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 pattern,pull, and potential of Baltic Sea trade

This paper describes the current conditions of trade in the Baltic Sea region and considers the strength of trade affinities between countries and country groups within that region. The evidence supports a strong affinity between Estonia, Latvia, and Lithuania to the Baltic Nordic countries. The paper also considers how sensitive Swedish exports are to per capita GDP of importing countries and how that varies across industries. Some of the evidence supports a positive relation between product differentiation and the per-capita GDP sensitivity. Among this evidence is the finding that for Swedish exports, distance sensitivity and per-capita GDP sensitivity are negatively related. Received: January 2001/Accepted: April 2002 The authors are thankful for funding from the EU's INTERREG IIC Programme through SEBTrans. They also appreciate the helpful comments provided by B?rje Johansson.?An earlier draft of this paper was presented at the Udevalla, Sweden Conference 2000 entitled “Entrepreneurship, Firm Growth and Regional Development in the New Economic Geography”.     

The evolution of the U.S. industrial landscape, 1969–1995

The industrial landscape of the U.S. has undergone major changes in the last three decades, which have affected the location of the work-force as much as sector location. This paper adopts a dynamic approach in order to analyse the principal characteristics of this process in the time-period 1969–1995 among the twenty two-digit SIC industries. Two main conclusions have emerged. First, we find that, in general, industries are tending to reduce their degree of concentration. Secondly, the classification of industries according to different economic criteria allows us to test the degree of compliance with various theoretical propositions and to detect relevant empirical regularities. Received: July 2001/Accepted: August 2002 The authors would like to express their thanks to two anonymous referees for their valuable comments and observations on an earlier version of this work. Similarly, they are grateful for the financial support provided by the University of Zaragoza under Project UZ2001-SOC-09.     

Impacts of the development of large cities on economic growth and income distribution in Korea: A multiregional CGE model

A multiregional Computable General Equilibrium (CGE) model of Korea is used to assess urban development strategy in terms of national economic growth and income distribution. We find that the dispersion of total investment expenditure to six large cities would be the best policy if the emphasis of national development were to be placed on economic growth, together with a reduction in regional income disparity. Conversely, a heavy concentration of investment expenditure in Seoul and Pusan would lead to an amelioration of inequality in the distribution of personal income, but it would be difficult to implement due to hostility towards a primarily city-oriented value system. Received: 6 September 1999 / Accepted: 10 January 2002 RID="*" ID="*" An earlier version of this article was presented at the 16th Pacific Regional Science Conference held in Seoul, Korea, July 12–16, 1999.     

Linking sportfishing trip attributes,participation decisions,and regional economic impacts in Lower and Central Cook Inlet,Alaska

Forecasts of the regional economic impacts of changes in the demand for recreation occasioned by regulatory changes, changes in the quality of the recreation experience, or changes in average trip costs require a model that links changes in these trip attributes to individual participation decisions and population participation rates. The probability that an individual will take a particular recreational trip is described using a nonlinear random effects probit model based on variable trip attributes and individual economic and demographic characteristics. These conditional individual probabilities are transformed into predictions of changes in total recreation demand using a simulation-based sample enumeration method. The regional impacts associated with ensuing changes in primary and secondary expenditure patterns are elucidated with a stand-alone recreation-sector module linked to a regionally adjusted zip code-level input-output model. Because the participation model allows for non-constant marginal utility, primary and secondary impacts exhibit nonlinear responses to variations in trip attributes. The modeling approach is demonstrated in an application to the saltwater sport fisheries for Pacific halibut and salmon in Lower and Central Cook Inlet, Alaska. Received: February 2001/Accepted: December 2001     

Intra-Asia trade and foreign direct investment

This article reconsiders the patterns of intra-Asia trade and the linkages with foreign direct investment (FDI) in this region. The following conclusions are drawn. Firstly, by 1985 intra-Asia trade exhibited both distinct patterns of inter-industry trade on the one hand, and intra-industry trade on the other. Secondly, the patterns of trade in this region have not changed since 1985 from vertical to horizontal, but from a “flying-geese” to an “acrobatic” type, due to the sharp increase in FDI within the region. Thirdly, since the early 1990s, FDI began to shift to China due to the wage differentials between China and other East Asian countries. This made the countries of East Asia compete with one another, rushing to obtain capital and financial resources from all over the world – ultimately contributing to recent financial and economic turbulence in the region. The article concludes with some brief policy recommendations on how to avoid a recurrence of the Asian crisis in the 21 century. Received: 18 August 1997 / Accepted: 16 December 1998     

Measuring self-sustainability of economic development at the county level

Factors that affect self-sustainability of regional economic development are defined and analyzed in this paper. Extensive empirical testing shows that at the county level, the size of the regional economy and agglomeration effects are less important than its regional multiplier and its export base. Because the classic export-base model fails specification tests when estimated at the county level, a modified export-base model accounting for spatial effects is developed and analyzed. To validate the proposed spatial export-base model, a practical procedure for estimating parameters of the model is also developed and utilized in an empirical study. The paper concludes with a brief review of the applicability of the modified export-base model to the analysis of the self-sustainability of regional economies, its limitations, and its policy implications. In particular, it is suggested that regional economic development policies should focus on promoting patterns of self-reinforcing regional growth rather than on maintaining unsustainable economic initiatives. It is also demonstrated that the size of a county's economy is not directly related to its self-sustainability and growth rates. Received: May 2000/Accepted: March 2002 Many thanks to Roger Stough and Alena Smirnova for their helpful comments. The research was supported in part by Grant CO-12884F from the Appalachian Regional Commission. An earlier version of the paper was presented at the 39th Annual Meeting of the Southern Regional Science Association in Miami Beach, FL, April 13–15, 2000.     

Unemployment, selective employment measures and inter-regional mobility of labour

This article examines the impact of selective employment measures on the subsequent migration behaviour of the participants. We hypothesise that employment measures targeted at high unemployment regions may discourage out-migration of the unemployed. Since the possible locking-in effect mainly influences those with the weakest employment prospects, selective employment measures may impede the adjustment process of regional labour markets. Results suggest that employment measures reduce the mobility of the unemployed, but only during an era of low unemployment when the employment prospects in potential destination regions are favourable. In an era of high unemployment, these measures are not likely to contribute to greater regional unemployment disparities. There is also large variation in the locking-in effects across different employment programmes and specific groups of job seekers. Received: 6 December 1999 / Accepted: 16 March 2001 RID="*" ID="*" This study is part of a project supported by the Academy of Finland (project number 43546). I would like to thank the referees for thoughtful comments and suggestions.     

Integrating spatial optimization and cellular automata for evaluating urban change

Urban growth and change presents numerous challenges for planners and policy makers. Effective and appropriate strategies for managing growth and change must address issues of social, environmental and economic sustainability. Doing so in practical terms is a difficult task given the uncertainty associated with likely growth trends not to mention the uncertainty associated with how social and environmental structures will respond to such change. An optimization based approach is developed for evaluating growth and change based upon spatial restrictions and impact thresholds. The spatial optimization model is integrated with a cellular automata growth simulation process. Application results are presented and discussed with respect to possible growth scenarios in south east Queensland, Australia. Received: August 2001/Accepted: July 2002 The second author was supported by a grant from the Australian Research Council.     

Changing the economic landscape: The phenomenon of regional inversion in the US manufacturing sector

Regional inversion is the name given to the phenomenon whereby the traditional industrial areas of certain countries lose their weight in favor of what were formerly peripheral zones. Against this background our first objective is to offer a formal and rigorous definition of the concept of regional inversion from an econometric standpoint. To that end we relate such a process with the long-run concepts of convergence and catching-up. Secondly, we test this definition through the use of unit root statistics and apply these to demonstrate the presence of this phenomenon in some of the US two-digit SIC industries. Received: 4 December 2000 / Accepted: 20 August 2001 RID="*" ID="*" The authors would like to express their thanks to three anonymous referees for their helpful comments and observations on an earlier version of this article. Financial support from grants PB97-1028 and PB98-1614 of DGES is gratefully acknowledged.     

Modelling the geography of economic activities on a continuous space

In the present article we propose a spatial micro econometric approach for studying the geographical concentration of economic activities. We analyse the incentives to use this approach rather than the traditional one based on regional aggregates. As an example, we present our prototypical theoretic model – to be seen as a continuous space version of Krugman's concentration model – that includes birth, survival and growth components. We present a numerical estimation of the birth model for a set of data referring to the concentration of the manufacturing industries in the San Marino Republic. Received: 18 May 1998 / Accepted: 12 March 2001     

Finite sample properties of estimators of spatial autoregressive models with autoregressive disturbances

The article investigates the finite sample properties of estimators for spatial autoregressive models where the disturbance terms may follow a spatial autoregressive process. In particular we investigate the finite sample behavior of the feasible generalized spatial two-stage least squares (FGS2SLS) estimator introduced by Kelejian and Prucha (1998), the maximum likelihood (ML) estimator, as well as that of several other estimators. We find that the FGS2SLS estimator is virtually as efficient as the ML estimator. This is important because the ML estimator is computationally burdensome, and may even be forbidding in large samples, while the FGS2SLS estimator remains computationally feasible in large samples. Received: 20 January 2001 / Accepted: 31 August 2001     

Measuring dynamic economic effects under the constant-technology versus varying-technology assumptions

This study measures the time-period-specific industrial price and output effects of cost-related variables (transportation cost, wage rate, and interest rate) by utilizing the Dynamic Variable Input-Output (VIO) model. The Dynamic Variable Input-Output (VIO) model extends the static single regional version of the MultiRegional Variable Input-Output (MRVIO) model which is a partial general equilibrium model that incorporates the input-output model.  By using the 15 sector industrial transaction table derived from the 1987 U.S. Benchmark input-output table for the constant-technology assumption case, and transaction tables derived from the 1987–1983 U.S. input-output tables for the varying-technology assumption case, we estimate cost-related variable effects on industrial price and output that are spread over several years. The dynamic price and output elasticities identify each period's impacts, and they add up to the static total price and output elasticities, respectively, when we adopt the constant-technology assumption. When we adopt the varying-technology assumption, each period's impacts do not add up to the neat dynamic totals. This study also finds that the initial period's price and output elasticities of the Dynamic VIO model are exactly the same as price and output elasticities of the static VIO model, thereby showing that the static VIO model underestimates the price and output impacts.  Empirical results show that price elasticities are all positive for both own and cross impacts. Empirical results also show that output elasticities are negative for own impacts but mixed in sign for cross impacts because of the substituting behavior of firms and consumers. The distributions of both price and output elasticities reveal that ripple effects vary among different industries, over different time periods, among the cost-related variables, and between the two different technology assumptions. The distributions of both price and output impacts are more apparent during the first four or five periods.  Hypotheses testings on the differences of mean elasticities between the two cases of technology assumptions show that under 10% level of significance, there are almost no differences in elasticities between the two cases of technology assumptions. However, as we increase the significance level, the total of five year periods' impacts show that they do differ under the two technology assumptions. Consequently, we recommend the use of constant technology for forecasting time horizons less than five years, and the use of varying-technology for forecasting time horizons longer than five years. Received: August 1998/Accepted: April 2000     

A note on Australia's inward and outward direct foreign investment

This research note investigates the determinants of Australia's inward and outward direct foreign investment (DFI) using annual and quarterly data. It is found from pooled annual data for Australia and seven developed countries that DFI has been influenced by labor disputes, current account balances, Australia's real GDP and real exchange rates. The application of an econometric model using quarterly data shows that the long run elasticities of DFI with respect to real exchange rates and labor disputes are significant for selected cases. Received: 30 April 1997 / Accepted: 1 September 1997     

The impact of residential neighborhood type on travel behavior: A structural equations modeling approach

Using a system of structural equations, this paper empirically examines the relationship of residential neighborhood type to travel behavior, incorporating attitudinal, lifestyle, and demographic variables. Data on these variables were collected from residents of five neighborhoods in the San Francisco Bay Area in 1993 (final N=515), including “traditional” and “suburban” as well as mixtures of those two extremes. A conceptual model of the interrelationships among the key variables of interest was operationalized with a nine-equation structural model system. The nine endogenous variables included two measures of residential location type, three measures of travel demand, three attitudinal measures, and one measure of job location.  In terms of both direct and total effects, attitudinal and lifestyle variables had the greatest impact on travel demand among all the explanatory variables. By contrast, residential location type had little impact on travel behavior. This is perhaps the strongest evidence to date supporting the speculation that the association commonly observed between land use configuration and travel patterns is not one of direct causality, but due primarily to correlations of each of those variables with others. In particular, the results suggest that when attitudinal, lifestyle, and sociodemographic variables are accounted for, neighborhood type has little influence on travel behavior. Received: March 2001/Accepted: October 2001     

Spent nuclear fuel and residential property values: the influence of proximity, visual cues and public information

This article examines whether public knowledge of spent fuel storage at nuclear power plants, and any local adverse risk perceptions that may have occurred, affect the sale price of single-family residential properties. We present evidence from the Rancho Seco, California, plant on residential property values using an hedonic modeling framework. We include a large number of control variables, data with a high level of spatial detail and a number of public information variables in order to model property market effects within a fifteen mile radius of the plant. Our findings indicate that proximity and visual reminders of the plant have some influence on local property markets, and that there is a small media coverage effect on single-family home sale prices. Received: 6 May 1998 / Accepted: 26 May 1999     

Urban rent and urban dynamics: The determinants of urban development in Italy

Many empirical analyses have proved the existence of an optimal city size through the measurement of economies or diseconomies of scale, generally applied either to the costs of urban services or to elegant econometric estimates of urban and sectoral production functions. But, unfortunately these studies have never produced a common result, and have often been subject to criticism for their restrictive hypotheses. The aim of the present paper is twofold. First of all, urban dynamics in Italy is described through an indicator of urban costs and advantages, i.e. urban rent. House prices are in fact a good indicator of the attraction of an urban area, as they are synthetic and avoid a time lag between the occurrence of phenomena such as demographic change, and the availability of data to capture these phenomena. This study is based on the idea that the difference in house prices between large and small cities is a measure of their relative attraction (and thus their relative location advantage). The second aim is to highlight the determinants of urban dynamics, and especially to understand whether urban development patterns are similar in cities of different size. For this second issue, the paper enters the debate on the existence of an optimal city size for all cities and draws attention to other possible determinanats of urban development. Received: May 2000/Accepted: January 2002     

The persistence of ecological-economic systems: Alternate measures and their properties

A number of ecologists and some economists have commented on the significance of persistence as a stability concept for jointly determined ecological-economic systems. This notwithstanding, the economics and the regional science literatures have paid scant attention to the problem of computing an ecological-economic system's persistence. As such, this paper has two objectives. First, we derive three measures of the persistence of a jointly determined ecological-economic system whose temporal behavior is governed by the presence of thresholds. Next, we compare and contrast these three measures. Finally, we discuss their theoretical properties and their practical uses. Received: March 2002/Accepted: September 2002 We thank T. John Kim and anonymous reviewers for their comments on a previous version of this paper. As well, we acknowledge financial support from the Gosnell endowment at RIT. This paper is dedicated to the memory of A.N. Batabyal (1937–2002). The usual disclaimer applies.     

Multiple equilibria, stability, and asymmetries in Krugman's core-periphery model

Paul Krugman developed a general equilibrium model with two sectors and two regions in 1991, from which two patterns of industrial localization could be endogenously deduced, dispersion at 50% and total concentration. The introduction of transport costs, which depend on the size of the population, are meant to capture effects produced by the trade-off between congestion costs and advantages derived from the possession of infrastructure, thus generates stable asymmetric multiple equilibria. The outcome of asymmetric stable multiple equilibria demonstrates the fruitfulness of this extension of the original model. Received: 23 June 1998 / Accepted: 5 October 1999     

Urban agglomeration: Knowledge spillovers and product diversity

There is no doubt that people like to migrate to large cities because they can acquire a wider range of products and jobs, but also because they can more easily exchange information and ideas. In this respect, we attempt to explain the formation of metropolitan areas by using a general equilibrium model, in which concentration emerges not only from interaction between increasing returns to scale at firm level, transport costs and labor mobility, but also from human capital externalities. This paper shows that there is new scope for government activity. Received: August 2000/Accepted: January 2002 I am indebted to J.L. Ferreira for valuable comments on an earlier draft. I also wish to thank T. Smith, participants at the ERWIT Workshop and EEA Congress, and two anonymous referees for helpful suggestions. Financial support from the Spanish Ministry of Science and Technology through DGICYT grant PB98-0613-C02-01, and from the Regional Government of Galicia via PGIDT00PXI30001PN is gratefully acknowledged.