nep-geo New Economics Papers
on Economic Geography
Issue of 2022‒11‒14
eleven papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Does Participation in Global Value Chains Reduce Spatial Inequalities within Countries ? By Grover,Arti Goswami; Lall,Somik V.
  2. Disentangling regional innovation capability: what really matters? By Ganau, Roberto; Grandinetti, Roberto
  3. Reversing Fortunes of German Regions, 1926-2019: Boon and Bane of Early Industrialization? By Berbée, Paul; Braun, Sebastian T.; Franke, Richard
  4. The Determinants of Regional Foreign Direct Investment and Its Spatial Dependence : Evidence from Tunisia By Bouzid,Bechir Naier; Toumi,Sofiene
  5. Income Inequality and Product Variety: Empirical Evidence By Pennerstorfer, Dieter; Schindler, Nora; Yontcheva, Biliana
  6. Economic Growth in European Union NUTS-3 Regions By Kilroy,Austin Francis Louis; Ganau,Roberto
  7. Economic complexity and firm performance in the cultural and creative sector: evidence from Italian provinces By Burlina, Chiara; Casadei, Patrizia; Crociata, Alessandro
  8. Structural Change, Land Use and Urban Expansion By Nicolas Coeurdacier; Florian Oswald; Marc Teignier
  9. The diffusion of digital skills across EU regions: Structural drivers and polarization dynamics By Caravella, Serenella; Cirillo, Valeria; Crespi, Francesco; Guarascio, Dario; Menghini, Mirko
  10. The Employment Effect of Place-Based Policies : Evidence from India By Li,Yue - ETICI; Sinha Roy,Sutirtha
  11. Development Research at High Geographic Resolution : An Analysis of Night Lights, Firms, and Poverty in India Using the SHRUG Open Data Platform By Asher,Sam; Lunt,Tobias; Matsuura,Ryu; Novosad,Paul Michael

  1. By: Grover,Arti Goswami; Lall,Somik V.
    Abstract: This paper examines whether a country’s participation in global value chains supports spatial convergence in the domestic economy. In theory, production disintegration through “unbundling†makes industrial development less lumpy, providing opportunities for smaller cities to plug and play in niche spaces while not having to fight the agglomeration economies offered by large metropolitan areas. Using data on the size distribution of cities within countries and the Organisation for Economic Co-operation and Development’s Trade in Value Added database, the paper finds that integration in global value chains is strongly associated with greater concentration in large urban agglomerations, not less. A unit standard deviation increase in domestic value added in exports of intermediate products is associated with a decline of 0.1 standard deviation in the Zipf coefficient, an index measuring spatial dispersion. Spatial concentration is strongest for global value chains involving knowledge-intensive business services and high-technology manufacturing.
    Date: 2021–04–09
  2. By: Ganau, Roberto; Grandinetti, Roberto
    Abstract: Where does innovation come from? And do all regions innovate similarly? We deal with these questions by highlighting the complexity of the concepts of innovation capability and performance, and by testing their association at the European Union regional level. We disentangle inputs of innovation capability, and consider regional heterogeneity in institutional quality, to understand the relative endowment of what innovation inputs is associated with higher relative innovation performance. We find that ‘formal’ inputs–public and business R&D expenditure–do not work unconditionally and everywhere, and that less ‘formal’ ones–e.g., non-R&D expenditure and firms collaborating for innovation–matter particularly in regions with relative low-quality institutions. Moreover, institutional quality emerges as an innovation productivity-enhancing factor.
    Keywords: European Union; Innovation capability; innovation performance; institutional quality; regions
    JEL: O30 O52 R11
    Date: 2021–07–03
  3. By: Berbée, Paul; Braun, Sebastian T.; Franke, Richard
    JEL: N91 N92 O14 R12
    Date: 2022
  4. By: Bouzid,Bechir Naier; Toumi,Sofiene
    Abstract: This paper explores the relationship between key economic and institutional attributes of Tunisian governorates and their ability to attract foreign direct investment inflows. A dynamic generalized method of moments and spatial autoregressive approaches are used to estimate a model of regional foreign direct investment over the recent period. The results provide evidence of regional interdependence of foreign direct investment that appears to be highly clustered along the coastal areas. An increase/decrease of foreign direct investment inflows to a given region creates an incentive/disincentive for other foreign direct investment inflows to the same regions as well as nearby ones. These agglomeration forces are relatively strong in Tunisia in the presence of vertical foreign direct investment. Further, the results indicate that a relatively developed market size, an increase of regional development areas, as well as robust governance practices and infrastructure are positive determinants of regional foreign direct investment inflows. Finally, the paper shows that although some of the determinants exhibit spillover effects on nearby regions, the direct effect on the region represents the bulk of the influence over foreign direct investment inflows.
    Keywords: Financial Economics,Finance and Development,Foreign Direct Investment,Transport Services,Employment and Unemployment,Investment and Investment Climate
    Date: 2020–11–30
  5. By: Pennerstorfer, Dieter; Schindler, Nora; Yontcheva, Biliana
    JEL: L22 D31 R12 L83
    Date: 2022
  6. By: Kilroy,Austin Francis Louis; Ganau,Roberto
    Abstract: This paper analyzes the growth pathways of 1,321 regions in the European Union from 2003 to 2017. The aim is to inform integrated territorial investments and other economic development initiatives in lagging regions. Using the definition of lagging regions from the European Commission’s Catching Up Initiative, more than two-thirds of the European Union member states have lagging regions when defined at the Nomenclature of Territorial Units for Statistics-3 scale. These small lagging regions are often hidden within larger and more prosperous regions. The paper considers the roles of industrial structure, innovation, and inward foreign direct investment as growth-enhancing factors. The findings indicate that the growth dynamics in low-income regions are different from those in regions in other income groups: there is no overall pattern in the contribution of industry to growth but there is a strong association between foreign direct investment and growth. Among low-growth lagging regions -- the 171 small regions in the European Union with gross domestic product per capita less than 90 percent of the European Union average, and stagnant or negative growth performance -- growth is correlated with construction and innovation. There are also differences in the growth pathways of rural and non-rural regions: growth is associated with moving away from agriculture in rural regions, and it is associated with construction and innovation in non-rural regions. The results imply that a finer geographic scale can be important in policy making and programming of Cohesion Policy Funds, to cater to different needs and opportunities at the scale of Nomenclature of Territorial Units for Statistics-3 regions.
    Keywords: Economic Theory&Research,Industrial Economics,Economic Growth,Financial Sector Policy,Transport Services,Food Security,Legislation,Real&Intellectual Property Law,Social Policy,Regulatory Regimes,Legal Products,Common Property Resource Development,Intellectual Property Rights,Judicial System Reform,Legal Reform
    Date: 2020–12–10
  7. By: Burlina, Chiara; Casadei, Patrizia; Crociata, Alessandro
    Abstract: Several studies have detected a positive relationship between the spatial dynamics of cultural and creative industries (CCIs) and their social and economic outcomes. In this article, we draw upon the Economic Complexity Index (ECI) as a proxy to capture the social interactive nature that characterises CCIs and the way this affects firm performance. Our assumption is that more complex locations, endowed with different types of more sophisticated production capabilities, allow CCI firms to perform more strongly. This can depend on the higher opportunities of complex knowledge sharing and cross-fertilisation processes among different types of CCI firms or with non-CCI firms. The focus is on Italy, a country with a long-standing historical tradition in culture and creativity. We draw upon an original panel database at firm and province level (for the period 2010–2016) to compute two different ECIs, one for the CCIs and another one for the rest of the economy. Moreover, we analyse the effects these two types of complexity on the performance of firms within sectors with different levels of cultural and commercial value. We find that economic complexity of CCIs but not economic complexity of the rest of the economy matters for CCI firm performance. However, the effect is relatively weak. The same finding applies to all CCI firms, irrespective of their type of sector. Policy implications and directions for future research are discussed.
    Keywords: clusters; cultural and creative industries; economic complexity; firm performance; Italy; provinces
    JEL: J1 R14 J01
    Date: 2022–09–23
  8. By: Nicolas Coeurdacier (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Florian Oswald (ECON - Département d'économie (Sciences Po) - Sciences Po - Sciences Po - CNRS - Centre National de la Recherche Scientifique); Marc Teignier (University of Barcelona)
    Abstract: We develop a multi-sector spatial equilibrium model with endogenous land use: land is used either for agriculture or housing. Urban land, densely populated due to commuting frictions, expands out of agricultural land. With rising productivity, the reallocation of workers away from agriculture frees up land for cities to expand, limiting the increase in land values despite higher income and increasing urban population. Due to the reallocation of land use, the area of cities expands at a fast rate and urban density persistently declines, as in the data over a long period. As structural change slows down, cities sprawl less and land values start increasing at a faster rate, as in the last decades. Quantitative predictions of the joint evolution of density and land values across time and space are confronted with historical data assembled for France over 180 years.
    Keywords: Structural Change,Land Use,Productivity Growth,Urban Density
    Date: 2021–12–03
  9. By: Caravella, Serenella; Cirillo, Valeria; Crespi, Francesco; Guarascio, Dario; Menghini, Mirko
    Abstract: The digital transformation is an important driver of long-run productivity growth and, as such, it has the potential to promote a more inclusive and sustainable growth. However, digital capabilities, crucial to develop and govern new digital technologies, are unevenly distributed across European regions increasing the risk of divergence and polarization. By taking advantage of a set of original indicators capturing the level of digital skills in the regional workforce, this work analyzes the factors shaping the process of digital skill accumulation in the EU over the period 2011-2018. Relying on transition probability matrices and dynamic random effects probit models, we provide evidence of a strong and persistent regional polarization in the adoption and deployment of digital skills. Further, we investigate whether European Funds (European Regional Development Fund, Cohesion Funds, and European Social Funds) are capable to shape the digitalization process and to favor regional convergence.
    Keywords: Digital transition,Skills,Labour markets,Persistence,Regional development,EU policies
    JEL: O14 O30 O38
    Date: 2022
  10. By: Li,Yue - ETICI; Sinha Roy,Sutirtha
    Abstract: Many governments in developing countries have pursued policies targeting specific geographic areas over the past several decades. However, only a few have rigorously evaluated the causal impact of these interventions. This paper examines the effectiveness of a prominent place-based policy in India: the centrally sponsored New Industrial Policy for the state of Uttarakhand. Using georeferenced economic census data, the analysis applies a boundary discontinuity research design and zones in on the unique border between Uttarakhand and Uttar Pradesh, two states that were officially one before the implementation of the New Industrial Policy. The findings show that there was a significant and abrupt increase in employment at the town and village level when crossing the state border from Uttar Pradesh to Uttarakhand after the full implementation of the New Industrial Policy. The conclusion even holds for firms within the same sector. The increase is mainly due to larger firm sizes and expansions into new industries. A main component of the New Industrial Policy was excise tax incentives for certain industries. The paper finds that the increase in cross-border employment is higher for sectors receiving excise tax incentives than others. Additionally, exploring spillovers between industries, the paper shows that, controlling for the direct effects, the sectors with labor requirements similar to those receiving excise tax incentives also experience an increase in employment. Finally, the growth in the number of firms in Uttar Pradesh close to the border remained stable before and after the New Industrial Policy, which suggests the results are not fully driven by firms relocating from Uttar Pradesh to Uttarakhand.
    Keywords: Tax Policy,Macroeconomics and Economic Growth,Economic Policy, Institutions and Governance,Construction Industry,Pulp&Paper Industry,Plastics&Rubber Industry,Textiles, Apparel&Leather Industry,Business Cycles and Stabilization Policies,General Manufacturing,Food&Beverage Industry,Common Carriers Industry,Tax Law,Economic Adjustment and Lending,Taxation&Subsidies,Tax Administration,Public Sector Economics,Public Finance Decentralization and Poverty Reduction,Macro-Fiscal Policy,Legislation,Judicial System Reform,Foreign Trade Promotion and Regulation,Trade Law,Legal Reform,Social Policy,Regulatory Regimes,Legal Products
    Date: 2020–11–19
  11. By: Asher,Sam; Lunt,Tobias; Matsuura,Ryu; Novosad,Paul Michael
    Abstract: The SHRUG is an open data platform describing multidimensional socioeconomic development across 600,000 villages and towns in India. This paper presents three illustrative analyses only possible with high-resolution data. First, it confirms that nighttime lights are highly significant proxies for population, employment, per-capita consumption, and electrification at very local levels. However, elasticities between night lights and these variables are far lower in time series than in cross section, and vary widely across context and level of aggregation. Next, this study shows that the distribution of manufacturing employment across villages follows a power law: the majority of rural Indians have considerably less access to manufacturing employment than is suggested by aggregate data. Third, a poverty mapping exercise explores local heterogeneity in living standards and estimates the potential targeting improvement from allocating programs at the village- rather than at the district-level. The SHRUG can serve as a model for open high-resolution data in developing countries.
    Keywords: Energy Policies&Economics,Business Cycles and Stabilization Policies,General Manufacturing,Plastics&Rubber Industry,Pulp&Paper Industry,Textiles, Apparel&Leather Industry,Construction Industry,Common Carriers Industry,Food&Beverage Industry,Inequality,ICT Policy and Strategies,ICT Legal and Regulatory Framework
    Date: 2021–02–09

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