nep-geo New Economics Papers
on Economic Geography
Issue of 2022‒08‒15
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Disruptive innovation and spatial inequality By Tom Kemeny; Sergio Petralia; Michael Storper
  2. Agglomeration Spillovers and Persistence: New Evidence from Large Plant Openings By Carlianne Patrick; Mark Partridge
  3. Spatial Interactions By Kim, Jun Sung; Patacchini, Eleonora; Picard, Pierre M.; Zenou, Yves
  4. Extractive Industries and Regional Diversification: A Multidimensional Framework for Diversification in Mining Regions By Moritz Breul; Miguel Atienza
  5. Industrial sources and unevenness of regional employment resilience in Japan By Nishi, Hiroshi
  6. Can decentralisation help address poverty and social exclusion in Europe? By Vassilis Tselios; Andres Rodriguez-Pose
  7. Tie formation in global production chains By Hempfing, Alexander; Mundt, Philipp
  8. Does the creation of smaller states lead to higher economic growth? Evidence from state reorganization in India By Vikash Vaibhav; K.V. Ramaswamy
  9. The Italian National Strategy for Inner Areas: first insights from regions’ specialization in cultural and creative industries By Andrea Porta; Josep-Maria Arauzo-Carod; Giovanna Segre
  10. New perspectives on territorial disparities By PROIETTI Paola; SULIS Patrizia; PERPIÑA CASTILLO Carolina; LAVALLE Carlo; AURAMBOUT Jean Philippe; BATISTA E SILVA Filipe; BOSCO Claudio; FIORETTI Carlotta; GUZZO Fabrizio; JACOBS Christiaan; KOMPIL Mert; KUCAS Andrius; PERTOLDI Martina; RAINOLDI Alessandro; SCIPIONI Marco; SIRAGUSA Alice; TINTORI Guido; WOOLFORD Jayne
  11. Regional Convergence in Bangladesh using Night Lights By Syed Abul, Basher; Salim, Rashid; Mohammad Riad, Uddin

  1. By: Tom Kemeny; Sergio Petralia; Michael Storper
    Abstract: Although technological change is widely credited as driving the last two hundred years of economic growth, its role in shaping patterns of inequality remains under-explored. Drawing parallels across two industrial revolutions in the United States, this paper provides new evidence of a relationship between highly disruptive forms of innovation and spatial inequality. Using the universe of patents granted between 1920 and 2010 by the U.S. Patent and Trademark Office, we identify disruptive innovations through their rapid growth, complementarity with other innovations, and widespread use. We then assign more- and less-disruptive innovations to subnational regions in the geography of the U.S. We document three findings that are new to the literature. First, disruptive innovations exhibit distinctive spatial clustering in phases understood to be those in which industrial revolutions reshape the economy; they are increasingly dispersed in other periods. Second, we discover that the ranks of locations that capture the most disruptive innovation are relatively unstable across industrial revolutions. Third, regression estimates suggest a role for disruptive innovation in regulating overall patterns of spatial output and income inequality
    Keywords: technological change; regional development; industrial revolutions; innovation; inequality
    JEL: O30 O33 O51 J31
    Date: 2022–07
  2. By: Carlianne Patrick; Mark Partridge
    Abstract: We use confidential Census microdata to compare outcomes for plants in counties that “win” a new plant to plants in similar counties that did not to receive the new plant, providing empirical evidence on the economic theories used to justify local industrial policies. We find little evidence that the average highly incentivized large plant generates significant productivity spillovers. Our semiparametric estimates of the overall local agglomeration function indicate that residual TFP is linear for the range of “agglomeration” densities most frequently observed, suggesting local economic shocks do not push local economies to a new higher equilibrium. Examining changes twenty years after the new plant entrant, we find some evidence of persistent, positive increases in winning county-manufacturing shares that are not driven by establishment births.
    Keywords: local economic development, agglomeration externalities, persistence
    JEL: R11 H25 R38
    Date: 2022–06
  3. By: Kim, Jun Sung; Patacchini, Eleonora (Cornell University); Picard, Pierre M. (University of Luxembourg); Zenou, Yves (Monash University)
    Abstract: This paper studies how the strength of social ties are affected by the geographical location of other individuals and their social capital. We characterize the equilibrium in terms of both social interactions and social capital. We show that lower travel costs increase not only the interaction frequency but also the social capital for all agents. We also show that the equilibrium frequency of interactions is lower than the efficient one. Using a unique geo-coded dataset of friendship networks among adolescents in the United States, we structurally estimate the model and show that, indeed, agents socially interact less than that at the first best optimum. Our policy analysis suggests that, at the same cost, subsidizing social interactions yields a higher total welfare than subsidizing transportation costs.
    Keywords: social networks, location, structural estimation, policies
    JEL: D85 R1 Z13
    Date: 2022–06
  4. By: Moritz Breul; Miguel Atienza
    Abstract: Economic diversification is seen as imperative for mining regions to achieve an economically sustainable form of development. Yet, existing knowledge is largely drawn from national scale analyses, thereby concealing interregional differences as well as mechanisms between resource extraction and diversification operating at the regional scale. This special issue on ‘Extractive Industries and Regional Diversification’ therefore shows recent work that brings the study of the relationship between extractive industries and diversification to a regional level. In this introductory article, we propose a multidimensional framework that seeks to refine our understanding of mining regions’ (in)ability to diversify their economies by bringing together insights from research on the relationship between resource extraction and development and research on regional diversification in economic geography. We argue that the effect of extractive industries on regional diversification is mediated along three dimensions, that is (1) the regional context conditions, (2) the multi-scalar organization of extractive industries, and (3) the relevance of temporality. The framework is applied to synthesize the key insights of the special issue articles and directions for future research are derived.
    Keywords: regional diversification, mining regions, subnational resource curse, Dutch disease, Evolutionary Economic Geography
    Date: 2022–07
  5. By: Nishi, Hiroshi
    Abstract: Given the increase in the importance of measuring the degree and source of resilience after great shocks, resilience has garnered researchers’ attention. However, there is no generally agreed-upon measurement for resilience; the existing approach holds few industrial assessments for resilience. This study provides a structural sensitivity index to measure the industrial sources of regional employment resilience and applies it to the Japanese economy between 1980 and 2012. It presents a novel formula that quantifies the sources of regional resilience by within-sector and structural change effects and extracts how unevenly different local industries con-tribute to regional resilience. Exploring the industrial and quantitative aspects of employment resilience chronally and geographically reveals that Japanese prefectures gradually became resilient after the 1990s, increasing the regional heterogeneity. Moreover, the structural change effect has constantly hurt the regional resilience, offsetting some favourable within-sector effects. Finally, the increasing regional heterogeneity behind improvements in resilience accompanies industrial unevenness from different time horizons, but the overall relationship between industrial unevenness and resilience is not unique from a different spatial perspective.
    Keywords: Resilience, sensitivity index, employment, industrial structural change, Japan
    JEL: B52 E24 J21 R11 R12
    Date: 2022–06–23
  6. By: Vassilis Tselios; Andres Rodriguez-Pose
    Abstract: Poverty reduction and the tackling of social exclusion are overarching goals of development and welfare policies. This paper explores the extent to which decentralisation contributes to poverty and social exclusion alleviation in European countries and regions. We find evidence that increases in central government transfers of political, administrative, and fiscal authority to subnational tiers of government reduce poverty and address social exclusion at an aggregate level. This, however, mainly happens in countries with a high degree of governance quality and, fundamentally, in urban areas. The link between decentralisation and poverty and social exclusion alleviation is more uniform at the regional level, as greater regional autonomy is connected to lower poverty and social exclusion, regardless of the quality of regional government. Hence, when regional governments have the capacity to design their own independent policies, a reduction of poverty and social exclusion and improvements in well-being generally ensue.
    Keywords: decentralisation; poverty; social exclusion; quality of governance; urban areas; Europe
    JEL: H11 H53 I32 R11
    Date: 2022–07
  7. By: Hempfing, Alexander; Mundt, Philipp
    Abstract: Using a statistical model of an evolving multiplex network, we study tie formation in global production chains within and across developed countries, their trade activities with developing economies in the intermediate goods market, and the mutual dependencies between these relationships. Our model approaches these dynamics from the perspective of individual nodes and thus identifies the driving forces behind the tie formation process. The empirical value of our approach is demonstrated by fitting the model to a panel data set from the OECD Inter-Country Input-Output Tables between 2005 and 2015. Based on these data, we find that (i) geography, two-sided heterogeneity of buyers and sellers, trade costs, as well as structural characteristics of the production network determine the formation of trade linkages between OECD country-sectors, (ii) some of these determinants have an asymmetric effect on import and export ties between OECD and non-OECD countries, and (iii) intra-OECD trade and import and export ties with non-OECD economies are mutually dependent.
    Keywords: trade network,network formation,stochastic actor-oriented model,multiplex dynamics,input-output analysis
    JEL: E23 F14 D57 R15
    Date: 2022
  8. By: Vikash Vaibhav; K.V. Ramaswamy (Indira Gandhi Institute of Development Research)
    Abstract: In the largest territorial reorganization since the 1950s, when the modern state boundaries were demarcated, the Indian union government carved out three new states from three large north Indian states in November 2000. This was accompanied by discussions along political and sociological lines. But the debates along economic lines were muted, owing to a lack of data. Equipped with three and a half decades-long macro panel data, we investigate whether the event had an impact on the per capita income. For comparison, we construct five separate counterfactuals using techniques such as synthetic control and elastic net regularization. The three erstwhile `combined' states do not show any evidence of extraordinary growth. We further investigate the six states separately to see if the `new' states grew at the expense of their `parent' states. The state of Uttarakhand shows `extraordinary' growth in the post-reorganization period. Two other smaller states (Bihar and Chhattisgarh) did grow faster than their counterfactual, but do not qualify for the statistical significance test. Three other states (Jharkhand, Madhya Pradesh, and Uttar Pradesh) also do not show a significant change in their growth path. Overall, we find that the creation of smaller sub-national administrative units may not be a panacea for their economic problems.
    Keywords: State reorganization, Economic growth, Impact evaluation, Synthetic Control, Elastic Net
    JEL: O11 O47 R58
    Date: 2022–06
  9. By: Andrea Porta (University Rovira i Virgili); Josep-Maria Arauzo-Carod (University Rovira i Virgili); Giovanna Segre (University of Turin)
    Abstract: The paper investigates the spatial distribution of cultural and creative industries (CCIs) with the main focus on the inner peripheries of the Italian regions, as defined by the Italian National Strategy of Inner Areas (SNAI). The objective of the paper is to analyse the role of culture in fostering the development of peripheral areas in order to discuss the correspondence between the presence of CCIs evaluated in terms of establishments and employees, and the policies applied by the National Strategy. The analysis includes quantitative (specialization indexes) and cartographic methods (maps) at the national, regional, and local levels that provide a clear insight into the CCIs endowments. The results of the analysis suggest that CCIs distribute in Italian Inner peripheries in a similar way than in the whole country. The results also confirm the historically rooted difference between the northern and southern parts of Italy. The paper opens to further research concerning the adherence of the SNAI (and the actions planned at the different scales) to the actual characteristics of the economic tissue and the possible role of culture in bridging the gap between the areas, contributing to the success of the overall National Strategy.
    Keywords: Inner peripheries, SNAI, Cultural and Creative Industries, Regional development
    JEL: R58 Z11
    Date: 2022
  10. By: PROIETTI Paola (European Commission - JRC); SULIS Patrizia (European Commission - JRC); PERPIÑA CASTILLO Carolina (European Commission - JRC); LAVALLE Carlo (European Commission - JRC); AURAMBOUT Jean Philippe (European Commission - JRC); BATISTA E SILVA Filipe (European Commission - JRC); BOSCO Claudio (European Commission - JRC); FIORETTI Carlotta (European Commission - JRC); GUZZO Fabrizio (European Commission - JRC); JACOBS Christiaan (European Commission - JRC); KOMPIL Mert (European Commission - JRC); KUCAS Andrius (European Commission - JRC); PERTOLDI Martina (European Commission - JRC); RAINOLDI Alessandro (European Commission - JRC); SCIPIONI Marco (European Commission - JRC); SIRAGUSA Alice (European Commission - JRC); TINTORI Guido (European Commission - JRC); WOOLFORD Jayne (European Commission - JRC)
    Abstract: Persisting territorial disparities across and within the EU represent a potential threat to the future of the European project. These inequalities have been further exacerbated by the impact of the COVID-19 pandemic. Therefore, it is crucial to understand existing challenges and opportunities across European locations for improving policies coherently with the principles of leaving no place and no one behind. This work introduces the exploratory concept of lonely places, which is spatially embedded and identifies a plurality of places that present a vulnerability in terms of lack or insufficient local endowment, accessibility, or connectivity. This study presents a unique spatial, multi-scalar and interdisciplinary approach to places. It aims at creating knowledge going beyond traditional operational classes of policy programmes, the urban/rural dichotomy, or administrative boundaries. This work also includes several dimensions (e.g., physical infrastructure, access to schools, cultural facilities, democratic participation, migrants’ integration, etc.), which are all useful to create fully integrated policies. Findings from this research enhance and support evidence-based policy actions to favour cohesion among territories and avoid the possibility that places might act as an obstacle to individuals to achieving their full potential. Results presented in this report can also inform other specific EU policies and frameworks, as well as policies at national, regional, and local levels
    Keywords: Lonely places, disconnected, vulnerable, opportunities, territorial
    Date: 2022–06
  11. By: Syed Abul, Basher; Salim, Rashid; Mohammad Riad, Uddin
    Abstract: We analyze economic convergence across 64 districts of Bangladesh using newly harmonized satellite night light data over 1992-2018. The growth in night lights—taken as a proxy for regional economic activity—reveals overwhelming evidence of absolute convergence. Regional differences in night light (or income) growth have been shrinking at an annual convergence rate of 4.57%, corresponding to a half-life of 15 years. Net migration plays a relatively prominent role in the regional convergence process.
    Keywords: Night lights, convergence, Bangladesh
    JEL: O47 R11
    Date: 2022–06–14

This nep-geo issue is ©2022 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.