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on Economic Geography |
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Issue of 2026–03–02
nine papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Gabriel Ahlfeldt (HU Berlin); Stephan Heblich (University of Toronto); Tobias Seidel (University of Duisburg-Essen); Fan Yin (HU Berlin, Berlin School of Economics) |
| Abstract: | We construct a new micro-geographic commercial rent index for Germany to study the capitalization of agglomeration economies into floor space prices. In large local labor markets, commercial rents decline by -17% per kilometer from the central business district, compared to 13% for residential rents, reflecting stronger agglomeration benefits at the center. Commercial rents in central business districts increase with local labor market size at an elasticity of 15%, implying that wage responses capture only about half of the agglomeration effect on total factor productivity. |
| Keywords: | floor space; rents; spatial equilibrium; total factor productivity; |
| JEL: | L2 R3 |
| Date: | 2026–02–09 |
| URL: | https://d.repec.org/n?u=RePEc:rco:dpaper:563 |
| By: | Pablo Castro (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Henry Willebald (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía) |
| Abstract: | The aim of this article is to examine the influence of geographical conditions on the territorial distribution of agrarian output in Uruguay in the long-run. Our analysis covers seventeen time-benchmarks (1870, 1884, 1890, 1900, 1908, 1916, 1924, 1937, 1943, 1951, 1956, 1966, 1970, 1980, 1990, 2000 and 2008) by considering the possible explicative power of those factors closely related to “pure” geographical features (land endowments, climate, places where provinces are situated in the territory) in contrast to the second nature causes (those related to agglomeration economies, infrastructure and transport). For this purpose, we used a database that includes provincial value-added of agriculture and a set of variables possibly related with the location of production, and we tested our hypotheses with panel data and R² decomposition through a relative importance method, estimating the contribution of each variable to the fit of the model. Our results show that first-nature and second-nature factors compete in explaining the uneven territorial distribution of agriculture and that their effects changed over time. During the 20th century, second-nature factors gained influence as technological change favoured the rise of intensive agricultural activities (particularly the dairy industry and industrial crops). Furthermore, we found evidence of the increasing role of large markets (cities in the Uruguayan littoral, the south of the country, Montevideo, and key border region in neighbouring countries such as Buenos Aires, Entre Ríos, and Río Grande do Sul) in concentrating these agrarian productions. Second-nature causes emerged as key factors, with market potential becoming the predominant factor over time. |
| Keywords: | agriculture, location, geographical factors, Uruguay |
| JEL: | N5 N56 O33 Q16 R12 |
| Date: | 2025–03 |
| URL: | https://d.repec.org/n?u=RePEc:ulr:wpaper:dt-06-25 |
| By: | Ernest Miguelez; Michele Pezzoni; Fabiana Visentin; Catalina Martínez; Reinhilde Veugelers; Julio Raffo |
| Abstract: | This paper examines the evolving geography of international technological knowledge diffusion over the last four decades using multiple patent-based indicators. We first review the main mechanisms through which knowledge diffuses across borders—including trade and global value chains, foreign direct investment, skilled migration, global science, and markets for technology—highlighting their complementarities and the role of domestic capabilities. We then provide new empirical evidence based on cross-border patent citations, technological trajectories defined by IPC recombinations, patent-to-science linkages, and international patent families. The results reveal persistent asymmetries, with a small group of advanced economies remaining central knowledge hubs, alongside the rising role of emerging countries, especially China. Science-based technologies diffuse farther and faster, while capability constraints continue to limit integration for many regions. |
| Keywords: | Technological knowledge diffusion, Geography, Patents, Citations, Technological trajectories, Science, Patent families |
| JEL: | O34 O33 F14 F23 R12 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:wip:wpaper:92 |
| By: | Giulia Martinelli (Gran Sasso Science Institute); Andrea Ascani (Gran Sasso Science Institute); Stefano Basilico (Gran Sasso Science Institute); Alberto Marzucchi (Gran Sasso Science Institute) |
| Abstract: | By integrating the literature on the twin transition with an international business perspective, this paper assesses whether the regional endowment of green, digital and twin occupations in the EU can act as a pull factor for inward foreign direct investment (FDI). We explore green, digital and twin skills per se as well as the role of their respective enabling (complementary) skills. We find a positive link of enabling skills on inward FDI, while focused digital and twin skills are generally not related to a higher level of FDI attractiveness. A high regional endowment of green skills may even have detrimental effects under specific circumstances. Our evidence paves the way for policies reinforcing locations with occupational complementarities between green, digital and twin competences in order to foster regional participation in global dynamics and favouring the twin transition. |
| Keywords: | green skills, digital skills, twin skills, FDI, EU regions |
| JEL: | F23 O33 O32 R11 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ahy:wpaper:wp79 |
| By: | Ali Khodabandeh (University of Tehran); Mojtaba Shahabi Shahmiri (University of Tehran) |
| Abstract: | This study investigates the complex relationship between spatial structure and income inequality across Iran's 31 provinces, aiming to move beyond linear and simplistic analyses. The methodology is based on a two-stage quantitative approach: first, four key indicators—urban primacy, polycentricity, the Gini coefficient, and an expenditure dispersion index—were calculated for each province. Second, K-Means cluster analysis was used to classify provinces based on their spatial economic profiles. The findings reveal that no universal link exists between spatial form and inequality, uncovering several distinct patterns: 1) The Dominant Metropolis model (Tehran and Alborz), where extreme spatial concentration is coupled with acute inequality; 2) The "Polycentricity Paradox, " where a similar spatial form leads to two contrasting outcomes: "efficient polycentricity" with low inequality (e.g., Kurdistan) and "inefficient polycentricity" with high inequality (e.g., Sistan and Baluchestan); and 3) The "Industrial Multi-Polar" model (Khuzestan), where a balanced spatial form coexists with high income inequality. The main conclusion is that physical form alone does not determine socio-economic outcomes; rather, the "functional quality" and "degree of integration" of the urban network are far more decisive. These findings underscore the need for context-specific regional policies focused on strengthening economic linkages between cities instead of merely engineering spatial form. |
| Keywords: | Income Inequality; Spatial Structure; Urban Primacy; Polycentricity; Cluster Analysis; Iran. |
| JEL: | R12 R23 D63 C38 R58 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ahy:wpaper:wp74 |
| By: | Bernardo David Romero-Torres; Gerson Javier Pérez-Valbuena; Andrés García-Suaza; Jaime Bonet-Morón |
| Abstract: | Disadvantaged communities worldwide have been the focus of government-sponsored programs aimed at improving living standards and fostering economic development. Decentralization has emerged as a central strategy in this effort, strengthening accountability, and promoting local development, a trend to which Colombia is no exception. This paper examines the effects of a regionally targeted transfer program that designated additional resources to municipalities allocated along the Magdalena River, the longest country’s waterway. To identify causal impacts, we exploit the 2002 reform that significantly reduced these transfers and apply a difference-in-differences approach using panel data for the period 1994-2019. The findings reveal no effects on social outcomes but a slowdown in economic activity, accompanied by reductions in municipal operating expenditures and investment, while revealing an increase in tax revenues. These results highlight the complex interplay between fiscal decentralization and regional development, raising important questions about the effectiveness of targeted transfers in achieving their intended objectives. **** RESUMEN: Las comunidades desfavorecidas en todo el mundo han sido el foco de programas patrocinados por los gobiernos, orientados a mejorar las condiciones de vida y fomentar el desarrollo económico. La descentralización ha surgido como una estrategia central en este esfuerzo para reforzar la rendición de cuentas y promover el desarrollo local, tendencia de la cual Colombia no es la excepción. Este artículo examina los efectos de un programa de transferencias regionalmente focalizado que asignó recursos adicionales a los municipios ubicados a lo largo del río Magdalena, la principal vía fluvial del país. Para identificar impactos causales, se aprovecha la reforma de 2002 que redujo significativamente dichas transferencias y se aplica un enfoque de diferencias en diferencias utilizando datos de panel para el período 1994-2019. Los hallazgos revelan ausencia de efectos sobre los resultados sociales, pero una desaceleración de la actividad económica, acompañada de reducciones en los gastos operativos e inversión municipal, al tiempo que se observa un incremento en los ingresos tributarios. Estos resultados ponen de relieve la compleja interacción entre descentralización fiscal y desarrollo regional, planteando interrogantes relevantes sobre la efectividad de las transferencias focalizadas para alcanzar sus objetivos previstos. |
| Keywords: | decentralization, difference-in-differences, regional development, descentralización, diferencia en diferencias, desarrollo regional |
| JEL: | H77 C3 R58 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:bdr:region:340 |
| By: | Katja Gehr; Linus Kraft; Michael Pflüger |
| Abstract: | This paper establishes a novel city size premium which may be termed the capitalization premium. Real estate investors derive benefits from investing in larger cities, most notably lower housing risk and/or higher expected rent growth. Standard asset valuation implies that, given the level of rents, investors are willing to pay increasingly higher housing prices as city size increases, a capitalization premium. Enabled by fine-grained microgeographic property prices and rents and an estimation strategy combining fixed-effects and instrumental variables, the key contribution of this paper is to identify the relationship between city size and the capitalization rate and to provide an estimate of the magnitude of this capitalization premium. We also spell out key implications of this finding for urban economics and macroeconomics. |
| Keywords: | agglomeration, rents, housing prices, price-rent ratio, capitalization |
| JEL: | R10 R23 R31 R51 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12430 |
| By: | Fabiano Compagnucci (Gran Sasso Science Institute); Daria Denti (Gran Sasso Science Institute); Alessandra Faggian (Gran Sasso Science Institute); Arsène Perrot (Gran Sasso Science Institute) |
| Abstract: | The green transition unfolds against a backdrop of widening territorial inequalities driven by the spatial concentration of the knowledge economy. While knowledge-intensive regions with educated, affluent populations might be expected to champion environmental causes, this paper reveals a counter-intuitive pattern. Using novel measures of pro- and anti-environmental activism across Italian provinces (2012-2022) and a Bartik-like instrumental variable, we find that knowledge economy concentration reduces pro-environmental activism nearly twice as much as anti-environmental activism. This asymmetry creates a compositional shift where knowledge-intensive areas exhibit relatively more anti-environmental sentiment in their remaining activism. The findings challenge simplified assumptions about education, affluence, and environmental support, revealing that territorial economic structures fundamentally alter engagement patterns. Green transition policies must account for how different economic contexts generate distinct mobilization patterns, addressing both the reduced collective action in knowledge hubs and resistance in vulnerable territories. |
| Keywords: | green transition, climate crisis, local resentment, knowledge economy, activism, polarisation, local vulnerability |
| JEL: | R11 R12 Q54 Q58 D74 |
| Date: | 2026–02 |
| URL: | https://d.repec.org/n?u=RePEc:ahy:wpaper:wp75 |
| By: | Adrián Rodríguez Miranda (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía); Camilo Vial Cossani (Universidad de la República (Uruguay). Facultad de Ciencias Económicas y de Administración. Instituto de Economía) |
| Abstract: | This research, funded by the National Agency for Innovation and Research (ANII), examines the role of Departmental Governments (DG) in territorial development in Uruguay. Building on the Regional Development Index (IDERE-UY), which measures departmental performance across eight dimensions—well-being and cohesion, economy, education, health, institutions, security, environment, and gender—a pilot study was conducted with the DGs of Rivera and San José to develop a methodology for assessing their contribution to territorial development. The approach involved identifying the public goods and services (PGS) provided by DGs, classifying them according to IDERE dimensions, and measuring both the degree of autonomy in their provision and their relative weight within the departmental budget. The findings reveal that DGs contribute significantly and autonomously to territorial development, reaching autonomy scores above 2.5 (on a scale of 0 to 3) in most dimensions. When combining autonomy with budgetary weight, the dimensions of well-being and cohesion, economy, and environment emerge as the most prominent in both cases. However, variations in budgetary priorities and in the modes of PGS provision reflect distinct strategies, departmental characteristics, and context-specific challenges. The conclusions highlight that DGs transcend their traditional functions associated with basic services (e.g., street lighting, cleaning, and roads) to become strategic actors capable of shaping development policies with meaningful levels of autonomy. In sum, departmental action is both significant and strategic, although constrained by external contexts that often limit decision-making capacities and financial resources, underscoring the importance of alignment with national policy. Recognizing these contributions not only enhances the value of the current role of subnational governments but also provides a basis for strengthening their potential to support more integrated national development policies that take into account Uruguay’s territorial diversity and specificities. |
| Keywords: | territorial development, subnational management, decentralization, subnational development policies, Uruguay, departments. |
| JEL: | H70 H77 O18 R58 |
| Date: | 2025–09 |
| URL: | https://d.repec.org/n?u=RePEc:ulr:wpaper:dt-21-25 |