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on Economic Geography |
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Issue of 2025–10–27
thirteen papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Stephan Heblich; Stephen J. Redding; Yanos Zylberberg |
| Abstract: | We provide new evidence on the income distributional consequences of trade using the New World Grain Invasion in the 19th Century and variation in agroclimatic suitability for wheat across locations within England and Wales. We show that this large-scale agricultural trade shock led to structural transformation away from agriculture and a redistribution of population from rural to urban areas. We develop a quantitative spatial model to rationalize our empirical findings and evaluate the aggregate implications of this international trade shock. We use our model to undertake counterfactuals for the Grain invasion, holding constant other exogenous determinants of economic activity. We find modest aggregate welfare gains combined with much larger income distributional effects, with geography an important dimension along which these income distributional effects occur. |
| Date: | 2025–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:25/790 |
| By: | Rodríguez-Pose, Andrés |
| 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: | R58 R11 O18 D72 |
| Date: | 2025–10–02 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:129229 |
| By: | Stephan Heblich; Dávid Krisztián Nagy; Alex Trew; Yanos Zylberberg |
| Abstract: | Does industrial concentration shape the life and death of cities? We identify settlements from historical maps of England and Wales (1790–1820), isolate exogenous variation in their late 19th-century size and industrial concentration, and estimate the causal impact of size and concentration on later dynamics. Industrial concentration has a negative effect on long-run productivity—independent of industry trends and consistent with cross-industry Jacobs externalities. A spatial model quantifies the role of fundamentals, industry trends, and Jacobs externalities in shaping industry-city dynamics and isolates a new, dynamic trade-off in the design of place-based policies. |
| Date: | 2025–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:25/797 |
| By: | Paglialunga, Elena; Resce, Giuliano; Zanoni, Angela |
| Abstract: | This paper predicts regional unemployment in the European Union by applying machine learning techniques to a dataset covering 198 NUTS-2 regions, 2000 to 2019. Tree-based models substantially outperform traditional regression approaches for this task, while accommodating reinforcement effects and spatial spillovers as determinants of regional labor market outcomes. Inflation—particularly energy-related—emerges as a critical predictor, highlighting vulnerabilities to energy shocks and green transition policies. Environmental policy stringency and eco-innovation capacity also prove significant. Our findings demonstrate the potential of machine learning to support proactive, place-sensitive interventions, aiming to predict and mitigate the uneven socioeconomic impacts of structural change across regions. |
| Keywords: | Regional unemployment; Inflation; Environmental policy; Spatial spillovers; Machine learning. |
| JEL: | E24 J64 Q52 R23 |
| Date: | 2025–10–15 |
| URL: | https://d.repec.org/n?u=RePEc:mol:ecsdps:esdp25101 |
| By: | Stephan Heblich; Marlon Seror; Hao Xu; Yanos Zylberberg |
| Abstract: | We study the impact of large, successful manufacturing plants on other local producers in China, focusing on “Million-Rouble Plants†built in the 1950s during a brief alliance with the U.S.S.R. The ephemeral geopolitical situation and the locations of allied and enemy airbases provide exogenous variation in plant siting. We find a boom-and-bust pattern: Counties hosting these plants were 80% more productive than control counties in 1982 but 20% less productive by 2010. This decline reflects the performance of local establishments, which exhibit low productivity, limited innovation, and high markup. Specialization hindered spillovers, preventing the emergence of new clusters and local entrepreneurship. |
| Date: | 2025–04–02 |
| URL: | https://d.repec.org/n?u=RePEc:bri:uobdis:25/792 |
| By: | Michael Fritsch (Friedrich Schiller University Jena); Maria Greve (University of Utrecht); Michael Wyrwich (University of Groningen) |
| Abstract: | This paper examines how the legacy of socialist regime in countries of Central and Eastern Europe has affected innovation and R&D cooperation and compares this to Western Europe. Our analysis reveals that the negative impact of socialism on innovation Central and Eastern European countries is mediated by interpersonal trust and the quality of government. These findings highlight the significance of historical context for innovation activity. Our insights are particularly relevant for policymakers who are trying to create effective strategies to encourage technological development in post-socialist regions. |
| Keywords: | Innovation, socialist legacy, institutional quality, trust |
| JEL: | O31 O43 P20 R11 |
| Date: | 2025–10–16 |
| URL: | https://d.repec.org/n?u=RePEc:jrp:jrpwrp:2025-0010 |
| By: | Luisa Alamá-Sabater (Department of Economics and IIDL, Universitat Jaume I, Castellón, Spain); Joan Crespo (Department of Economic Structure, Universidad de Valencia, Spain); Miguel Ángel Márquez (Department of Economics, Universidad de Extremadura, Spain); Emili Tortosa-Ausina (IVIE, Valencia and IIDL and Department of Economics, Universitat Jaume I, Castellón, Spain) |
| Abstract: | We empirically evaluate how the efficiency of Spanish public universities impacts regional economic performance in Spain during the period 2010–2019. Efficiency is measured using activity analysis methods that attempt to capture reflect how universities perform in their respective missions—namely, teaching, research, and knowledge transfer. We analyse the geography of higher education by examining efficiency at the provincial (NUTS3) and regional (NUTS2) levels, as well as for groups of regions (NUTS1). Our results offer several key insights. First, we find that geography plays a differential role primarily when knowledge transfer activities are considered, while geographical patterns are similar for teaching and research activities. Second, the impact of universities’ efficiency on regional economic activity varies across different outcome measures. While provinces with more efficient public university systems show higher labor productivity and capital intensity levels, there is no significant relationship with per capita income. The spatial analysis indicates that efficiency gains generate indirect and positive spillovers, particularly for capital intensity, suggesting that improvements in university performance can benefit broader regional areas. Additionally, institutional quality, measured through regional government performance indicators, reinforces these effects. Our findings suggest that policies aimed at enhancing university efficiency should prioritise the research mission. Among the three university missions, research has the greatest impact on improving productive processes and is the most effective in fostering regional economic development. |
| Keywords: | bias-corrected efficiency; capital intensity; higher education institutions; regional growth; productivity |
| JEL: | C61 J24 R11 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:jau:wpaper:2025/09 |
| By: | Gabriel Chaves Bosch (Queen Mary University of London); Cem Özgüzel (Centre d'Economie de la Sorbonne, Paris School of Economics et IZA) |
| Abstract: | Does the presence of migrants influence innovation at the local level? This paper answers this question using novel data containing fine-grained information on the migrant population and geo-coded data on patent locations for a large set of 19 OECD countries over the 1990-2014 period. We find that a one percentage point increase in the local migrant share increases patent applications by 2.5%. This effect is driven by more urbanised and economically developed localities, where innovation levels are already higher to begin with. However, this impact becomes insignificant when aggregating observations at larger geographical levels, suggesting that the effect of migration on innovation is concentrated in space and features high rates of spatial decay |
| Keywords: | Migration; Innovation; Patents; OECD countries; local |
| JEL: | O31 J61 R11 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:mse:cesdoc:25021 |
| By: | Rok, Jakub; Grodzicki, Maciej; Podsiadło, Martyna |
| Abstract: | The balance between environmental protection and socioeconomic development is a critical policy challenge. Conservation efforts may constrain local development but can also generate benefits beyond nature protection itself, with effects varying across protection regimes and spatial scales. Poland presents a compelling case to examine this trade-off, given its rapid economic growth and significant expansion of PAs in recent decades. This study assesses the relationship between nature protection regimes and local development across Polish municipalities from 2009 to 2022. Using spatial econometric modelling (Spatial Durbin Error Model), we analyse the direct and indirect effects of national parks, nature reserves, and Natura 2000 sites on three dimensions of local development: economic, social, and infrastructural. The most consistent positive effects are observed for economic development in municipalities with high share of national parks and Natura 2000 sites. The effects on infrastructure development are limited: only Natura 2000 sites show a positive direct effect, while negative indirect effects suggest regional competition for investment. The social impacts of protection are predominantly negative, especially for stricter protection regimes. Moreover, these effects extend beyond administrative boundaries, likely due to interlinked labour markets. These findings challenge the notion that conservation uniformly hinders economic development. Instead, they suggest that outcomes differ depending on the protection regime, and that benefits are unevenly distributed – supporting local economic growth while reinforcing social exclusion. The study underscores the need for policies that mitigate social costs and promote more just and integrated development under expanding conservation efforts. |
| Keywords: | conservation policy; protected areas; Local Development; Natura 2000; Protection regime; Spatial spillovers |
| JEL: | Q5 R14 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:pra:mprapa:126400 |
| By: | Treb Allen; Woan Foong Wong; Simon Fuchs |
| Abstract: | How do we evaluate the welfare gains from transportation infrastructure investment? We present a quantitative spatial framework that integrates both traffic and economic responses to infrastructure investment and derive the elasticity of aggregate welfare to improvements in the transportation network. This approach extends the traditional "social savings" method to incorporate agglomeration and dispersion externalities and endogenous traffic congestion. We calibrate the model to the US freight transport network and assess the welfare impact of upgrading segments of the US Interstate Highway System, quantifying the marginal gains from improvements in specific corridors and highlighting where the returns to investment are highest. |
| Keywords: | transportation networks; infrastructure; social savings; quantitative spatial models |
| JEL: | H54 R12 R13 R41 R42 |
| Date: | 2025–10–14 |
| URL: | https://d.repec.org/n?u=RePEc:fip:fedawp:101968 |
| By: | Chaurey, Ritam (Johns Hopkins SAIS); Nayyar, Guarav (The World Bank); Sharma, Siddharth (The World Bank); Verhoogen, Eric (Columbia University) |
| Abstract: | Knowledge spillovers among firms are widely viewed as a key driver of agglomeration and growth, but are difficult to estimate cleanly. We randomly allocated an energy-efficient motor – a “servo'” motor – among leather-goods firms in Dhaka, Bangladesh, and tracked adoption, information flows, beliefs about energy savings, and other variables. We use the difference between actual exposure and expected exposure (from simulated randomization draws) to identify the effect of exposure. We find a robust positive effect of exposure to treated neighbors within a small geographic area (500 meters in our baseline specification) on information flows and adoption. A marginal value of public funds (MVPF) calculation taking learning spillovers into account yields a significantly larger value than one considering only treated firms and suggests that adoption subsidies would be a cost-effective policy intervention. |
| Keywords: | knowledge spillovers, social learning, technology adoption, energy efficiency |
| JEL: | O14 R11 L67 L23 O12 |
| Date: | 2025–10 |
| URL: | https://d.repec.org/n?u=RePEc:iza:izadps:dp18183 |
| By: | Giovanni Dosi; Federico Riccio; Maria Enrica Virgillito |
| Abstract: | This paper brings new compelling regional-level evidence on the environmental degradation brought about by intra-European value chains. The paper postulates the presence of pollution havens derived as a consequence of the European production integration. We identify a neat elites-ghettos divide in carbon emission intensity per unit of production across EU regions: while capital-city and Northern regions form a carbon elites club, of contained emissions, Eastern regions converge towards systematically higher intensities. We build the intra-EU emission network, looking at the CO2 embodied in its backwards linkages to account for the extent to which the divide derives from GVC participation. The flow analysis reveals a steady decline in domestic multipliers, but persistently higher carbon intensity in foreign intermediates, with the Eastern regions dominating the most polluting linkages. The elites-ghettos regions are characterised by opposite emission paths: while the first export CO2 via the outsourcing of the most-polluting production activities toward the East, the latter import CO2 via the production of high-emission intermediaries for the West. In fact, convergence clubs display distinct specialisation profiles, with mid-stream manufacturing regions structurally locked into higher emission intensity. Overall, the paper highlights a discarded dimension of GVCs, that is, the environmental lock-in paths for regions embedded into GVCs to serve as pollution havens for the European carbon elite. |
| Keywords: | CO2 emissions; Global Value Chains; Club convergence; Regional specialisation; Carbon leakage |
| Date: | 2025–09–25 |
| URL: | https://d.repec.org/n?u=RePEc:ssa:lemwps:2025/31 |
| By: | Mauro Lanati; Rainer Thiele |
| Abstract: | Research on the nexus between development and migration has mainly focused on cross-border flows. How income changes affect migration within developing countries is much less well researched even though addressing this topic might provide essential information about the process of structural transformation needed for economic development. In this paper, we provide new evidence on the link between income growth and internal migration for Malawi, one of the poorest countries worldwide where migration is predominantly internal. Employing a gravity approach and performing an instrumental variable regression based on a shift-share instrument, we robustly find that, on average, rising incomes – proxied by changes in nightlight intensity – are associated with higher emigration rates. This effect is mainly driven by people emigrating from comparably richer urban areas. In the poorer rural districts, by contrast, migration tends to fall with increasing economic activity, which is in accordance with the notion that poverty may force people to leave their home in response to negative shocks. Our results also suggest a specific sorting pattern by education levels: While in urban areas rising incomes mainly facilitate the emigration of lower-skilled people to non-urban destinations, in rural areas it is higher-skilled people who most likely leave their home in response to falling incomes. |
| Keywords: | Economic development; Internal Migration; Malawi; Sub-Saharan Africa |
| JEL: | O55 R23 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:frz:wpaper:wp2025_15.rdf |