Specialization, R&D and productivity growth: evidence from EU regions

The present paper analyzes the effect of regional specialization and R&D expenditures on labor productivity growth. Following Fingleton [Environ Plan 32:1481?C1498 2000], we assume positive externalities in labor productivity growth and technological spillovers depend on interregional distances and economy size. Regional specialization and R&D expenditures are assumed to enhance growth by affecting the level of technology. Although it may seem natural that specialization and R&D expenditures can convey great advantages on economic growth, evidence varies across sectors. We conduct an empirical analysis for two economic sectors and the economy as a whole. Recently developed spatial econometric methods are adopted to control for potential heteroscedasticity in the growth equation.     

Uncertain economic growth and sprawl: evidence from a stochastic growth approach

This paper examines how the volatility of local economies, represented by uncertainty over future land rents, affects urban sprawl. We develop a theoretic model that links sprawl to shocks to expected rent from future land development, among other factors. The econometric analysis draws upon panel data from US metropolitan areas. To measure urban sprawl, we construct a distinctive measure that captures the distribution of population density within metropolitan areas. Using a proxy for uncertainty over future land rents, we confirm the theoretic prediction that across US metropolitan areas, higher levels of uncertainty are associated with lower levels of sprawl.     

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     

Entrepreneurial attitude and economic growth: A cross-section of 54 regions

In the literature factors like entrepreneurial ability, regional innovative potential, and entrepreneurial human capital are emphasized in explaining the economic success of regions. Using the European Values Studies (EVS) dataset on norms and values in 54 European regions, we distinguish values that characterise self-employed, which enables us to construct a regional aggregate that reflects the average score on entrepreneurial attitude. We show that regions differ in entrepreneurial attitude, and that a high score on entrepreneurial characteristics is correlated with a high rate of regional economic growth. In this way we empirically establish the link between culture and economy at the regional level.This paper was presented at several conferences, among which the Academy of International Business (2002), the European Regional Science Association (2002) and the Academy of Management (2002), where it was a finalist of the Carolyn Dexter best international paper award. We thank the anonymous reviewers for their valuable comments and suggestions. We are grateful to the members of the EVS working group of Tilburg University, especially Ton van Schaik, Wil Arts, Jacques Hagenaars and Lock Halman.     

Eastern reforms,trade, and spatial change in the EU

Economic reforms in Eastern Europe and Eastern Europe's integration into the world economy are supposed to induce fundamental changes into European trade patterns. This will affect regions in the EU differently, depending on location and specialization. The article quantifies the impact of changing trade flows on EU regional manufacturing. Estimates are based on comparative static simulations, using an empirically calibrated computable partial equilibrium model of interregional trade. The spatial EU output pattern under status-quo conditions is compared with an optimistic “successful reform scenario”. The article explains the model structure and its calibration, and presents results for 13 manufacturing industries.     

Spatial markets and the potential for economic integration between Canadian and U.S. regions

The potential for further economic integration among Canadian and American regions is measured by comparing province-to-state trade with state-to-state trade, where the latter is used as a benchmark of integration. To accomplish this, an attraction constrained gravity model is derived from micro foundations and estimated. The analysis demonstrates that after controlling for variations in output, distance, wages, productivity, and localization economies, the border remains a significant barrier to trade, although much less than previous estimates of the border effect using internal Canadian trade as a benchmark. The model's results also indicate that the border's influence varies across sectors, and the influence appears to be, in part, related to the presence of tariff and non-tariff barriers. Received: 1 February 1999 / Accepted: 8 August 2000     

The economic effects of local authority mergers: empirical evidence for German city regions

Cooperation of neighbouring local authorities in the provision of regional public goods can be efficiency enhancing due to economies of scale, a better realisation of fiscal equivalence or dynamic efficiency gains. While the need for such cooperation between local authorities is undisputed, there are different positions concerning the form the cooperation should take. Some argue that local authority mergers are the most efficient and democratic strategy. Others argue that functional cooperation is more appropriate and that mergers reduce the welfare enhancing effects of competition between local authorities. Based on the conditions in Germany that can be interpreted as a natural experiment it is shown in a cross-section analysis that local authority mergers in monocentric city regions have indeed significant economic effects. All else equal the financial situation of city regions where the core and the hinterland are separate administrative districts is worse than in single district regions. Radical mergers of core cities and suburban towns in the 60s and 70s led to higher economic growth in the period 1980–1998.     

Nonlinearities in regional economic growth and convergence: the role of entrepreneurship in the European union regions

Nonlinearities have been identified in recent literature on growth and convergence at the cross-country level and they have been associated with a number of variables of interest such as initial conditions and human capital accumulation. This research takes the analysis at the regional level within a European context while focusing on entrepreneurship and, using semiparametric regression techniques, provides evidence for nonlinear effects of the base-year income per capita on growth suggesting that convergence may be a phenomenon restricted to particular income bands. Entrepreneurship has a positive effect on regional growth and no serious departures from linearity are detected, while evidence for an almost L-shaped relationship between income per capita levels and self-employment rates was produced. A quality-adjusted proxy for human capital stock was found to be a positive and significant determinant of economic growth across European regions but, again, no departures for linearity were detected for this effect.     

An analysis of wage flexibility: evidence from the Spanish regions

The theory of Optimum Currency Areas poses that one of the most important costs that EMU may entail for countries belonging to it is the loss of some instruments of political economy (exchange rate and monetary policies) in response to shocks. The aim of this paper is to analyse real wage flexibility, which is one of the main alternative adjustment mechanisms to these policies. For this purpose, the case of the Spanish regions for the period 1985–1999 is reported. First, we develop a nonparametric approach to show that unemployment and productivity growth rates have reduced effects on wage evolution in the period of study. Second, semiparametric estimation techniques are applied to provide more econometric evidence regarding regional flexibility of real wages in Spain. Additionally, some suggestions are developed on the topic of EMU’s ability to improve the degree of regional wage flexibility. The general conclusion that we draw in the study is that regional wages are very rigid and the impact of EMU, though favourable, will be reduced.

Presidential address productivity and the spatial implications of structural change: Empirical evidence for Simon's model

As society changes, so Regional Science must devise new methods to analyze these changes, for technical change affects not merely society but also the social sciences. This claim is illustrated by an analysis and a test of Simon's (1947) model of productivity, economic structure, and spatial distribution of activities.     

Exploring the sources of labour productivity growth and convergence in the Italian regions: some evidence from a production frontier approach

This paper investigates labour productivity growth and regional convergence patterns in Italy over the time span 1982–2000. Starting from some evidence of spatial polarisation within Italian economy, the analysis aims at exploring the sources of this tendency. To this end, an approach based on data envelopment analysis (DEA) production frontiers is employed which allows to decompose labour productivity growth into efficiency change, technological progress and capital deepening, looking then at the relative contribution of each component to regional convergence. Moreover, some measures of human capital and public capital are used as augmentation factors of the conventional inputs. The study leads to the conclusion that polarisation is mainly due to regional differences in efficiency change.     

Banking structure and regional economic growth: lessons from Italy

Following the literature on the comparative advantage of small versus large banks at lending to small businesses and in light of the worldwide decline in the number of intermediaries that specialise in this type of lending associated with deregulation in the banking industry, we examine the role that specific categories of banks have played in the context of Italy’s regional economic growth. Over the estimation period, 1970–1993, which ends in the year of full implementation of the banking reform that introduced statutory de-specialisation and branching liberalisation, Italy featured not only a substantial presence of small- and medium-sized enterprises (SMEs) in the real sector, as is still the case, but also a large and heterogeneous set of credit institutions with different ownership, size and lending styles. Exploiting these peculiarities we study the role of specific intermediaries and gather indirect evidence concerning the likely effects, ceteris paribus, of the current consolidation processes. The main findings, stemming from panel regressions with fixed effects, are as follows. The overall size of the financial sector has a weak impact on growth, but some intermediaries are better than others: cooperative banks and special credit institutions play a positive role, banks of national interest (basically large private banks) and public law banks (government-owned banks) either do not affect growth or have a negative influence depending on how growth is measured. Cooperative banks were mostly small banks and special credit institutions were all but large conglomerates with standardized credit policies, hence our results lend support to the current worldwide concerns of a reduction in the availability of credit to SMEs resulting from consolidation and regulatory reforms in the banking industry.

Agglomeration,inequality and economic growth

Agglomeration and income inequality at country level can be both understood as concentration of physical and human capital in the process of economic development. As such, it seems pertinent to analyse their impact on economic growth considering both phenomena together. By estimating a dynamic panel specification at country level, this paper analyses how agglomeration and inequality (both their levels and their evolution) influence long-run economic growth. In line with previous findings, our results suggest that while high-inequality levels are a limiting factor for long-run growth, agglomeration processes can be associated with economic growth, at least in countries at early stages of development. Moreover, we find that the growth-enhancing benefits from agglomeration processes depend not only on the country’s level of development, but also on its initial income distribution (something, to the best of our knowledge, not considered before). In fact, probably suggesting a social dimension to congestion diseconomies, increasing agglomeration is associated with lower growth when income distribution is particularly unequal.     

The new economic geography: Past,present and the future

This article presents a summary of our conversation on the past, present and future of the new economic geography, which took place with the help of an interlocutor in San Juan, Puerto Rico in November 2002. Following the introduction, we explain what the new economic geography is, and we describe some basic models. The discussion of its various critical aspects is presented subsequently, and the article concludes with the discussion of future issues and challenges facing the field.JEL Classification: O41, R12We thank Maria Makabenta, the guest-editors of the journal and an anonymous reviewer for valuable comments on earlier drafts. The first author is grateful to Grants in Aid for COE Research 09CE2002 and Scientific Research S 13851002 (Japanese Ministry of Education and Science).     

Distinct spatial characteristics of industrial and public research collaborations: evidence from the fifth EU Framework Programme

This study compares the spatial characteristics of industrial R&D networks to those of public research R&D networks (i.e. universities and research organisations). The objective is to measure the impact of geographical separation effects on the constitution of cross-region R&D collaborations for both types of collaboration. We use data on joint research projects funded by the fifth European Framework Programme (FP) to proxy cross-region collaborative activities. The study area is composed of 255 NUTS-2 regions that cover the EU-25 member states (excluding Malta and Cyprus) as well as Norway and Switzerland. We adopt spatial interaction models to analyse how the variation of cross-region industry and public research networks is affected by geography. The results of the spatial analysis provide evidence that geographical factors significantly affect patterns of industrial R&D collaboration, while in the public research sector effects of geography are much smaller. However, the results show that technological distance is the most important factor for both industry and public research cooperative activities.     

Regional economic integration and the evolution of disparities

This paper provides an overview of the evolution of interregional disparities in Europe and in the United States in recent decades, considering also the changes that economic integration over the 1990s and beyond may bring. The assumptions of the existing paradigms on differential regional change are placed in perspective, by relating them to past and ongoing changes in interregional disparities. Data on the European (EC) and United States cases are analyzed, providing insights into past performance and into its possible causes. A final section then discusses the characteristics of regional inversion processes, and their potential for reducing interregional disparities as economic integration advances. These macro-level characteristics are related to micro-level processes in which innovation (technological, organizational, institutional) plays a central role, allowing less developed regions to bypass a rigid or static domestic spatial division of labor through the inversion process.An earlier version of this paper was presented at the 4th World Congress of the RSAI, Palma de Mallorca, Spain, May 1992.