and cross-sectional units are interdependent in more than a single network domain. The latter provides for a substantial degree of flexibility towards modelling the decay function in network neighborliness (e.g., by disentangling the importance of rings of neighbors) or towards allowing for several channels of interdependence whose relative importance is unknown ex ante. Besides the flexible parameterization of cross-sectional dependence, the approach allows for simultaneity of the equations. These features should make the approach interesting for applications in a host of contexts involving structural and reduced-form models of multivariate choice problems at micro-, meso-, and macroeconomic levels. The paper outlines the estimation approach, illustrates its suitability by simulation examples, and provides an application to study exporting and foreign ownership among potentially interdependent firms in the specialized and transport machinery sector in the province of Guangdong.
    Keywords: Network Models; Spatial Models; Higher-Order Network Interdependence; Multivariate Panel Probit; Bayesian Estimation; Firm-Level Data; Chinese Firms
    JEL: C11 C31 C35 F14 F23 L22 R10
    Date: 2022–02

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