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.     

Regional costs-of-living with congestion and amenity differences: an economic geography perspective

Standard models of the “new economic geography” predict that costs-of-living are low in the central and high in peripheral region, due to the fact that consumers in the periphery have to bear transportation cost for manufacturing varieties. In reality, however, only some goods are cheaper in economic centres, whereas the overall costs-of-living (including housing costs) tend to be higher. In this paper we use an analytically tractable economic geography model with an immobile housing stock, so that regional agglomeration drives up housing prices. We show that a core-periphery structure can endogenously emerge in which the core is the more expensive area in equilibrium. We also analyse the efficiency of spatial cost-of-living differences and augment the model to include an exogenous regional difference in the form of a consumption amenity.     

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.     

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.

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.     

Sequencing and scheduling highway network expansion using a discrete network design model

The motive behind this paper is to produce an NDP model that prescribes the final shape of a transportation network and the sequence and schedule of facility construction during the planning span as well. The proposed bi-level NDP model fills the gap between existing NDP models and practitioners’ needs because, in practice, planners have to select investment projects on a year-by-year basis. Conversely, existing models suggest only the optimal network configuration for a planning horizon. A genetic algorithm and a simulated annealing algorithm are proposed along with an exhaustive search algorithm as solution algorithms. Testing these algorithms with an example problem revealed that the simulated annealing worked superiorly to the genetic algorithm. The paper also demonstrates that the model is applicable to a real world problem by showing that the computational time needed to solve the example problem is not prohibitively large.     

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.     

Testing the credit view with pooled data: dynamic links among state bank health, investment-oriented bank loans, and economic performance

This paper focuses on the “credit view” theory at the state level, which suggests that state-level banking sector health influences state-level real economic performance. Specifically, we extend typical analysis of the credit view theory, applying relevant state-level economic variables to consider whether the health of a state’s banking system affects capital investment loans and, in turn, whether growth of these loans affects a state’s economic performance. We develop a two-equation state-level model, use more refined measures of capital investment loans, and apply advanced dynamic pooled estimators to our panel of state data for the 1984–1993 period. Regression results support dynamic links among state bank health, state investment-oriented bank loans, and state economic performance, thus supporting existence of a state-level credit channel effect.

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.     

Continuous economic space modelling

This paper attempts a survey of continuous modelling in spatial economics. The classics of spatial economics, from von Thünen on, like geographers always did, considered phenomena in the two dimensional plane, though later development was in favour of modelling discrete location point sets connected by communication arcs. The models discussed here are strongly focused around Beckmann’s continuous space market model from the early 1950s.     

Knowledge networks across Europe: which distance matters?

In this paper, we address the manifold nature of knowledge through the analysis of four distinct but complementary phenomena (Internet hyperlinks, EPO co-patent applications, Erasmus students mobility and European research networks) which characterise knowledge as an intrinsic relational structure (directly) connecting people, institutions and (indirectly) regions across five European countries. We study the structure (in terms of density, centralisation, clustering, assortativity, centre-periphery and resilience) of these international knowledge flows through network analysis techniques and we test the influence of geographical distance as opposed to sectoral (based on the industrial distribution of innovative activity) and functional (based on the value of the European technological index) distances in shaping the strength of knowledge relations through a gravitational model. Network Analysis techniques applied to the configuration of international knowledge flows between European regions highlight the existence of a polarised hierarchical structure. By estimating a “gravity equation” model we demonstrate that, far from the claim of the “death of distance”, geographic distance is still relevant for determining the structure of inter-regional knowledge flows. Functional and, above all, sectoral distances play also a relevant role suggesting that knowledge flows easier between similar regions (according to their technological level and the industrial distribution of their innovation system).     

The spatial distribution of inventor networks

Inventor networking has become both more feasible with improved telecommunication and more important as it usually produces research of higher quality. Despite overwhelming evidence on the benefits of collaboration, patent data from 1994 to 2001 in Sweden demonstrate that inventor networks are not very common. Moreover, the spatial distribution of inventor networks is not uniform. It appears that agglomeration measured both as employment density and as industry diversity, plays a role in explaining networking. Our results indicate that inventor networks are more likely to exist in densely populated areas with a diversified industry. Market size has a negative impact on networking in that we can observe that inventor networks are less common in large metropolitan areas, ceteris paribus. Hence, it supports the proposition that networking can act as a substitute to agglomeration. Our results also suggest that researchers in dense areas will not only collaborate more; they will also collaborate over longer distance.     

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.     

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).

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.

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.

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.

Toll roads and economic development: exploring effects on property values

An increasing number of toll projects are being considered across the country, and questions are often raised about the impact of toll roads on the economy and economic development in the region. This paper examines the effects of toll roads in a major metro area. Toll roads in Dallas County, Texas, are examined for their impacts on property values, one indicator for economic development impacts. Particular emphasis is placed on the temporal and spatial nature of the impacts. The paper examines impacts of existing toll roads using residential transactions data spanning a period of 20 years and a combination of traditional and spatial econometric approaches.     

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.