nep-geo New Economics Papers
on Economic Geography
Issue of 2022‒10‒24
twelve papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Evolutionary Economic Geography and Policy By Ron Boschma; ; ;
  2. Varieties of Regional Innovation Systems around the World and Catch-up by Latecomers By Jinhee Kim; Keun Lee; ;
  3. Towards a Causal Model and Causal Inference of Regional Entrepreneurship Development Index, its antecedents and outcomes in European regions By Behnam Azhdari; Jean Bonnet; Sébastien Bourdin
  4. The work-from-home revolution and the performance of cities By Steven Bond-Smith; Philip McCann
  5. Climate Change and Migration: The Case of Africa By Bruno Conte
  6. Demand and Distribution in a Dynamic Spatial Panel Model for the United States: Evidence from State-Level Data By Gilberto Tadeu Lima; Andre M. Marques
  7. Bouncing back, forward, and beyond: Towards regenerative regional development in responsible value chains By Grillitsch, Markus; Asheim, Bjørn
  8. Regional Diffusion of Foreign Demand Shocks Through Trade and Ownership Networks By Lionel Fontagné; Gianluca Santoni
  9. Forecasting Regional Industrial Production with High-Frequency Electricity Consumption Data By Robert Lehmann; Sascha Möhrle
  10. Local employment dynamics and communtig costs By Julien Pascal
  11. Are West Virginia Banks Unique? By Eduardo Minuci; Scott Schuh
  12. Archipelagic Economies By Robert J. Utz

  1. By: Ron Boschma; ; ;
    Abstract: The literature of Evolutionary Economic Geography (EEG) has received little attention in Evolutionary Economics, despite overwhelming evidence that time-space dimensions are crucial to understand economic evolution. This chapter will focus on the relationship between EEG and regional policy. We will discuss how evolutionary principles like proximity, relatedness and path dependency have been used to construct regional innovation policy in the European Union.
    Keywords: Evolutionary Economic Geography, regional innovation policy, Smart Specialization, relatedness, complexity
    JEL: O25 O38 R11
    Date: 2022–10
  2. By: Jinhee Kim; Keun Lee; ;
    Abstract: This study identifies the characteristics and types of the regional innovation systems (RIS) of regions and cities in emerging economies in comparison to those in advanced economies. It uses the citation data of the US patents filed by 30 regions. Some RIS variables are newly developed, and they include intra-regional, inter-regional, and inter-national sourcing of knowledge and local ownership of innovation. The cluster analysis of these variables enables us to identify four major types of RIS around the world and link them to regional economic performance. The four types are, in the descending order of their per capita income levels, as follows: large, mature RIS characterized by a combination of long cycle technology specialization and high local ownership (Group 1), mixed RIS characterized by a long cycle and low local ownership (Group 2), “strong catch-up†characterized by short cycle and high local ownership (Group 3), and “weak catch-up†characterized by short cycle and low local ownership (Group 4). Groups 3 and 4 include only the regions in emerging world. They similarly specialize in the same short cycle time of technologies (CTT)-based sectors but show different records of economic performance. The key differentiating variable is the degree of local ownership of knowledge, which can be a basis for increasing domestic sourcing of knowledge and sustained catching up. Another important variable is decentralization, of which the level is lower in the strong catch-up group than in the weak catch-up group. In this Group 3, catching up is led by big businesses. Several cities experiencing upgrading, like Moscow, Beijing, and Shanghai, also show an increasing trend of local ownership and centralization.
    Keywords: regional innovation systems, innovation, patents, economic growth, economic catch-up
    JEL: C23 O31 O32 O33 O50 R11 R58
    Date: 2022–10
  3. By: Behnam Azhdari (Department of Management, Khark Branch, Islamic Azad University, Shohada St. Khark Island, Boushehr, Iran); Jean Bonnet (Normandie Univ, Unicaen, CNRS, CREM, 14000 CAEN, FRANCE); Sébastien Bourdin (EM Normandie Business School, Métis Lab, 9 rue Claude Bloch, 14000 CAEN, FRANCE)
    Abstract: While the literature on entrepreneurial ecosystems (EEs) is growing, there is still a scarce literature on the causal effect between the components of the EEs and between the EEs and regional development. Our paper fills this gap and empirically identify the causal relationships between the EEs' components and the causal effect of the EE on regional development. We show that the growth of GDP/Inhabitant in European regions is only directly determined by the creation of new firms with a strong ambition to grow and create many jobs. The perception of regional opportunities and the risk acceptance are primitive points at the origin of most of the crucial nodes of successful entrepreneurial ecosystems in European regions.
    Keywords: Entrepreneurial Ecosystem, REDI Components, Causal Models, Bayesian Networks, Bayesian Inference
    JEL: C11 L26 M13 R11
    Date: 2022–09
  4. By: Steven Bond-Smith (UHERO, University of Hawai'i at Manoa); Philip McCann (University of Manchester, Alliance Manchester Business School; The Productivity Institute, Manchester, United Kingdom)
    Abstract: In this paper we set out the relationships between the behavioural, technological and spatial changes in systems that allow for heterogeneous responses to workingfrom- home by different types of actors, and also identifies the channels via which such changes take place. Unlike all other papers on the subject, the analytical framework we propose centers explicitly on the role of frequency of commuting. In particular, we find that the optimal frequency of commuting is positively related to the opportunity costs of less-than-continuous face-to-face interaction and inversely related to the travel plus travel-time costs. The results also support recent empirical findings of a “donut effect†with greater growth in the suburbs and hinterlands around large cities, but also capture inter-city effects for the first time. Counterintuitively, the reduction in the frequency of commuting makes larger cities and their hinterlands more desirable places, in spite of longer commuting distances. Taken together, our results imply enhanced productivity of larger cities over smaller cities.
    Keywords: Working-from-home, agglomeration economies
    JEL: R1
    Date: 2022–09
  5. By: Bruno Conte
    Abstract: This paper estimates the impacts of climate change in sub-Saharan Africa (SSA) on migration and other economic outcomes. I develop a quantitative spatial model that captures the role of trade networks, migration barriers, and agricultural yields on the geography of the economy. I combine the model with forecasts of future crop yields to find that climate change, by the end of the century, reduces SSA real GDP per capita by 1.8 percent and displaces 4 million individuals. Migration barriers in SSA are very stringent: if absent, climate-induced migration exceeds 100 million individuals. Still, migration and trade are powerful adaptation mechanisms. Reducing migration barriers to the European Union (EU) standards eliminates the aggregate economic losses of climate change in SSA, but at the cost of more climate migration and higher regional inequality. Also reducing trade frictions to the EU levels attenuates this cost and makes SSA better off on aggregate and distributional terms.
    Keywords: climate change, migration, economic geography
    JEL: O15 Q54 R12
    Date: 2022
  6. By: Gilberto Tadeu Lima; Andre M. Marques
    Abstract: We estimate a modified demand-and-distribution system for the 48 contiguous US states and the District of Columbia (DC) employing spatial dynamic panel data for 1980–2019. We allow for endogenous regressors, test for the presence, significance, and magnitude of spatial spillovers, and estimate both immediate and cumulative effects on our endogenous variables of interest. Without testing for spatial dependence and spillovers, we estimate that output growth and capacity utilization in the sample US states and DC rise in response to an increase in their own wage share. Yet when we test for spatial dependence and spillovers as required by the state-level nature of the data, we estimate that a higher state wage share lowers output growth and capacity utilization in the own state, but raises output growth and capacity utilization in neighboring states. The former direct effect is larger (smaller) in absolute value than the latter indirect effect in the case of capacity utilization (output growth). Meanwhile, we find that a higher state output growth or capacity utilization reduces the wage share in the own state, but raises the wage share in neighboring states. The former direct effect is larger in absolute value than the latter indirect effect.
    Keywords: Wage share; output growth rate; capacity utilization; state-level economic activity; dynamic spatial panel data
    JEL: C33 D33 O10 R11
    Date: 2022–10–04
  7. By: Grillitsch, Markus (CIRCLE, Lund University); Asheim, Bjørn (CIRCLE, Lund University)
    Abstract: Understanding, explaining, and affecting regional economic resilience and transformation has become more important in recent years than a narrow economic growth perspective. The paper investigates why, how and to what consequences local actors engage in regional development during and after crisis times to understand the role of human agency for regional resilience. We identify the differences in the underlying processes that lead to adaptation – bouncing back to economic activities existing before the crisis, adaptability – bouncing forward or diversification into new economic activities, or transformation – bouncing beyond the current organization of the economy towards a more green and inclusive future. In our empirical study of the maritime industry in Sunnmøre/Norway, we found two starkly contrasting development rationales: a traditional, neoliberal economic rationale of globalization, and a progressive rationale combining regenerative regional development with responsible value chains. We trace the origin of these rationales and show how they differ in agentic orientation and time perspective. Subsequently, we engage in a theoretical discussion about the downsides of global value chains embedded in a neoliberal ideology, and how it would be possible to combine regenerative regional development with responsible value chains; including important elements of policy interventions to facilitate the shift.
    Keywords: Regional resilience; sustainability transformation; human agency; global value chains; automation and industry 4.0; innovation; industrial and innovation policy
    JEL: O30 R10 R11 R50 R58
    Date: 2022–10–11
  8. By: Lionel Fontagné; Gianluca Santoni
    Abstract: International demand shocks are transmitted within the trade and ownership firms' networks and impact directly or indirectly domestic firm productivity and labor misallocation. Considering manufacturing firms for Italy, Spain and France over the period 2009-2017, we quantify these transmission channels from the global economy to the domestic firms, and within the domestic economy across locations, sectors and firms. We compute in a shift share fashion international demand shock at the district-sector-year level as plausibly exogenous to individual firms. Our results confirm that global shocks are transmitted through trade networks and that this transmission is largely mediated by firms' ownership networks both across and within the borders of the three countries.
    Keywords: Globalization;Productivity;Networks;FDI
    JEL: F14 F23 F61
    Date: 2022–09
  9. By: Robert Lehmann; Sascha Möhrle
    Abstract: In this paper, we study the predictive power of electricity consumption data for regional economic activity. Using unique weekly and monthly electricity consumption data for the second-largest German state, the Free State of Bavaria, we conduct a pseudo out-of-sample forecasting experiment for the monthly growth rate of Bavarian industrial production. We find that electricity consumption is the best performing indicator in the nowcasting setup and has higher accuracy than other conventional indicators in a monthly forecasting experiment. Exploiting the high-frequency nature of the data, we find that the weekly electricity consumption indicator also provides good predictions about industrial activity in the current month even with only one week of information. Overall, our results indicate that regional electricity consumption offers a promising avenue to measure and forecast regional economic activity.
    Keywords: electricity consumption, real-time indicators, forecasting, nowcasting
    JEL: E17 E27 R11
    Date: 2022
  10. By: Julien Pascal
    Abstract: I explore the links between commuting costs and local employment dynamics using a spatial discontinuity introduced by a French reform in September 2015. The reform decreased the cost of public transportation in selected areas of the Paris region, but did not affect other areas. In the baseline regression framework, which only includes units that are geographically close to each other, I find that areas benefiting from the reform experienced a 0:25 percentage point decline in the unemployment rate, a 0.60 percentage point increase in the share of employed workers commuting using public transport, and a 1.4% increase in the price of residential real estate. I extend the regression framework to take into account the heterogeneity of treatment introduced by the reform, which allows me to analyze the mechanisms driving the results. I also show that a calibrated spatial search-and-matching model can rationalize the estimated treatment effects.
    Keywords: Local employment, Commuting Costs, Policy, Search-and-Matching
    JEL: E24 J68 R13 R23
    Date: 2022–10
  11. By: Eduardo Minuci (North Carolina A&T State University); Scott Schuh (West Virginia University, Department of Economics)
    Abstract: Many factors contribute to weak economic growth in Appalachia, but little research has examined the role of banking heterogeneity and efficiency across states. This paper documents how West Virginia (WV) banks'  financial behavior differs from other U.S. banks and shows these differences cannot be explained fully by the composition of banks in the state. Despite experiencing faster banking consolidation, West Virginia still has more and smaller banks that are less efficient and profitable. WV banks' customers and managers heavily favor liabilities (time deposits) and assets (real estate loans) with longer maturity and lower risk and returns. Although shares of time deposits and real estate loans are positively correlated across states in part due to lower interest risk, other factors are needed to fully explain banks'  financial behavior across states and the connections to the real economy. Heterogeneity in the risk aversion of banks' customers and managers is one possible explanation.
    Keywords: Unique banks, West Virginia, Appalachia, state heterogeneity, financial statements, time deposits, real estate loans, mixed-effects model, market structure
    JEL: G21 R11 D22
    Date: 2022–09
  12. By: Robert J. Utz
    Keywords: Macroeconomics and Economic Growth - Spatial and Local Economic Development Poverty Reduction - Migration and Development Social Protections and Labor - Labor Markets Public Sector Development - Public Sector Economics
    Date: 2021–07

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