Knowledge flows across European regions

The recent resurgence of growth studies has clearly established that technological progress and knowledge accumulation are among the most important factors in determining the performance of regional and national economic systems. In this paper we propose new evidence on knowledge flows across European regions based on patenting at the European Patent Office. We examine in- and out-flows of patent citations as a proxy of knowledge connections, while looking also at their dynamics through time. The econometric analysis is based on a model where the exchange of knowledge across regions is mainly affected by geographical distance together with a set of spatial variables. The main result is that knowledge flows decrease as the geographical distance between the origin and the destination region increase. Furthermore, knowledge flows tend to be higher among contiguous regions and areas within the same country. These results prove to be robust with respect to the inclusion of other characteristics of the origin and destination regions (production structure, economic conditions and technological efforts) as well as different estimation methods.     

Factors conditioning the formation of European regional convergence clubs

Recent findings have indicated the existence of European regional clubs. In the following paper, we examine factors conditioning the distribution of European regional GDPpc by estimating conditioned stochastic kernels, arguably the best method for whole distribution or partial conditionings. We also compute conditioned Markov chains for the conditioning factors detected and their sensitivity to changes in probability. Our results show that a country’s fiscal policies to reduce within country inequalities remain the key factor in escaping from backward clubs, together with the integration of women into the labour market. The average number of patents and low-tech manufacturing specialisation indexes are also considered key factors.     

Applying social network analysis in economic geography: framing some key analytic issues

Social network analysis attracts increasing attention in economic geography. We claim social network analysis is a promising tool for empirically investigating the structure and evolution of inter-organizational interaction and knowledge flows within and across regions. However, the potential of the application of network methodology to regional issues is far from exhausted. The aim of our paper is twofold. The first objective is to shed light on the untapped potential of social network analysis techniques in economic geography: we set out some theoretical challenges concerning the static and dynamic analysis of networks in geography. Basically, we claim that network analysis has a huge potential to enrich the literature on clusters, regional innovation systems and knowledge spillovers. The second objective is to describe how these challenges can be met through the application of network analysis techniques, using primary (survey) and secondary (patent) data. We argue that the choice between these two types of data has strong implications for the type of research questions that can be dealt with in economic geography, such as the feasibility of dynamic network analysis.     

Modeling regional endogenous growth: an application to the non-metropolitan regions of Australia

An exploratory modeling approach to investigate spatial variation in the levels of regional endogenous employment growth and decline over the decade 1991–2001 is developed and applied to an analysis of the non–metropolitan regions (Local Government Areas) in each of the five mainland States of Australia. For the dependent variable, the summation of the regional shift component for change in total employment in major industry sectors¹ over the decade 1991–2001, standardized by the size of the labor force at the beginning of the period, is used as a proxy measure of regional endogenous growth. A general OLS model incorporating a set of 27 independent variables (measuring aspects of industry structure, unemployment, occupational structure, population size and growth, human capital, income distribution, and proximity to the coast and the state metropolitan region) is run, followed by a backward iterative statistical procedure to reduce the complexity of the general model by eliminating statistically insignificant variables to arrive at a specific model for each State. ¹ 17 of the first digit industry sector classifications under ANZSIC93 were used.     

Geographical and sectoral clusters of innovation in Europe

In this paper we attempt to provide empirical evidence on the phenomenon of cluster agglomeration of innovation activities throughout time and space in European regions. More specifically we try to assess whether there are some forces which support the development of technologically specialised regional clusters. In particular we want to determine the spatial extent of these forces, their dynamics along the eighties and nineties and their connection with production clustering. We have started from a mapping of innovation activity in European regions by means of an exploratory spatial analysis based on global indicators of spatial dependence. As a result, in a second step, we check the hypothesis that innovation concentration can be a result not only of the geographic concentration of production but also of the development of technologically specialised clusters in neighbouring regions. The analysis is based on a databank set up by CRENoS on regional patenting at the European Patent Office spanning from 1978 to 2001 and classified by ISIC sectors and on the Cambridge Econometrics database on production activity. Among the main results, it is shown that specialisation in innovative activity is positively and significantly influenced by specialisation in production activity. Additionally, it is obtained that innovation tends to cluster more in sectors in which the neighbouring regions are also technologically specialised.

Influence of highway construction projects on economic development: an empirical assessment

The evaluation of transportation projects has traditionally been made by assessing changes in travel time, vehicle operating cost, and safety. The broader, long-term effects on economic development (job, income and business growth) are a concern of transportation planners and decision makers, but have often been overlooked due to the lack of a reliable impact-estimation methodology and/or data. This paper presents a quantitative tool that can be used at the project-development phase to estimate the economic-development impacts of different types of highway construction projects. Using data from Indiana, we develop models that can be used to estimate the effects of geographic location, accessibility, and other factors on the economic-development impacts of highway construction projects. Our models can also be used as a basis for programming and ranking a wide variety of highway construction projects.     

Innovation and regional absorptive capacity: the labour market dimension

In 2003, Eurostat published an ‘experimental’ dataset on regional innovation levels derived from the Second Community Innovation Survey. This dataset, part of the European Innovation Scoreboard, also contains a range of regional labour market indicators. In this paper, we report an exploratory analysis of this data, focussing on how the labour market characteristics of regions shape regions’ absorptive capacity (RACAP) and their ability to assimilate knowledge from public and externally conducted R&D. In particular, we aim to establish whether labour market aspects of RACAP are more important for innovation in prosperous or lagging regions of the European Union (EU).

Spatial disparities in the European Union: an analysis of regional polarization

This paper examines the degree of polarization in the European Union regional per capita income distribution between 1977 and 1999 from several complementary perspectives. Specifically, we have combined a non-parametric analysis with the information provided by various polarization measures proposed by the literature on personal income distribution. The results reveal that the European regions tend to cluster into different per capita income classes during the study period. Nevertheless, the level of intra-distribution mobility is relatively low, especially in regions at the upper and lower ends of the distribution. In any event, regional polarization has decreased over time, as a consequence of various factors sometimes working in opposite directions. Additionally, the empirical evidence provided reveals that the geographical location of the various regions and the differences in their productivity levels, play a major role in explaining the polarization patterns observed in the European Union.     

The identification of functional regions: theory, methods, and applications

A functional region is characterised by a high frequency of intra-regional interaction. The text analyses how functional regions can be identified by using labour market data. Three approaches are applied in this task, named the local labour market, commuting zone, and accessibility approach, respectively. The text includes an application using the Fyrstad region. The situation is also studied at two points in time. The outcomes using the different approaches are compared, and the results combined have a richer flavour.

Location quotient and trade

Economic base analysis suggests that export expansion should be the primary engine of regional economic growth and the most commonly employed approach to identifying specialization is the location quotient (LQ). Similarly, the law of comparative advantage represents a conceptual framework for determining the type of trade. However, several assumptions of the LQ limit both its general applicability and usefulness. This study recommends that comparative advantage can provide another channel to re-examine the LQ from the viewpoints of both interregional and international trade, where the former can correct the LQ from dependence problems of the location theory and the latter inserts international trade into the LQ to show another vital source of exports, especially for a small open economy and increasing globalization today. Furthermore, the optimal LQ is obtained by integration of the above two new revisions to respond to all types of trade. Finally, the evidence finds that differences in base employment between traditional and these new LQ indices are substantial and hence revised LQ should be considered profoundly.     

Regional economics in its 1950s: recent theoretical directions and future challenges

Regional economics has just entered in its 1950s. It is a young discipline compared to other branches of the economy, yet much work has been done in this field. A vast and rich number of theoretical and methodological approaches exists nowadays to incorporate space into logical schemes, laws and models which regulate and interpret the formation of prices, demand, productive capacity, levels of output and development, growth rates, and the distribution of income in conditions of unequal regional endowments of resources. This contribution provides the state of the art in Regional Economics with the aim to highlight the scientific achievements obtained so far and the theoretical and methodological gaps which still need to be filled out. Aspects that run counter to general beliefs emerge by reading the original contributions of wellknown theoreticians, and will be presented. Future challenges will emerge from a critical approach to the milestones achieved so far. This paper is at the basis of a keynote lecture given at the 46° ERSA Conference, held in Volos, 30 August–3 September 2006.     

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.

Networking strategies of young biotechnology firms in Israel

This article examines the factors involved in the network development process in young biotechnology firms in Israel. The findings show that this process occurs as a result of the firm’s existing network and networking resources, as well as of exposure and activation routines that are implemented by the firm and targeted for the network development process. Exposure routines refer to the frequency at which the firm uses existing tools, such as partnering events, conferences, and publications. Activation routines refer to the extent to which the firm uses its networking resources for the benefit of the networking process.     

Localized inter-organizational linkages,agglomeration effects,and the innovative performance of firms

This paper focuses on the questions to what extent agglomeration effects and localized inter-organizational linkages influence different types of innovative performance of firms. Doing so adds to the relatively scarce firm-level literature regarding the role of regional environment for the innovative performance of firms by disentangling the often conflated effects of agglomeration effects and localized inter-organizational linkages. Based on data from the Dutch automation services, we show that agglomeration economies and localized inter-organizational linkages have different effects on different types of innovative performance of firms.     

Interstate spillovers of private capital and public spending

The analysis estimates the economic returns on public spending by transportation and non-transportation functions vs. private capital, using a panel data set for 48 contiguous states from 1989 through 2002. These actual spending dollars are used as a more precise measure compared to apportioned state public capitals used in the existing literature. For each type of capital/spending, the interstate spillovers were constructed in such a way that different states are weighted by commodity flows across the states to reflect different degree of inter-state dependence. We find that when spending data rather than capital stock is used, all of the interstate spillover effects are negative and statistically significant, suggesting that infrastructure investment does not contribute to economic growth (at least not directly). Therefore, crowding out effects exist among states competing for both private and government funds, in particular if states are highly dependent on allocation of federal funds. These results confirm the finding that previously estimated positive coefficients reflect spurious correlation based on capital stocks and output.     

A time series analysis of U.S. metropolitan and non-metropolitan income divergence

This paper employs time series methods to analyze convergence across metropolitan and non-metropolitan regions during the 1969–2001 period. The results suggest that non-metropolitan regions are diverging from below the U.S. average income level, while metropolitan regions show mixed evidence of convergence. These summary results vary by geographic location and the size of the region, with medium-sized metropolitan regions showing the strongest tendencies to converge, while non-metropolitan areas with larger urban centers and small towns showed the strongest tendencies to diverge. Differences in human capital (as well as employment concentrations in farming and mining) appear to have influenced the relative performance of metropolitan and non-metropolitan regions during the last 30 years, suggesting a role for agglomeration economies in the observed trend toward divergence.

Regional variations in the price of building land: a spatial econometrics approach for West Germany

In this paper, we analyze the enormous variation in the price of building land across West German regions. We outline a theoretical model that ties a household’s willingness to pay for building land to the inter-temporal value of employment. Using data for NUTS 3 regions the theoretically derived impact of labor market variables and other influences is investigated. We show that spatial dependence through spatially lagged variables plays a crucial role. According to our findings, the variation in the price of building land can be explained reasonably well if one adequately takes into account the specific patterns of spatial interaction.     

Incentive consistency and the choice of a spatial pricing mode

This paper extends Gronberg and Meyer’s results (1981 21:541–549) and studies the problem that occurs when transportation costs are different between a firm and consumers: The firm (based on a profit-maximizing consideration) may adopt discriminatory pricing with an inefficient transport mode. This inefficient pricing behavior may not be consistent with the social optimum, whereby the problem of incentive inconsistency thus occurs. When dealing with endogenous pricing modes having asymmetric transportation costs, one should pay more attention to the distortion caused by the inconsistency problem.

The geography of collaborative knowledge production in Europe

We analyse inter-regional research collaboration as measured by scientific publications and patents with multiple addresses, covering 1316 NUTS3 regions in 29 European countries. The estimates of gravity equations show the effects of geographical and institutional distance on research collaboration. We also find evidence for the existence of elite structures between excellence regions and between capital regions. The results suggest that current EU science policy to stimulate research collaboration is legitimate, but doubt the compatibility between EU science policy and EU cohesion policy.