|
on Economic Geography |
|
Issue of 2026–04–20
five papers chosen by Andreas Koch, Institut für Angewandte Wirtschaftsforschung |
| By: | Ron Boschma; Simona Iammarino; Agnieszka Olechnicka |
| Abstract: | Despite recognition that interregional and international linkages promote the innovative capacity of regions, their role in regional innovation policy has received limited academic attention, resulting in challenges on how to incorporate them effectively into policy. We argue that interregional linkages are not generic in nature but shaped by capabilities that are place- and activity-specific. This is clearly shown in the strengths and weaknesses in three types of regional collaborations – foreign direct investment, co-invention, and co-publication – that we identified across five EU regions that prioritized automotives in their regional smart specialisation strategies. Using mixed-methods, we show that regions differ in the intensity and nature of interregional linkages, depending on their capabilities. Regions with a strong knowledge base in automotives manage to build effectively a range of strong connections that allow them to tap into complementary capabilities in other regions that support innovation and upgrading, in contrast to regions with a weak absorptive capacity. Consequently, interregional linkages can only be effectively integrated into innovation policies when they are place-based and activity-specific. We argue that, in the absence of targeted incentives to foster interregional connectivity, a substantial share of its potential for local innovation and regional upgrading remains untapped. |
| Keywords: | Regional strategy, International and interregional linkages, Foreign direct investment, Global value chains, Smart Specialisation Strategy, Place-based policy |
| Date: | 2026–03 |
| URL: | https://d.repec.org/n?u=RePEc:egu:wpaper:2603 |
| By: | Giendl, Clara; Schwarzbauer, Wolfgang |
| Abstract: | This paper examines how regional economic diversity shapes economic resilience across European regions during major crises. Using sectoral diversity indicators at the NUTS-2 level, we analyze the impact of diversity on three dimensions of resilience: the depth of economic downturns, the strength of the initial recovery, and the duration of recovery, focusing on the 2008 financial crisis and the COVID-19 pandemic. Our results show that higher economic diversity consistently mitigates the severity of economic shocks, reducing the immediate decline in regional economic activity in both crises. However, this stabilizing effect comes with a trade-off: More diversified regions tend to exhibit weaker short-term recovery dynamics and longer recovery periods. In contrast, regions characterized by higher innovation intensity and productivity-driven specialization recover more quickly. These findings highlight the importance of balancing structural diversity and innovation. While diversity enhances shock absorption, innovation and specialization appear crucial for accelerating recovery. The paper contributes to the literature on regional resilience by providing EU-wide evidence across multiple crises and offers policy-relevant insights on how structural economic characteristics shape regional responses to shocks. |
| Abstract: | Wirtschaftskrisen treffen Regionen unterschiedlich stark. Warum kommen manche Regionen besser durch Krisen als andere? Das EcoAustria Research Paper untersucht, welche Rolle die wirtschaftliche Struktur - insbesondere die sektorale Diversität - für die Krisenresilienz von Regionen spielt. Auf Basis von Daten für europäische Regionen analysieren wir die Auswirkungen zweier großer Krisen: der Finanzkrise 2008 und der COVID-19-Pandemie. Dabei betrachten wir drei zentrale Dimensionen der Resilienz: die Tiefe des Einbruchs, der Beginn der ersten Erholung sowie die Dauer bis zur vollständigen Erholung. Die Ergebnisse zeigen ein klares Muster: Regionen mit einer stärker diversifizierten Wirtschaftsstruktur sind besser in der Lage, wirtschaftliche Schocks abzufedern. Da ihre Wertschöpfung auf mehrere Sektoren verteilt ist, sind sie weniger anfällig für Einbrüche in einzelnen Branchen. Allerdings geht diese Stabilität mit einem Zielkonflikt einher: Diversifizierte Regionen erholen sich tendenziell langsamer, während stärker spezialisierte Regionen häufig schneller und dynamischer aus der Krise herauswachsen. Eine wichtige Rolle spielt zudem Innovation. Regionen mit höherer Innovationskraft und Produktivität weisen schnellere Erholungsprozesse auf Insgesamt zeigen die Ergebnisse: Diversität und Innovation sind beide entscheidend für Resilienz, wirken jedoch unterschiedlich. Eine ausgewogene Kombination aus wirtschaftlicher Vielfalt und Innovationsstärke kann daher einen guten Schutz vor zukünftigen Krisen bieten. |
| Keywords: | regional economics, resilience, COVID-19, Economic and financial crisis 2008 |
| JEL: | R11 R15 N41 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:zbw:ecoarp:340006 |
| By: | Rainald Borck; Tadashi Morita; Yasuhiro Sato |
| Abstract: | We build a dynamic quantitative spatial model with mobile households and endogenous fertility to analyze the efficiency of equilibrium fertility choices and city size distribution. City size affects the economy through three channels: a larger city population increases productivity, affects amenity levels (positively or negatively), and increases the cost of child care. We find that the competitive equilibrium is inefficient due to the intergenerational externality. We calibrate our model to German county data and find that excessively large cities have excessively low fertility rates, which yields a 14% welfare loss. |
| Keywords: | optimal city system, mobility, endogenous fertility, agglomeration |
| JEL: | R12 R13 J13 |
| Date: | 2026 |
| URL: | https://d.repec.org/n?u=RePEc:ces:ceswps:_12595 |
| By: | Vladislav Morozov; Andrea Sy |
| Abstract: | Firms in denser areas are more productive, a pattern attributed to agglomeration economies and firm selection. To disentangle these two channels, the popular approach of Combes et al. (2012, ECTA) critically assumes that total factor productivity (TFP) distributions between denser and less dense areas are the same up to mean, variance, and left-tail truncation. We empirically validate this assumption using Spanish administrative firm-level data and recent econometric methods adapted to noisy TFP estimates. Our results find that TFP distributions are indeed statistically identical up to these parameters, validating the use of such productivity decompositions. Furthermore, using only the mean and variance is sufficient to capture differences for all sectors. Accordingly, the productivity advantage of cities may be entirely due to agglomeration rather than stronger selection, suggesting that policymakers should focus on policies targeting agglomeration. Finally, our approach extends to related contexts like differences in worker skill distributions. |
| Date: | 2026–04 |
| URL: | https://d.repec.org/n?u=RePEc:arx:papers:2604.13188 |
| By: | Mateusz Jankiewicz |
| Abstract: | The paper aims to assess the simultaneous relationships among three dimensions of sustainable development, while accounting for modifications to the economic structure and governance quality. The study was conducted across 149 selected countries from 2012 to 2023. To ensure spatial homogeneity, countries are divided into five clusters based on their geographic location. The linkages between the sustainable development pillars are verified using a spatial vector autoregressive (spVAR) model, in which performance in each sustainability dimension is calculated using Sustainable Development Goals (SDGs) indices. Moreover, the connections between countries are defined in two ways: (1) as the nearest neighbourhood in the geographical space, (2) as the governance quality level similarity. The results show a significant relationship between sustainable development achievement for individual dimensions in almost all established clusters. The economic and environmental situations are rather negatively related, unlike economic and social sustainability and social and environmental sustainability. Additionally, except for African economies, the sustainability achievement is driven by the ongoing servitisation process. Moreover, the significance of the government quality level for sustainable development performance is concluded. |
| Keywords: | geographical proximity, governance quality, economy servitisation, spatial VAR model, sustainable development |
| JEL: | C51 O14 Q56 |
| Date: | 2026–04–01 |
| URL: | https://d.repec.org/n?u=RePEc:pie:dsedps:2026/330 |