nep-geo New Economics Papers
on Economic Geography
Issue of 2024‒01‒15
six papers chosen by
Andreas Koch, Institut für Angewandte Wirtschaftsforschung

  1. Technological diversification and the growth of regions in the short and long run By Silvia Rocchetta; Martina Iori; Andrea Mina; Robert Gillanders
  2. Export complexity, industrial complexity and regional economic growth in Brazil By Ben-Hur Francisco Cardoso; Eva Yamila da Silva Catela; Guilherme Viegas; Fl\'avio L. Pinheiro; Dominik Hartmann
  3. The World's Rust Belts: The Heterogeneous Effects of Deindustrialization on 1, 993 Cities in Six Countries By Gagliardi, Luisa; Moretti, Enrico; Serafinelli, Michel
  4. R&D Subsidies, Innovation Location, and Productivity Growth By Colin Davis; Ken-ichi Hashimoto
  5. Input-output analytics for urban systems: explorations in policy and planning By Zhang, Bowen; Rees, Griffith; Solomon, Guy; Wilson, Alan
  6. Interregional Input-Output Table for Costa Rica: Database Description and Construction Steps Based on the IIOA Method By Araujo, Inacio F.; Haddad, Eduardo A.; León, José Antonio

  1. By: Silvia Rocchetta; Martina Iori; Andrea Mina; Robert Gillanders
    Abstract: We study the effects of different types of technological diversification on the performance of regional economies. We focus on the relatedness and unconventionality of technological capabilities as drivers of GDP and employment growth. Using economic indicators from Eurostat regional statistics and patent records from the European Patent Office (EPO) PATSTAT and the OECD RegPat databases, we estimate Panel Vector Autoregression models and generate Impulse Response Functions to assess to what extent and with what persistence relatedness and unconventionality affect growth. Our findings, which have implications for place-based innovation policies, reveal that technological relatedness has short-term effects on employment growth and negative effects on GDP growth, whereas technological unconventionality has a long-lasting positive impact on GDP growth and no effect on employment growth.
    Keywords: Technological capabilities; Diversification; Relatedness; Unconventionality; Innovation; Regional development
    Date: 2023–12–23
  2. By: Ben-Hur Francisco Cardoso; Eva Yamila da Silva Catela; Guilherme Viegas; Fl\'avio L. Pinheiro; Dominik Hartmann
    Abstract: Research on productive structures has shown that economic complexity conditions economic growth. However, little is known about which type of complexity, e.g., export or industrial complexity, matters more for regional economic growth in a large emerging country like Brazil. Brazil exports natural resources and agricultural goods, but a large share of the employment derives from services, non-tradables, and within-country manufacturing trade. Here, we use a large dataset on Brazil's formal labor market, including approximately 100 million workers and 581 industries, to reveal the patterns of export complexity, industrial complexity, and economic growth of 558 micro-regions between 2003 and 2019. Our results show that export complexity is more evenly spread than industrial complexity. Only a few -- mainly developed urban places -- have comparative advantages in sophisticated services. Regressions show that a region's industrial complexity is a significant predictor for 3-year growth prospects, but export complexity is not. Moreover, economic complexity in neighboring regions is significantly associated with economic growth. The results show export complexity does not appropriately depict Brazil's knowledge base and growth opportunities. Instead, promoting the sophistication of the heterogeneous regional industrial structures and development spillovers is a key to growth.
    Date: 2023–12
  3. By: Gagliardi, Luisa (Bocconi University); Moretti, Enrico (University of California, Berkeley); Serafinelli, Michel (University of Essex)
    Abstract: We investigate the employment consequences of deindustrialization for 1, 993 cities in France, Germany, Great Britain, Italy, Japan, and the United States. In all six countries we find a strong negative relationship between a city's share of manufacturing employment in the year of its country's manufacturing peak and the subsequent change in total employment, reflecting the fact that cities where manufacturing was initially more important experienced larger negative labor demand shocks. But in a significant number of cases, total employment fully recovered and even exceeded initial levels, despite the loss of manufacturing jobs. Overall, 34% of former manufacturing hubs–defined as cities with an initial manufacturing employment share in the top tercile–experienced employment growth faster than their country's mean, suggesting that a surprisingly large number of cities was able to adapt to the negative shock caused by deindustrialization. The U.S. has the lowest share, indicating that the U.S. Rust Belt communities have fared relatively worse compared to their peers in the other countries. We then seek to understand why some former manufacturing hubs recovered while others didn't. We find that deindustrialization had different effects on local employment depending on the initial share of college-educated workers in the labor force. While in the two decades before the manufacturing peak, cities with a high college share experienced a rate of employment growth similar to those with a low college share, in the decades after the manufacturing peak, the employment trends diverged: cities with a high college share experienced significantly faster employment growth. The divergence grows over time at an accelerating rate. Using an instrumental variable based on the driving distance to historical colleges and universities, we estimate that a one standard deviation increase in local college share results in a rate of employment growth per decade that is 9.1 percentage points higher. This effect is in part explained by faster growth in human capital-intensive services, which more than offsets the loss of manufacturing jobs.
    Keywords: manufacturing hubs, spatial heterogeneity, human capital
    JEL: J21 R12 J24
    Date: 2023–12
  4. By: Colin Davis; Ken-ichi Hashimoto
    Abstract: This paper studies how national research subsidies affect productivity growth and national welfare through adjustments in the geographic location of research and development (R&D) across countries. Our two-country framework features a tension in the firm-level innovation location decision between accessing technical knowledge and sourcing low-cost high-skilled labor. With trade costs and imperfect international knowledge diffusion, the larger country has a greater share of industry and tends to host a larger share of innovation. In this setting, we find that an R&D subsidy expands the implementing country’s share of innovation and raises the rate of productivity growth. Although the non-implementing country experiences a welfare improvement, the rising cost of the policy generates a concave relationship between the R&D subsidy and the welfare of the implementing country, yielding an optimal R&D subsidy rate.
    Date: 2023–12
  5. By: Zhang, Bowen; Rees, Griffith; Solomon, Guy; Wilson, Alan
    Abstract: Modelling complex systems like cities requires a theory of how elements interact (e.g. how transport influences trade, how education and housing impact labour, etc.), tempered by the tractability of measurements and assumptions. Combining the 2017 national UK Input-Output accounting table with local population and sector employment tallies from the Office of National Statistics (ONS), we develop an Multi-Regional Input-Output model with a novel spatial-interaction transport cost component to estimate trade between 48 UK cities and their Gross Domestic Products (GDPs). We extend the model to estimate future scenarios via ONS population projections over a constant national GDP growth of 2% per year. Without external shocks, our results reflect the so-called ‘North-South divide’: while northern UK cities may have higher GDPs than many southern cities (excluding London), their economic output per employee is lower. Our results suggest the prominence of lower value-added sectors like ‘Production’ in northern cities may account for lower income per worker, relative to the dominance of higher value-added sectors like ‘Financial and insurance’ and ‘Professional and support activities’ in southern cities.
    Date: 2023–12–08
  6. By: Araujo, Inacio F. (Departamento de Economia, Universidade de São Paulo); Haddad, Eduardo A. (Departamento de Economia, Universidade de São Paulo); León, José Antonio (Disaster Risk Specialist. Ph.D. in in Engineering from the National Autonomous University, Mexico)
    Abstract: This technical note outlines the hypotheses and methodologies employed in estimating the Interregional Input-Output Table for Costa Rica (IIOT-CRI) for 2019. The construction process involves utilizing limited information to develop a comprehensive interregional input-output database, shedding light on the intricate spatial linkages within the Costa Rican economy across its 82 cantons and 27 sectors. We provide detailed insights into the methodological procedures adopted for generating the interregional system and the accompanying database.
    Keywords: Interregional Input-Output Table; Costa Rica
    JEL: R10
    Date: 2023–12–20

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