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on Economic Geography |
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Issue of 2025–08–25
nine papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Bluhm, Richard; Dreher, Axel; Fuchs, Andreas; Parks, Bradley C.; Strange, Austin M.; Tierney, Michael J. |
| Abstract: | This paper studies the causal effect of transport infrastructure on the spatial distribution of economic activity within subnational regions across a large number of developing countries. To do so, we introduce a new global dataset of geolocated Chinese grant- and loan-financed development projects from 2000 to 2014 and combine it with measures of spatial concentration based on remotely sensed data. We find that Chinese financed transportation projects decentralize economic activity within regions, as measured by a spatial Gini coefficient, by 2.2 percentage points. The treatment effects are particularly strong in regions that are less developed, more urbanized, and located closer to cities. |
| Keywords: | Development finance, Transport costs, Infrastructure, Foreign aid, Spatial concentration, China |
| JEL: | F35 R11 R12 P33 O18 O19 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ifwkie:323671 |
| By: | André Luiz Ferreira (Universidade Federal do Pará); André Luis Squarize Chagas (Departmento de Economia, FEA-USP); Carlos Roberto Azzoni (Departmento de Economia, FEA-USP) |
| Abstract: | This paper develops a spatial stochastic frontier framework for panel data that jointly accounts for spatial dependence and heteroskedastic technical inefficiency. Inefficiency and noise components are parameterized using scaling functions, while spatial dependence is modeled through both a spatial lag (SF-SLM) and a spatial Durbin specification (SF-SDM). Maximum likelihood estimation is implemented by explicitly incorporating the spatial autoregressive process into the log-likelihood function. A key innovation of this study is the use of the spatial multiplier to decompose estimated technical inefficiency into three components: (i) own inefficiency, (ii) spill-in effects (feedback of a unit’s inefficiency on itself through spatial interactions), and (iii) spillover effects (inefficiency transmitted from neighboring regions). This approach extends the stochastic frontier literature by showing that inefficiency is not purely local but can propagate across space. The method is applied to the Brazilian food manufacturing industry (2007–2018). Likelihood ratio tests confirm that spatial models outperform the nonspatial specification, with SF-SDM providing the best fit and more stable inefficiency estimates. Results reveal that, for an average region, approximately 9% of inefficiency is due to spillovers from neighbors, while 0.2% is explained by spill-in effects. Ignoring spatial structure would therefore overestimate region-specific inefficiency and underestimate the role of interregional linkages. The proposed framework offers a flexible tool for analyzing productive efficiency in spatially interconnected settings and provides new insights for regional policy and future research. |
| Keywords: | Spatial stochastic frontier; Maximum likelihood estimator; Technical inefficiency; spatial spillover |
| JEL: | C23 C51 R12 R15 L66 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ris:nereus:021487 |
| By: | Sarah Fritz; Catherine van der List |
| Abstract: | We study the effects of place-based policies on aggregate productivity using administrative data on projects co-financed by the EU in Italy linked to balance sheet data. We exploit quasi-experimental variation in funding for a large place-based policy stemming from measurement error in regional GDP estimates. Results show that the policy likely decreases productivity. Decompositions reveal that aggregate declines are driven by reallocation of labor to low-productivity firms. Mechanism analysis using firm-level event studies reveals that negative reallocation effects are caused by high-productivity firms taking up the funds and subsequently becoming more liquidity constrained, leading to slowdowns in employment growth. |
| Keywords: | place-based policy, productivity, EU cohesion policy |
| JEL: | R11 R58 J23 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12031 |
| By: | Andres Rodriguez-Pose; |
| Abstract: | This paper outlines a renewed vision for the EU’s Cohesion Policy amid the growing political uncertainty threatening its very viability. Drawing on the High-Level Group on the Future of Cohesion Policy’s findings, it advocates for a more dynamic, systemic approach emphasising institutional capacity, territorial sensitivity, global links, and performance-based delivery. These are areas where past reforms have underdelivered. It warns against marginalising cohesion in favour of top-down, centralised strategies, arguing it is more than a funding tool. Cohesion Policy is the EU’s most democratic mechanism, fostering trust, participation, and unity. Revitalising it is essential for competitiveness, resilience, and the very future of Europe. |
| Keywords: | EU Cohesion Policy, Regional development, Policy reform, EU enlargement |
| JEL: | R11 R58 O18 D72 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2524 |
| By: | Mounir Amdaoud (CNRS, EconomiX, Université Paris Nanterre, 92001 Nanterre); Nadine Levratto (CNRS, EconomiX, Université Paris Nanterre, 92001 Nanterre) |
| Abstract: | This article investigates the links between sectoral diversity and local employment growth in France over the period 2004‑2015. Starting from the seminal contribution of Frenken et al. (2007), we take into account both the within and between sectoral diversities at the local level and at the neighbourhood one. Our empirical investigations confirm that intrasector diver‑ sity (so called related variety) is positively associated with employment growth. Moreover, this association seems to be driven by the local related variety in growth phase and by the related variety in the neighbourhood in crisis period. We also find that the negative relationship between unrelated variety and employment growth goes only through the neighbourhood canal. |
| Abstract: | Cet article examine les liens entre la diversité sectorielle et la croissance de l'emploi local en France entre 2004 et 2015. Suivant les travaux précurseurs de Frenken et al. (2007), nous prenons en compte à la fois la diversité intrasectorielle (également appelée « variété reliée ») et la diversité intersectorielle (ou « variété non reliée »), au niveau local et au niveau du voisinage.Nos résultats confirment que la variété reliée est corrélée positivement avec la croissance de l'emploi. De plus, cette corrélation semble alimentée par la variété reliée locale en période de croissance et par la variété reliée du voisinage en période de crise. La variété non reliée est corrélée négativement avec la croissance de l'emploi, et ce lien ne passe que par le canal du voisinage. |
| Keywords: | related variety, unrelated variety, spatial interactions, France, employment growth, interactions spatiales, croissance de l'emploi, variété non reliée, variété reliée |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:hal:journl:hal-05185983 |
| By: | Chowdhury, Shyamal (Australian National University); Puente-Beccar, Manuela (Max Planck Institute for Research on Collective Goods); Schildberg-Hörisch, Hannah (Heinrich Heine University Düsseldorf); Schneider, Sebastian O. (Max Planck Institute for Research on Collective Goods); Sutter, Matthias (Max Planck Institute for Research on Collective Goods) |
| Abstract: | We investigate how strongly the local environment beyond the family can contribute to understanding the formation of children's economic preferences. Building on precise geolocation data for around 6.000 children, we use fixed effects, spatial autoregressive models and Kriging to capture the relation between the local environment and children's preferences. The spatial models explain a considerable part of so far unexplained variation in preferences. Moreover, the "spatial stability" of preferences exceeds the village level. Our results highlight the importance of the local environment for the formation of children's preferences, which we quantify to be as large as that of parental preferences. |
| Keywords: | prosociality, risk attitudes, patience, local environment, Kriging, spatial models, skill formation, experiments with children, Bangladesh |
| JEL: | D01 C21 C99 |
| Date: | 2025–07 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18015 |
| By: | Simone Daniotti; Matte Hartog; Frank Neffke |
| Abstract: | Diversified economies are critical for cities to sustain their growth and development, but they are also costly because diversification often requires expanding a city’s capability base. We analyze how cities manage this trade-off by measuring the coherence of the economic activities they support, defined as the technological distance between randomly sampled productive units in a city. We use this framework to study how the US urban system developed over almost two centuries, from 1850 to today. To do so, we rely on historical census data, covering over 600M individual records to describe the economic activities of cities between 1850 and 1940, as well as 8 million patent records and detailed occupational and industrial profiles of cities for more recent decades. Despite massive shifts in the economic geography of the U.S. over this 170-year period, average coherence in its urban system remains unchanged. Moreover, across different time periods, datasets and relatedness measures, coherence falls with city size at the exact same rate, pointing to constraints to diversification that are governed by a city’s size in universal ways. |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2522 |
| By: | Rounak Hande (xKDR Forum); Ayush Patnaik (xKDR Forum); Ajay Shah (xKDR Forum); Susan Thomas |
| Abstract: | With the Russia-Ukraine war evolving into a prolonged war of attrition, the functioning of the two economies has become central. A small but growing literature uses alternative data to measure economic activity, responding to the limitations of official statistics. In this paper, we use nighttime lights ("NTL") data to track economic changes in both countries. Ukraine's NTL has fallen by 50% compared to 2022 levels. In contrast, Russia's aggregate NTL showed virtually no change between 2022 and 2025. Within Russia, the Yamal-Nenets Autonomous Okrug, which produces 90% of the country's gas, recorded substantial NTL growth despite reports of declining national gas production. We also identify growth reversals in regions hundreds of kilometres from the Ukrainian border, likely reflecting the effects of standoff weapons. Similar reversals appear along Russia's Western European border but not along other international frontiers, suggesting uneven enforcement of sanctions. Over the war years, Ukraine's economic activity has shifted westward, while Russia's has moved eastward. |
| JEL: | R11 F51 C80 P25 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:anf:wpaper:40 |
| By: | Alen Mulabdic (World Bank); Yoto Yotov (School of Economics, Drexel University) |
| Abstract: | We study the impact of geopolitical risks on international trade. To this end, we use the Geopolitcal Risk (GPR) index of Caldara and Iacoviello (2022) and an empirical gravity model. The impact of spikes in GPR on trade is negative, strong, and heterogeneous across sectors. Specifically, we find that increases in geopolitical risk reduce trade by about 30-40%. These effects are equivalent to a global tariff increase of up to 14%. Services trade is most vulnerable to geopolitical risks, followed by agriculture, while the impact on manufacturing trade is moderate. These negative effects are partially mitigated by cultural and geographic proximity, as well as by the presence of trade agreements. |
| Keywords: | Geopolitical Risks, International Trade, Structural Gravity |
| JEL: | F13 F14 F16 F51 F52 H56 |
| Date: | 2025–08 |
| URL: | https://d.repec.org/n?u=RePEc:drx:wpaper:202532 |