nep-geo New Economics Papers
on Economic Geography
Issue of 2023‒03‒20
nine papers chosen by
Andreas Koch
Institut für Angewandte Wirtschaftsforschung

  1. Spatial concentration and firm-level innovation Evidence from Ghana By Anthony Krakah; Gonzague Vannoorenberghe
  2. Spatial Agglomeration, Innovation and Firm Survival for Italian Manufacturing Firms By Arnab Bhattacharjee; Ornella Maietta; Fernanda Mazzotta
  3. Allocative efficiency, plant dynamics and regional productivity: Evidence from Germany By Bruhn, Simon; Grebel, Thomas
  4. Directionality and Subsidiarity: A Regional Policy for People and Planet By Grillitsch, Markus; Coenen, Lars; Morgan, Kevin
  5. Trade and Regional Economic Development By Mathias Bühler
  6. Localisation economies, intellectual property rights protection and entrepreneurship in China: a Bayesian analysis of multi-level spatial correlation By Gao, Xing; Meng, Jing; Ling, Yantao; Liao, Maolin; Cao, Mengqiu
  7. Crossing Borders: Labor Market Effects of European Integration By Illing, Hannah
  8. Dirty density: air quality and the density of American cities By Carozzi, Felipe; Roth, Sefi
  9. The Intra and Multi-Regional Impact of a Local PNRR Project using a Multi-Regional SAM Model of Italy By Darlington Agbonifi; Daniele Cufari; Riccardo Magnani; Francesco Pecci; Federico Perali; Pasquale Lucio Scandizzo

  1. By: Anthony Krakah (Ghana Statistical Service); Gonzague Vannoorenberghe (UNIVERSITE CATHOLIQUE DE LOUVAIN, Institut de Recherches Economiques et Sociales (IRES))
    Abstract: We analyze how the spatial concentration of economic activity affects innovation among firms in Ghana. We use the 2014 census of all establishments to map economic activity at a precise geographic level and the responses to a detailed survey of more than 5000 firms to capture measures of innovation and firm-level characteristics. We find a strong positive effect of the overall density of economic activity on innovation (urbanization economies) but a negative effect of the density of employment in an establishment’s sector (localization economies). Several questions in the survey allow us to address the issue of endogeneity and shed some light on the mechanisms. We control for many firm characteristics and confirm our results on a subsample of establishments declaring that their location is that of their founder’s origin, i.e. firms with a plausibly exogenous geographic location. We find that firms in regions with denser economic activity report less problems to access funding and knowledge, while the presence of firms in the same sector is associated with more uncertainty about the gains from innovating.
    Keywords: innovation, development, localization, urbanization, externalities, Ghana
    JEL: R10 R11 R12 O14 O18
    Date: 2023–02–13
  2. By: Arnab Bhattacharjee; Ornella Maietta; Fernanda Mazzotta
    Abstract: Innovativeness of a firm improves not only its own survival chances but can also generate externalities on its neighboring firms. We empirically examine the role of agglomeration economies in how innovativeness affects firm survival in Southern Italy, using spatial weights to model spillovers. Spatial Durbin probit model estimates confirm that innovation is a determinant of firm survival not only for firms that are themselves innovative but also ones located close to other innovative firms. Definition of spatial scale and weight plays an important role. Spillover benefits are enhanced by agglomeration economies, but only at a very local scale.
    Keywords: Firm survival, Spatial models, Innovation, Spillovers, Southern Italian SMEs
    JEL: L20 O3 D22 C21 C41
    Date: 2023–02
  3. By: Bruhn, Simon; Grebel, Thomas
    Abstract: This paper argues that regional variation in the efficiency of labor allocation among German manufacturing plants plays a critical role in explaining regional disparities in productivity. In fact, we show that over 50% of the East-West productivity gap is associated with a less efficient labor allocation in former East Germany. Yet, we also demonstrate that the mere focus on East-West comparisons hides partially large differences between the German federal states. These results suggest that regional productivity differences could be substantially narrowed by a more efficient labor allocation among plants. With respect to the underlying causes, we find evidence that the regional differences in allocative efficiency are significantly correlated with differences in export intensity, market concentration and plant size.
    Keywords: Regional productivity gap, productivity decomposition, allocative efficiency, labor allocation
    JEL: E24 J24 L11 L25 O47
    Date: 2023
  4. By: Grillitsch, Markus (CIRCLE, Lund University); Coenen, Lars (Western Norway University of Applied Sciences); Morgan, Kevin (Cardiff University)
    Abstract: In this paper we consider if and how regional policy can be designed to foster sustainability (the wellbeing of people and planet) as well as being a catalyst for innovation and development. Focusing on the entrepreneurial discovery process, the paper explores its role and limitations in balancing directionality and subsidiarity in regional development. In its original conception, it was designed to direct regional development towards promising future opportunities building on existing strengths. We argue that while the rationale of the entrepreneurial discovery process serves innovation-driven competitiveness, it lacks sufficient sensitivity to the social and environmental dimensions of sustainability. Rather than retrofitting the missing dimensions of sustainability, the logic needs to be rethought from the basics, which we do by asking if and under which conditions the entrepreneurial discovery process directs regional development to deliver on human wellbeing and environmental impact. We argue that this depends on the nature of existing opportunities, on how development is framed and on who is engaged in the discovery process. To this end we argue that regional policy needs to i) adopt a more capacious perspective to change processes and policy agency, taking action if needed to reconfigure the opportunity space, and ii) adopt a broader perspective on discovery processes, which goes beyond the realm of entrepreneurs and business alone and integrates the lessons learned from experimentation processes in and across a variety of domains. For this to happen, it is necessary to develop the institutional capacity for a regional development strategy that is sensitive to multiple (and sometimes conflicting) societal goals.
    Keywords: regional innovation policy; smart specialisation; partnerships for regional innovation; sustainability transitions; discovery process; opportunity space
    JEL: O10 O20 O38 R10 R58
    Date: 2023–02–22
  5. By: Mathias Bühler
    Abstract: A central argument for trade liberalization is that when the ‘gains from trade’ are shared, countries see large gains in economic development. In this paper, I empirically evaluate this argument and assess the impact of elite capture on regional development. Africa provides a unique study ground because the arbitrary placement of country borders during the colonial period partitioned hundreds of ethnic groups across borders. This partitioning is a source of variation in population heterogeneity and cross-country connectedness that is independent of economic considerations. Thus, African borders provide both a credible instrument for bilateral trade flows and enable the assignment of trade flows —and their impacts— to individuals. I find that while ethnic networks increase trade flows, increased trade activity decreases subnational economic development when measured by satellite data or individual wealth. I show that this counter-intuitive result comes from elite groups capturing the gains from trade, with detrimental impacts on trust and democratic progress in society.
    Date: 2023
  6. By: Gao, Xing; Meng, Jing; Ling, Yantao; Liao, Maolin; Cao, Mengqiu
    Abstract: Entrepreneurship is an important determinant of innovation and growth with an uneven spatial distribution. In addition, the mechanism of entrepreneurship is affected by administrative hierarchies. However, the driving forces behind the spatial differences are not clear. Therefore, this study aims to examine the key determinants of entrepreneurship by clarifying the roles of localisation economies and intellectual property rights (IPRs) protection from 2008 to 2017 using a Bayesian analysis of multi-level spatial correlation. The empirical results indicate that localisation economies and IPRs protection have a major influence on entrepreneurship. In particular, although it is insignificant, the role of localisation economies at prefecture level is important, because the impact of supplier linkages at provincial level is negative. The effects of IPRs protection at both prefecture and provincial levels are significant in all the models, and its effect increases with the improvement in model performance. Moreover, these determinants vary across different spatial scales.
    Keywords: entrepreneurship; IPRs protection; localisation economies; multi-level models; spatial random effects; 51808392; 72173133; EP/R035148/1; chool Funding from the University of Westminster; and National Conditions Research Project of Research Institute for Eco-civilization; Chinese Academy of Social Sciences (Taicang 2022) .
    JEL: J1 C1
    Date: 2022–06–01
  7. By: Illing, Hannah (University of Bonn)
    Abstract: This paper studies the labor market effects of out- and in-migration in the context of cross-border commuting. It investigates an EU policy reform that granted Czech citizens full access to the German labor market, resulting in a Czech commuter outflow across the border to Germany. Exploiting the fact that the reform specifically impacted the Czech and German border regions, I use a matched difference-in-differences design to estimate its effects on local labor markets in both countries. Using a novel dataset on Czech regions, I show that municipalities in the Czech border region experienced a decrease in unemployment rates due to the worker outflow, and a corresponding increase in vacancies. For German border municipalities, I find evidence for slower employment growth (long-term) and slower wage growth (short-term), but no displacement effects for incumbent native workers.
    Keywords: out-migration, in-migration, local labor markets
    JEL: J61 J15 R23
    Date: 2023–02
  8. By: Carozzi, Felipe; Roth, Sefi
    Abstract: We study the effect of urban density on the exposure of city dwellers to air pollution using data from the United States urban system. Exploiting geological features to instrument for density, we find an economically and statistically significant pollution-density elasticity of 0.14. We assess the health implications of these estimates and find that increased density in an average city leads to sizeable mortality costs. Our findings highlight the possible trade-off between reducing global greenhouse gas emissions, which is associated with denser cities according to prior empirical research, and preserving local air quality and human health within cities.
    Keywords: air pollutiuon; cities; density; health; UK Cities’ seed fund
    JEL: Q53 R11
    Date: 2023–03–01
  9. By: Darlington Agbonifi (Department of Economics, University of Verona); Daniele Cufari (Department of Economics, University of Verona); Riccardo Magnani; Francesco Pecci; Federico Perali (Department of Economics, University of Verona); Pasquale Lucio Scandizzo
    Abstract: This study estimates the socio-economic impact of investments related to the Institutional Development Contract (CIS) for the city of Taranto on different categories of households, labor markets (skilled and unskilled), and enterprises in Italy by developing a multi-regional SAM (MR-SAM) model with inter-regional trade. The model is designed and implemented both at the level of Apulia region, to estimate the intraregional impact, and at the national level, to estimate the interregional spillover effects and the supply chain linkages. The study finds that the interregional effects are more than one half of the intraregional ones, with more than 26 percent of the interregional impact accruing to the Lombardy region and about 60 percent captured by the regions in the North of Italy. The model also shows that while the local Taranto economy is highly connected with the rest of the Apulia region, it has only weak linkages with the regions of Southern Italy. The ratio between the impact on added value at the national level and the total investment of the CIS is slightly more than 2. The study also suggests that impact analyses considering the area on which the public investment is developed as an island unconnected to the entire economic system may be misleading, because they provide no information about the propagation of the effects outside the administrative limits of the local economy, even though these effects may be crucial to fuel a desirable regional distribution of economic growth.
    Keywords: Interregional trade, multi-regional input-output (MR-SAM) analysis, PNRR, Taranto (Apulia, Italy)
    JEL: C67 D57 F14 Q56 Q58 R15
    Date: 2023–03

This nep-geo issue is ©2023 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.