nep-geo 2026-03-23 papers

on Economic Geography

Issue of 2026–03–23
two papers chosen by
Andreas Koch, Institut für Angewandte Wirtschaftsforschung

Financial development traps in European regions: Theory and evidence By Rodrigo Cuenca De Armas; Maria Teresa Balaguer-Coll; Emili Tortosa-Ausina
Digital network centrality and the structure of goods trade By Gianmarco Ottaviano

Financial development traps in European regions: Theory and evidence

By:	Rodrigo Cuenca De Armas (Department of Economics, Universitat Jaume I, Castellón, Spain); Maria Teresa Balaguer-Coll (Department of Finance and Accounting, Universitat Jaume I, Castellón, Spain); Emili Tortosa-Ausina (IVIE, Valencia and IIDL and Department of Economics, Universitat Jaume I, Castellón, Spain)
Abstract:	This study explores the risk of financial development traps in European regions by analysing the performance of the financial sector in terms of productivity and its relationship with GDP per capita. Using data for 226 NUTS2 regions over the period 2000–2021, we construct two original indicators adapted from Diemer et al. (2022) to a sectoral framework, capturing respectively the cyclical and structural dimensions of decoupling between financial sector dynamics and regional economic performance. The analysis reveals that a non-negligible share of European regions show signs of entrapment, with considerable heterogeneity both between and within Eastern and Western Europe. Results also point to a reduction in the share of trapped regions between the crisis period (2008–2015) and the subsequent recovery phase (2016–2021), alongside a notable inversion in the relative exposure of Eastern and Western European regions. Our findings highlight the importance of assessing the functional orientation of the financial sector (rather than its mere size or depth) and suggest that institutional and sectoral factors play a critical role in shaping regional financial resilience beyond geographic location.
Keywords:	financial development, development traps, regional inequalities, productivity, employment, convergence
JEL:	R11 R58 O16 O18
Date:	2026
URL:	https://d.repec.org/n?u=RePEc:jau:wpaper:2026/06

Digital network centrality and the structure of goods trade

By:	Gianmarco Ottaviano
Abstract:	This paper studies how digital infrastructure is associated with the spatial structure of international trade in goods. We embed data availability into a structural gravity framework, conceptualizing it as an information friction that interacts with geographic distance and equilibrium market access. Using the topology of the global subsea cable network, we construct country-level measures of digital network position. We find that countries with greater digital network embeddedness, particularly on the exporter side, exhibit lower distance elasticities of trade. Other dimensions of digital connectivity are more closely associated with multilateral resistance, highlighting distinct channels through which digital infrastructure affects goods trade.
Keywords:	digital network centrality, spatial integration, international trade, subsea cable networks
Date:	2026–03–11
URL:	https://d.repec.org/n?u=RePEc:cep:cepdps:dp2158

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