Trade and spatial economic interdependence

Regional scientists have had a long fascination with spatial economic interdependence, initially stimulated by the development of a suite of models in Isard (1960). In recent years there have been two major developments; first, a movement towards greater integration in model development not only with large-scale models, but also with careful attempts to make more components of the system endogenous. The second development has been the pursuit of greater integration than in earlier studies between theory and applied regional economic modelling, most notably in the area of trade and economic development. We explore some of the recent developments of this latter approach and provide an assessment of the current state-of-the art of some future opportunities.JEL Classification: F2, O1, R0, R1     

European cities in the process of economic integration: towards structural convergence

The process of economic integration has triggered complex territorial dynamics in Europe. Basically, opposite dynamics appears to prevail for national and regional economies. The convergence process of the national economies of the EU coexists with a process of divergence between the regional European economies. The process of economic integration occurs in a context of increased importance of permanent innovation and of resulting increased territorialisation of activities where the metropolitan areas seem to embody the main issues at stake on European scene, particularly regarding its regional dimension. Different theoretical literatures have been developed, regarding both income convergence and regional specialisation in Europe. This paper is a first step towards a simultaneous resolution of the different dimensions of regional dynamics induced by the European integration: it focuses on the concept of structural convergence applied at the regional level and adopting the Wacziarg (2001) framework empirically establishes the existence of structural convergence of European metropolitan areas. An erratum to this article can be found at     

A multi-scale, multi-model approach for analyzing the future dynamics of European land use

Europe’s rural areas are expected to witness massive and rapid changes in land use due to changes in demography, global trade, technology and enlargement of the European Union. Changes in demand for agricultural products and agrarian production structure are likely to have a large impact on landscape quality and the value of natural areas. Most studies address these changes either from a macro-economic perspective focusing on changes in the agricultural sector or from a local perspective by analyzing recent changes in landscapes for small case studies. This paper describes a methodology in which a series of models has been used to link global level developments influencing land use to local level impacts. It is argued that such an approach is needed to properly address the processes at different scales that give rise to the land use dynamics in Europe. An extended version of the global economic model (GTAP) and an integrated assessment model (IMAGE) are used to calculate changes in demand for agricultural areas at the country level while a spatially explicit land use change model (CLUE-s) was used to translate these demands to land use patterns at 1 km² resolution. The global economic model ensures an appropriate treatment of macro-economic, demographic and technology developments and changes in agricultural and trade policies influencing the demand and supply for land use related products while the integrated assessment model accounts for changes in productivity as result of climate change and global land allocation. The land use change simulations at a high spatial resolution make use of country specific driving factors that influence the spatial patterns of land use, accounting for the spatial variation in the biophysical and socio-economic environment. Results indicate the large impact abandonment of agricultural land and urbanization may have on future European landscapes. Such results have the potential to support discussions on the future of the rural area and identify hot-spots of landscape change that need specific consideration. The high spatial and thematic resolution of the results allows the assessment of impacts of these changes on different environmental indicators, such as carbon sequestration and biodiversity. The global assessment allows, at the same time, to account for the tradeoffs between impacts in Europe and effects outside Europe.     

Inclusionary housing policy: a tool for re-shaping South Africa’s spatial legacy?

In South Africa, recent initiatives to restructure cities towards greater compaction and integration include the formulation of an inclusionary housing policy, where private property developers are expected to offer some affordable housing in their developments. This paper examines policy and practice in the City of Johannesburg where an inclusionary housing policy is intended to work together with a growth management strategy to direct infrastructural investment. However the policy has hardly been used. The paper examines the policy and its development, initiatives to use it, and the challenges it faces. Key constraints include: resistance by the property development industry and middle/upper-income residents; South Africa’s huge income inequalities and hence housing price cliffs; and institutional and legal issues. These concerns have in part underpinned the lack of supportive national policy. In this context, local policies have been confined to specific, deal-driven projects, but these have also been fraught with problems, and have delivered few affordable units. The potential of inclusionary housing policy for reshaping South African cities therefore seems limited, although it could play a small role if national policy with careful attention to implementation were formulated. An alternative form of mixed income developer-led housing seems to have greater potential, although it is focused on low/middle-income housing and relies to a significant extent on government subsidies, in contrast to inclusionary housing proper.     

Rajin-Seonbong,new gateway of Northeast Asia

The economic zone of Rajin-Seonbong (Raseon) is located at the north-eastern border of North Korea, adjacent to China and Russia. Although its attractiveness to foreign investors has remained limited since its creation in 1991, Raseon is of growing interest as a transit port for Russian and Chinese trade. This paper reviews some theories on the constraints and advantages of remotely located ports, arguing that limited economic base can be overcome by a strategy based on transhipment flows to and from China, South Korea, Russia and Japan. In particular, it develops the idea that economic factors, such as remoteness from the nation’s core region, are not sufficient to explain the uneven success of the project. More likely is the mismatch between local industries and port facilities. Unlike the Chinese free-trade zone experiment, port and logistics development in North Korea may take place prior to industrial development, strengthening Raseon as a potential gateway and growth pole in Northeast Asia.     

Economic impacts of subsidized housing relocation

In recent years increased emphasis has been placed on use of “tenant-based” housing subsidies for acquisition of market-rate housing that is more economically and racially integrated than traditional “project-based” public housing. In this article, we model the short-term economic effects upon various groups of a hypothetical program in which low-income families move from inner-city public housing to spatially dispersed Section 8 rental housing. Using cross-section data from the Chicago region, impacts are computed for two of these groups. Preliminary results indicate that the short-term net economic impact of this hypothetical housing relocation is negative, that these impacts have a spatial character, and that there is a potential tradeoff between tenant benefits, housing subsidies from society and housing integration. Received: 20 January 1998 / Accepted: 30 November 1998     

The prospects for African urban economies

Cities generally function as sources of economic development and human progress. One of the puzzles about Africa's urbanization is that it has not been accompanied by greater economic dynamism. The paper considers the distinctive development trajectory of African urban economies. It considers the applicability of the argument that cities are drivers of economic growth, and the idea that cities develop more complex, higher-value functions over time. It examines the recent revival of African economies, and asks whether the fashionable idea of enhanced international integration through cross-border collaboration might facilitate greater urban prosperity.     

Beyond neoclassical orthodoxy: A view based on the new economic geography and UK regional wage data

Abstract.  The article examines the performance of two competing non-nested models of regional wage variations in Great Britain, one motivated by the Solow-Swann neoclassical growth model which assumes constant returns to scale, the other by new economic geography theory, which assumes internal and external increasing returns. Both models also include controls for labour efficiency variations across regions. The empirical analysis, which is based on the bootstrap J test, shows that the neoclassical model does not reject the new economic geography specification, but the converse is not true and the model with a basis in new economic geography has significantly superior explanatory power. This adds support to the notion that in order to correctly understand differential regional economic development, we should move beyond neoclassical orthodoxy and that an increasing returns stance is more appropriate. However, the article also highlights some limitations of new economic geography theory.     

Regional convergence in the European Union: From hypothesis to the actual trends

Economic convergence or non-convergence between countries and regions continues to attract analytical attention in Europe. To converge in real terms and not only in terms of nominal variables is one of the basic aims of the European Union Treaty. A first objective of this paper is to offer an overview on what is actually happening in the European Union in contrast to some generally accepted hypotheses and models predicting regional convergence. Empirical evidence shows that after a period of (relative) regional convergence in GDP per capita as well in terms of labour productivity, this process has almost completely ended. Possible explanations go from the most pro-convergence theories (optimists) to those that outweigh real obstacles to theoretical assumptions (pessimists). As a second objective the paper examines two important facts that can contribute to explaining the actual trends. The first is named the `national effect', where regions of each country have economic behaviour strongly linked to the national economy as a whole. The second is the `differential' behaviour of many European regions in terms of economic outcomes.  Some suggestions and conclusions are drawn from the facts and the trends observed in the European integration process. Received: May 2000/Accepted: December 2000     

The Experiences of Immigrants in South Africa: a Case Study of Ethiopians in Durban,South Africa

In recent years there has been an increase in the number of immigrants in South Africa from non-SADC countries. This research was conducted with Ethiopian immigrants in Durban in an attempt to shed some insights into this new nexus. The aim of the study was to understand the experiences of Ethiopian immigrants. The decision to migrate is motivated by a number of socio-economic factors including social networks and greater accessibility and availability of opportunities. The findings of this research suggest that most Ethiopian immigrants in South Africa are involved in the informal economic sector. The target of their economic activities is mainly South Africans in the townships and Ethiopian immigrants themselves. Crime is not the major concern because it does not impact the immigrant community. This research found that Ethiopian immigrants have not integrated into the local community. Language is a major barrier to integration. However, more efforts are needed to ensure their integration into the local community.     

The Development of Housing Policy in the English Regions: Trends and Prospects

This paper explores the emergence of housing strategies at the regional level in England in the context of wider ambiguities over establishing this new tier of governance. The paper notes the growing differentiation in local housing markets across the country and examines the implications for national policy formation and the development of new regional structures and responsibilities. These trends are interpreted by reference to different models of governance and the 'rescaling' of government functions and responsibilities in housing. The implications of these processes for housing strategy formation at the regional level are then assessed. The development of regional housing strategies is then considered against three key challenges: the growth of 'network' forms of governance, the applicability of the regional level as a tier for strategy formulation and development, and the different policy responses in other sectors towards housing market change at the sub-national level. The paper concludes by briefly considering likely future developments in regional governance. In conclusion it suggests that the aim of achieving greater integration between housing, planning and economic development strategies may be threatened by underlying processes of uneven economic growth and social polarisation.     

Regional economic instability: the role of industrial diversification and spatial spillovers

Within regional science there has been a long history of interest in the relationship between economic instability and regional diversification. Despite this interest there are many unresolved issues in the literature, and while regional economic theory suggests that greater diversity will make regional economies more stable, the evidence is far less convincing. In addition, very little is known about how other variables affect the level of instability experienced by regional economies. This paper intends to clarify some of these points, with developments in the field of spatial data analysis meaning that additional insights may be gathered using these techniques. The analysis uses data from the 125 Local Government Areas of Queensland, a state economy of Australia that consists of many types of regions, ranging from densely settled urban centres to sparsely settled rural regions.

Non-comprehensive Planning Approaches for Rapidly Urbanizing Communities

This paper presents the experience of managing a process of extremely rapid urban development in one of the Gulf States. In such situations of rapid urbanization, past planning models have not proved appropriate and many planning professionals working in such situations have not been exposed to more recent theoretical developments in the field. In this context, urban planning professionals have been required to invent new approaches for specific contexts, for which the models provided in their training had left them unprepared.     

Matching estimation,casino gambling and the quality of life

Little consensus exists in the literature as to the impact of casino gambling on regional economic development. This paper uses a propensity score matching estimator to assess the bottom line impact of casino gambling on the welfare of local residents. It extends the literature in two important ways. First, the traditional matching estimation model is extended to consider a kernel weighting formula that corrects for correlation between the outcome error term and characteristics of the regressors used in generating the propensity scores. Second, by using the matching procedure to control for selection bias in the casino location decision, this paper generates improved estimates for the impact of casino gambling on key economic variables and on local quality of life. Casinos are found to have no statistically significant net impact on the quality of life in their host counties, though Native American casinos do generate some additional economic activity in the form of increased population, employment, and housing starts. This paper was awarded the Charles M. Tiebout Prize for outstanding graduate student paper at the 2007 Western Regional Science Association annual meetings. I am thankful for helpful comments from Dan McMillen, Barry Chiswick, Joe Persky, Gib Bassett, John Tauras, seminar participants at the 2007 Western Regional Science Association meetings and the referees. I gratefully acknowledge support from the U.S. Department of Housing and Urban Development Doctoral Dissertation Research Grant Program. Any errors are my own.     

城市跨界发展与融合——港深案例研究

探讨港深两地跨界城市发展与城市融合的进程。香港和深圳已建立了紧密的经济融合,制度层面上的融合也有一定的进展,但社会层面上的融合显著滞后。香港和深圳居民对边界另一边的对方缺乏充分认识。超过57%的香港和深圳居民不太熟悉或非常不熟悉另一个城市。超过四成的香港和深圳受访者认为价值观的差异是构建港深大都会的最主要的障碍。港深大都会的跨界社区尚未融合。香港和深圳在许多方面存在差异,造成两地之间难以实现完全的融合。港深两地有必要在"一国两制"的原则下,以提升两地城市竞争力与方便居民跨界居住与工作为出发点,推动城市跨界发展与融合。     

Location, agglomeration and infrastructure

Abstract. In this article we discuss the relationships between transportation infrastructure, firm location, agglomeration and regional development. We will argue that the spatial transaction costs faced by modern firms have changed over recent decades, and that this has changed the ways in which transportation infrastructure contributes to form location behaviour and regional economic development. Therefore, in order to analyse these issues, it is necessary to consider the spatial transaction costs faced by modern firms and to investigate the conditions under which reductions in these costs due to infrastructure improvements will allow firms to move. These complex relationships are seen to be mediated via different geography-firm-organisation structures and consideration of these is essential for any realistic evaluation of the role of transportation infrastructure.     

Urban sprawl and municipal budgets in Spain: A dynamic panel data analysis

Urban sprawl has recently become a matter of concern throughout Europe, but it is in southern countries where its environmental and economic impact has been most severe. This low‐density, spatially expansive urban development pattern can have a highly marked impact on municipal budgets. Thus, local governments may see sprawl as a potential source of finance, in terms of building‐associated revenues and increased transfers from upper tiers of government. At the same time, sprawl leads to increased levels of expenditure, as it may raise the provision costs of certain local public goods and requires greater investment in extending basic infrastructure for new urban development. What, therefore, is the net fiscal impact of urban sprawl? Do local governments consider the long‐run net fiscal impact of new urban growth or do they simply focus on its short‐term benefits, ignoring future development costs? This paper addresses these questions by analysing the dynamic relationship between urban sprawl and local budget variables. To do so, we estimate a panel vector autoregressive model using data for 4,000 Spanish municipalities for the period 1994–2005. Computed generalized impulse response functions show: (i) that sprawl considerably increases demand for new infrastructure; (ii) that the capital deficit generated by this new infrastructure is covered in the main by intergovernmental transfers and, to a lesser extent, by revenues linked to the real estate cycle; and (iii) that sprawl leads to a short‐term current surplus, as the increase in current revenues offsets the increase in current expenditures due to public service provision for new developments. Overall, these findings point to a moral hazard problem for local governments in which inordinate intergovernmental transfers and development revenues encourage excessive urban sprawl.     

THE ECONOMIC INTEGRATION OF IMMIGRANTS AND REGIONAL RESILIENCE

This article explores variation in the economic integration of immigrants across U.S. metropolitan areas and tests a basic hypothesis that greater economic integration promotes regional resilience. Here we construct two quantitative indexes of occupational diversity as primary indicators of economic integration and develop a conceptual framework of social, economic, and spatial factors that are likely to shape occupational diversity at the regional scale. We conduct an exploratory quantitative analysis in two steps. First, we model labor market diversity in 2000 with metro level data drawn primarily from the Building Resilient Regions (BRR) database. Next, we use the occupational diversity indexes as dependent variables and assess whether greater occupational diversity among immigrants led to greater economic resilience between 2000 and 2010, as measured by changes in unemployment rate and real wage growth. We find some evidence that immigrants in regions that have more broadly integrated immigrants (across occupations) were relatively more resilient in the face of the economic shocks of the Great Recession.