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on Economic Geography |
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Issue of 2026–01–05
twelve papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Zoltan Elekes; Emelie Hane-Weijman |
| Abstract: | Labour mobility plays a central role in shaping local economies. Substantial contributions have been made in the Evolutionary Economic Geography (EEG) literature to understand the dynamics and geographies of local economies. A key contribution of EEG research has been the emphasis on both the supply of work and the demand for workers, raising questions about skill matching. Building on this tradition, the aim of this chapter is twofold. First, we aim to summarize the contributions on labour mobilities and skill relatedness made by EEG. Second, we argue that the micro perspective in EEG could be enriched by focusing more on the heterogeneity of workers with respect to, for instance, gender, age or ethnicity. We then outline a future research agenda within EEG that is more attentive to the diversity of workers by exploring (1) the assortativity of skill relatedness networks, (2) the bounded mobilities of workers and (3) dimensions of proximity beyond the cognitive. |
| Keywords: | labour mobility, skill relatedness, local labour markets, spatial division of labour, skill mismatch, worker heterogeneity |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2541 |
| By: | Filippo Bontadini; Valentina Meliciani; Maria Savona; Ariel Wirkierman |
| Abstract: | The aim of this paper is to quantitatively assess the propagation of supply shocks across European regions, triggered by the COVID-19 pandemic and diffused through Global Value Chains (GVCs). By taking advantage of the cross-country variation in policy responses to the pandemic, as well as the heterogeneity in regional productive structures, we document how downstream transmission of shocks via GVC-induced backward linkages yields differences in terms of regional resilience. By combining and adapting datasets at the NUTS2 level, classifying EU regions according to the risk of falling into a development trap, and embedding inter-regional, inter-industry indicators in a regression model estimated with a local projection method, we show that regional responses of real value added to foreign (i.e., inter-country) and domestic (i.e., intra-country yet inter- and intra-regional) shocks are far from homogeneous. The nuanced picture emerging from our findings warns against withdrawing from GVCs as an attempt to insulate from foreign shocks, as this might hamper the very forces that allow dynamic regions to withstand them. |
| Keywords: | global value chains, inter-regional connectivity, regional economic resilience, COVID-19 pandemic supply shocks, regional development trap risk |
| JEL: | C32 C67 F62 R11 R15 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12316 |
| By: | Andres Rodriguez-Pose |
| Abstract: | This paper offers a critical review and synthesis of the literature on the relationship between urban agglomeration, density, and regional prosperity. Agglomeration and density have long been portrayed as the core drivers of urban and regional success. Yet the evidence remains stubbornly inconclusive: some large cities flourish while others stagnate, and many smaller cities quietly outperform their sprawling counterparts. If density were destiny, the world’s largest cities would consistently lead in wealth and opportunity. However, they frequently do not. The paper argues that genuine sources of growth lie instead in institutional quality, the resilience of local ecosystems, and the strength of inter-territorial linkages. Conventional models have mostly dwelt on a narrow set of negative externalities —congestion, high rents, pollution— while overlooking deeper structural costs: territorial inequalities that erode trust, trigger discontent, and consign whole cities and regions to prolonged decline. As political and social fractures within countries widen, it is increasingly evident that prosperity hinges not on agglomeration itself but on the conditions of cities and their relationships with their hinterlands. The way forward requires a shift in policy and analysis towards place- sensitive strategies and robust institutions capable of promoting inclusive prosperity across all cities and regions, rather than privileging a select few. |
| Keywords: | agglomeration economies, urban density, territorial inequality, institutions, regional development, geography of discontent, ecosystems, place-based policies |
| JEL: | R11 R12 O18 O43 P25 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2539 |
| By: | Kamila Borsekova; Samuel Korony; Andres Rodriguez-Pose |
| Abstract: | The importance of institutions and innovation for regional development is well established. How these two factors interact under different historical legacies and urban-regional contexts remains, however, insufficiently understood. This paper identifies which combinations of institutional and innovation indicators most effectively classify regions into distinct developmental archetypes, revealing critical thresholds that redirect regional trajectories. Employing decision-tree analysis on 233 EU NUTS-2 regions, we analyse 15 indicators spanning institutional quality, technological readiness, business sophistication, and innovation. This methodology uncovers non-linear relationships that traditional approaches cannot capture. The findings demonstrate that institutional quality acts as a necessary condition for innovation-led growth. High-performing regions, predominantly in Western and Northern Europe, benefit from robust institutions and strong innovation outputs. Many lower-performing regions, particularly in Central and Eastern Europe, exhibit innovation potential but are constrained by governance deficits. By integrating institutional and innovation indicators within a single analytical framework, we underscore how addressing governance and innovation in tandem can result in balanced and sustainable growth across Europe. |
| Keywords: | regional development, institutions, innovation, decision tree modelling, regional competitiveness |
| JEL: | O18 O43 R11 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2538 |
| By: | Inmaculada C. Alvarez; Javier Barbero; Luis Orea; Andres Rodriguez-Pose |
| Abstract: | Most studies of institutional quality and regional growth assume uniform effects across territories. However, this may mask crucial regional heterogeneity, with direct policy implications. We use a latent class framework applied to 230 EU regions over 2009-2017 to identify institution-driven regional parameter groups, and to examine both average effects and catching-up effects associated with changes in the institutional environment. We demonstrate that institutional quality generates highly variable returns to investment in physical capital and innovation. Nordic and Central European regions show highest returns to physical capital and R&D investment, whereas less-developed regions benefit most from education spending. Crucially, we find that improving government quality not only raises average returns but also promotes territorial cohesion. By contrast, regional autonomy shows limited impact on returns. Our findings challenge the one-size-fits-all approach to cohesion policy and indicate that cohesion policy should explicitly promote institutional improvements in addition to capital deployment. |
| Keywords: | Institutional quality, European funds, investment, regional development |
| JEL: | O43 E61 H54 R11 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2537 |
| By: | Andres Rodriguez-Pose; Leiboyu Xiang; Neil Lee |
| Abstract: | This paper presents the first systematic city-level mapping of global scientific talent, analysing the top 200, 000 star scientists across 3, 635 cities worldwide annually between 2019 and 2023. We use a novel Knowledge Generation Index (KGI) that combines researcher quantity with research impact to reveal extreme spatial concentration in knowledge production. Just four cities — New York, Boston, London and the San Francisco Bay Area — host 12% of the world's star scientists, while much of the Global South remains virtually excluded from frontier research. Beijing's ascent into the global top ten represents a rare challenge to established hierarchies. Our analysis uncovers striking disciplinary variations. Resource-intensive fields like clinical medicine cluster heavily and traditionally dispersed disciplines are increasingly gravitating toward major hubs. Despite these differences, concentration is intensifying across most scientific fields. Even the pandemic's remote collaboration experiment failed to level the playing field. Established innovation centres continued strengthening their advantages while peripheral regions fell further behind. Overall, we find that geography remains destiny, with profound implications for innovation policy confronting widening spatial inequalities in global scientific capacity. |
| Keywords: | Star scientists; geography of knowledge; innovation agglomeration; spatial inequality |
| JEL: | O25 O31 R12 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2540 |
| By: | Smith, Cory B.; Kulka, Amrita |
| Keywords: | Community/Rural/Urban Development, Political Economy, Public Economics |
| Date: | 2024 |
| URL: | https://d.repec.org/n?u=RePEc:ags:aaea24:343859 |
| By: | Giorgio Chiovelli; Stelios Michalopoulos; Elias Papaioannou |
| Abstract: | Landmines affect the lives of millions in many conflict-ridden communities long after the end of hostilities. However, there is little research on the role of demining. We examine the economic consequences of landmine removal in Mozambique, the only country to transition from heavily contaminated in 1992 to mine-free in 2015. First, we present the self-assembled georeferenced catalog of areas suspected of contamination, along with a detailed record of demining operations. Second, the event-study analysis reveals a robust association between demining activities and subsequent local economic performance, reflected in luminosity. Economic activity does not pick up in the years leading up to clearance, nor does it increase when operators investigate areas mistakenly marked as contaminated in prior surveys. Third, recognizing that landmine removal reshapes transportation access, we use a market-access approach to explore direct and indirect effects. To advance on identification, we isolate changes in market access caused by removing landmines in previously considered safe areas, far from earlier nationwide surveys. Fourth, policy simulations reveal the substantial economywide dividends of clearance, but only when factoring in market-access effects, which dwarf direct productivity links. Additionally, policy counterfactuals uncover significant aggregate costs when demining does not prioritize the unblocking of transportation routes. These results offer insights into the design of demining programs in Ukraine and elsewhere, highlighting the need for centralized coordination and prioritization of areas facilitating commerce. |
| Keywords: | Africa, Development, History, Conflict, Landmines, Market Access, Transportation Infrastructure. |
| JEL: | N47 N77 O10 O55 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:mnt:wpaper:2506 |
| By: | Giorgio Chiovelli; Stelios Michalopoulos; Elias Papaioannou; Tanner Regan |
| Abstract: | Satellite images of nighttime lights are commonly used to proxy local economic conditions. Despite their popularity, there are concerns about how accurately they capture local development in different settings and scales. We compile an annual series of comparable nighttime lights globally from 1992 to 2023 by applying adjustments that consider key factors affecting accuracy and comparability over time: top coding, blooming, and variations in satellite systems (DMSP and VIIRS). Applied to various low-income settings, the adjusted luminosity series outperforms the unadjusted series as a predictor of local development, particularly over time and at higher spatial resolutions. |
| Keywords: | Night Lights, Economic Development, Measurement, Africa. |
| JEL: | O1 R1 E01 I32 |
| Date: | 2025 |
| URL: | https://d.repec.org/n?u=RePEc:mnt:wpaper:2507 |
| By: | Yuriy Gorodnichenko (University of California, Berkeley); Iikka Korhonen (Bank of Finland Institute for Emerging Economies); Elina Ribakova (Peterson Institute for International Economics) |
| Abstract: | This paper examines the impact of Russia's 2022 full-scale invasion of Ukraine on Russia's economy at a subnational, or "regional, " level. The analysis focuses on the regional disparities and convergence trends within Russia, driven by increased military spending and structural changes. The paper also explores the long-term implications of excessive reliance on military spending for regional development and economic efficiency. The findings suggest that there has been some convergence in regional wages and incomes during the war. However, the sustainability of this trend remains uncertain due to the misallocation of resources and the broader economic challenges facing Russia. The authors also find indirect evidence that regions with a strong military presence have experienced substantial income growth. |
| Keywords: | Russia, regional development, income, war |
| JEL: | E24 E65 F51 H72 |
| Date: | 2025–12 |
| URL: | https://d.repec.org/n?u=RePEc:iie:wpaper:wp25-21 |
| By: | Ribeiro, Diogo; de Almeida Vilares, Hugo; Carvalho, Luís |
| Abstract: | We investigate the impact of housing supply on affordability in rapidly appreciating sub-national markets in Portugal. Our spatial econometric model confirms a negative relation between housing stock and prices, yet predicts that, on average, maintaining the construction pace of the 2000s would lower prices by only 3%, while doubling it would bring a 6% reduction. We also find significant price impacts from short-term rentals and international demand. Simulations indicate that a policy mix combining moderate supply growth with sensible limitations in those domains could more effectively alleviate affordability pressures in high-demand regions, bringing spatial nuance to the “supply skepticism” debate. |
| Keywords: | housing affordability; supply skepticism; short-term rentals; tourism; spatial spillovers |
| JEL: | R21 R23 R31 R38 |
| Date: | 2025–12–10 |
| URL: | https://d.repec.org/n?u=RePEc:ehl:lserod:130587 |
| By: | Adibah Seila Nafaza (Department of Economics, Faculty of Economics and Business, University of Indonesia); Dea April Liandari (Department of Economics, Faculty of Economics and Business, University of Indonesia); Rifkanissa Azzahra1 (Department of Economics, Faculty of Economics and Business, University of Indonesia) |
| Abstract: | Regional disparities in Indonesia remain a significant challenge despite various development policies, including a substantial increase in infrastructure investment during President Joko Widodo’s second term. This study employs shift-share analysis to examine the factors influencing interregional inequality, decomposing it into three components: industry mix, productivity differentials, and allocative efficiency. The findings show that productivity differentials across regions are the dominant factor driving inequality, highlighting the uneven distribution of investments in technology and human capital. As a policy recommendation, this study proposes the Community-Based Development (CBD) approach to reduce inequality. CBD integrates local community participation with government policies that consider cultural norms and local wisdom, ensuring communities become the primary agents of development. This approach also helps strengthen public trust in development programs. By adopting CBD, a more balanced distribution of welfare between urban and rural areas is expected, contributing to inclusive and sustainable regional development in Indonesia. |
| Keywords: | Shift-Share Analysis, Productivity, Inequality Decomposition, Interregional Disparities, Community-Based Development |
| JEL: | E6 O1 O4 R5 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:gme:wpaper:202503001 |