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.     

The general urban model: Retrospect and prospect

The general urban model is viewed in brief retrospectively, mainly emphasizing the transition for the monocentric 'classical' elements of such a model to the multicentric. The emphasis of the paper, however, is on future prospects. It is argued that it could be developed as the basis of a model-based 'big picture' of urban development through five layers of disaggregation – from the global to the local. There are many opportunities for submodel development but the main future challenge is the modelling of urban and regional evolution. Progress in modelling urban and regional systems as complex nonlinear systems with particular reference to path dependence and phase transitions is reviewed. The idea of urban and regional 'DNA' is introduced which leads to a 'genetic medicine' view of aspects of planning.     

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.     

Convergence and regional productivity differences: Evidence from Greek prefectures

We study the effect of technology gaps and capital deepening on the productivity growth of Greek prefectures over the period 1971-1995. The empirical results show that Greek prefectures tended to converge over time, contrary to conventional wisdom. It is found that capital deepening plays a significant role in explaining productivity differences at the regional level. The empirical results are discussed in detail.We would like to thank the anonymous referees for helpful comments and suggestions. Thanks also go to Professor Clive Richardson and M. Terrasi for his constructive comments which improved the quality of the paper substantially. All errors remain the responsibility of the authors.Received: April 2001 / Accepted: May 2003     

Localised knowledge spillovers vs. innovative milieux: Knowledge “tacitness” reconsidered

Abstract. This article provides a critical discussion of the recent econometric literature on localised knowledge spillovers and the related notion of tacit knowledge. The basic claim of the article is that the increasing, and more or less automatic reliance of industrial geographers upon such econometric evidence and theoretical concepts to support their work on industrial districts, hi-tech agglomerations and, more broadly, local innovation systems is not well placed and risks to generate conceptual confusion and to distort research agendas. Following some recent advances in the economics of knowledge, the article also suggests that more research efforts should instead be devoted to exploring how knowledge is actually transmitted, among whom, at what distance, and on the basis of which codebooks.     

Decomposing regional productivity growth using an aggregate production frontier

The main contribution of this paper is the implementation of a new model which combines the two parametric approaches most commonly used in the productivity literature: fixed effects and stochastic frontiers. This allows us to discuss whether it is better to use average or frontier functions to estimate regional productivity. The empirical section uses panel data of Spanish regions over the period 1980–1995. Additionally, we calculate and decompose total factor productivity growth for the Spanish regions.     

Public policy,locational choice and the innovation capability of high-tech firms: A comparison between Israel and Ireland

Using survey data from Irish and Israeli firms we examine the influence of public policy on the characteristics, location and innovation capability of high-tech firms. The innovation activities of Israeli firms in Israel are found to be much more locationally sensitive than that of Irish companies. Regional policy incentives, involving the dispersal of high-tech firms to peripheral areas of Ireland are therefore likely to have had little negative effect on firms' innovation capabilities. In Israel, however, inducing highly R&D intensive firms to locate away from the main metropolitan areas may be counter-productive. Received: 28 November 2000 / Accepted: 26 September 2002     

Leisure,amenity, and capital accumulation in a multi-region model

This paper proposes a multi-region growth model with endogenous labor supply, endogenous amenity, and capital accumulation. Although the production side is the same as in the neoclassical growth theory, in order to solve issues related to regional migration with capital accumulation we propose an alternative approach to consumer decisions about time distribution between work and leisure, housing consumption and saving. We show that the dynamics of the J-region national economy can be described by J-dimensional differential equations. We simulate the long-term economic structure of the national economy with three regions. It is demonstrated that with the Cobb–Douglas production functions and specified values of the parameters, the national dynamics has a unique equilibrium. We also carry out comparative statics analysis with regard to productivity levels, amenity parameters, propensity to save, and the population.     

Efficiency wages,agglomeration, and a developing dual economy

In analyzing the implications of rural-urban migration in the presence of efficiency wages and external economies of scale in the urban sector, this paper focuses on structural transformation of a developing dual economy. It compares the agglomeration effects in the urban sector under exogenous wage distortion with that under exogenous wage distortion and external economies of scale and also with the agglomeration under efficiency wages and external economies of scale. It shows that because of the employment enhancing effect of rural-urban migration with efficiency wages, the agglomeration economies are bigger with efficiency wages than with minimum wage distortion in the Harris-Todaro model. In exploiting the existing external economies of scale, this agglomeration reduces the sectoral wage differential, and changes the effects of factor accumulation and commodity price changes in a way that is different from the effects under migration with exogenous wage distortion.Received: February 2003/Accepted: October 2003     

Urban spatial pattern as self-organizing system: An empirical evaluation of firm location decisions in Cleveland–Akron PMSA,Ohio

Economic models of urban spatial patterns have largely ignored complexity as an attribute of urban systems. Complexity theorists on the other hand have not made sufficiently serious and sustained attempts to verify empirically the relevance of complex systems models for urban spatial patterns. This research bridges this gap by simulating the evolution of an urban employment pattern as a self-organizing complex system and seeking its empirical validation. It estimates the model’s parameters by using firm data aggregated to the level of municipalities in Cleveland-Akron Consolidated Metropolitan Statistical Area in Ohio. The interaction among four parameters, forces of attraction and dispersion and their respective rates of dissipation with distance, are modeled as a two-dimensional complex system. The research compares the states of the modeled system with empirical data to present viable methods for verification, calibration and validation of such models.

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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     

Long-run development of a multi-regional economy

This article analyses models of a multi-regional economy with n regions and m factors, with a Cobb-Douglas or CES production function, and with or without economies of scale and Hicks-neutral technological progress, in which factors are imperfectly mobile as described by a revised gravity model. The article clarifies the incidence of interregional factor mobility, conditions of convergence of interregional per-capita income, the long-run equilibrium regional shares of factors and of income, and the convergence speed. The results are further generalised by explicitly introducing interregional distances. Received: 18 August 1997 / Accepted: 29 January 1999     

Exploratory spatial data analysis of the distribution of regional per capita GDP in Europe, 1980−1995

The aim of this paper is to study the space-time dynamics of European regional per capita GDP. A sample of 138 European regions over the 1980–1995 period provides clear evidence of global and local spatial autocorrelation as well as spatial heterogeneity in the distribution of regional per capita GDP. The detection of spatial clusters of high and low per capita GDP throughout the period is an indication of the persistence of spatial disparities among European regions. The dynamism of European regions is investigated by exploring the spatial pattern of regional growth. Implications for applied econometric work on the convergence of European regions are then suggested. Received: 11 September 2000 / Accepted: 11 March 2002 RID="*" ID="*"Previous versions of this article were presented at the 6th RSAI World Congress 2000 “Regional Science in a Small World”, Lugano, Switzerland, May 16–20, 2000 and the 40th ERSA Congress “European Monetary Union and Regional Policy”, Barcelona, Spain, August 29 – September 1, 2000. We would like to thank L. Anselin, R.J.G.M. Florax, A. Getis, C. Baumont, an and suggestions. We would also like to thank Eurostat: G. Decand and A. Behrens from the regional statistics section (division E4) as well as J. Recktenwald and I. Dennis for the help they provided on the Eurostat-Regio database. The usual disclaimer applies.     

Microregional fragmentation in a Swedish county

This study of the county of V?sterbotten in northern Sweden reveals significant differences in socio-economic conditions between populations living in different residential environments. A cluster analysis was performed in order to classify the nearly 500 microregions into a manageable number of groups with distinctive profiles. A seven-cluster solution contains groups ranging from remote and sparsely populated areas with poor socio- economic conditions and a large proportion of elderly to the most prosperous residential environments within the major centers. Besides high disposable incomes, the relatively wealthy areas also show high educational levels and better-than-average health status. In this way the county could be broken down into a mosaic of local housing environments with very different prerequisites for consumption and economic development. Increasingly, we find socio-economic marginality problems even within densely populated regions. The complex and dispersed pattern of disadvantaged and underprivileged residential areas all over V?sterbotten indicates the difficulty in treating counties and municipalities as homogeneous regions. Our findings may have major implications for regional planning and regional policy. Received: 17 August 1997 / Accepted: 31 July 2000     

Regional disparities and determinants of growth in Mexico

Developing countries such as Mexico, in which profound processes of economic liberalization have taken place over the last few decades, offer fertile terrain for studies of regional disparities. Mexico has experienced a history of polarization between regions, the industrialized north and the underdeveloped south, which have seen their differences widen, exacerbated through recurrent crises and liberalization processes. This paper looks at the convergence process among regions, examining which factors might affect regional growth, tracking the evolution of single units and identifying winners and losers. The evidence shows that northern states, bordering the USA, moved from a condition that might be described as `falling-behind' prior to liberalization to that of a `winner' after that process, while southern states went from the position of `catching-up' to that of `loser'. Regional disparities in human capital would appear to be playing a decisive role in the existence of differences. The author acknowledges comments from Gilles Duranton, Henry Overman, Andrés Rodríguez-Pose, two anonymous referees, and participants in seminars in The London School of Economics and the European University Institute.     

The effects of trade openness on regional inequality in Mexico

This paper attempts to shed light on the debate about the effect of trade openness on regional inequality, by exploring the specific mechanisms through which this relationship might operate. It does so by testing the hypothesis, based on endogenous growth theory, that a region’s ability to capture the benefits of trade openness depends on key regional characteristics—its critical endowments—and therefore the degree to which trade will reduce regional inequality in a given country is mediated by the geographic distribution of its endowments. I test the hypothesis in Mexico, using statistical analysis of an original sub-national dataset that runs from 1940 to the present. The results indicate that opening up to trade benefits more those regions with lower levels of education, thereby tending to reduce regional inequality. However, opening up to trade also benefits more those regions with higher levels of income and infrastructure, thereby tending to increase regional inequality. This latter effect is greater than the former, so that the overall effect of trade openness is to increase regional inequality.     

Cross-border transport infrastructure and aid policies

We investigate resource allocation concerning the provision of cross- border transport infrastructure, which is used for trade of goods between two neighboring countries. Since the level of infrastructure is sub-optimal under the circumstances that two governments choose the levels of infrastructure independently, we focus on the role of foreign aid to improve the efficiency of infrastructure provision. In this paper, we examine the welfare effects of aid policies, and show that aid can make both countries better off, i.e., Pareto improvement. Furthermore, Pareto improvement is more likely if the stage of development in recipient country is very low or sufficiently high.     

Intellectual leaders of regional science: A half-century citation study

Abstract. On the basis of citations to articles in regional science journals, this study identifies the most influential scholars in the field during various periods of its first-half century. It distinguishes among the pioneering generation who wrote its formative pieces, the generations who expanded its boundaries, and the current generation whose work is shaping the field and giving it direction. Useful insights into the nature of regional science flow from key facts about its intellectual leaders, including their disciplinary affiliations, periods of active research, and cited work outside the regional science journals. The article also discusses problems with the citation data and limitations of citation studies.