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     

The spatial distribution of new technology-based firms: Empirical results for West-Germany

The focus of the article is to shed some more light on the spatial distribution of new technology-based firms (NTBF) and to discuss location factors which may contribute to the explanation of the variation in the incidence of NTBF between the West-German districts (“Kreise”). Based on theoretical models explaining the location decisions of new firms, hypotheses are derived and tested in an empirical model. The regression results indicate strong correlations between the occurrence of NTBF and the proximity to Research and Development (R&D) facilities comprising universities, technical colleges and non-university institutes as well as private R&D. As expected, the impact of the various facilities varies with respect to their field of specialization, showing major positive correlations with respect to technical disciplines. Moreover, the estimates reveal out differences due to spatial characteristics such as infrastructure and other structural factors. Received: 26 April 1999 / Accepted: 28 November 1999     

Integrating models for regional development decisions: A policy perspective

This paper develops and demonstrates a combined set of models to capture regional development decision processes. The results of the models are then integrated along with other socio-political factors within a policy relevant decision methodology framework. The Haynes and Dinc (1997) extension of the shift-share model identifies regional industrial sectors for analysis based on their scale, productivity and sources of productivity change. By employing Data Envelopment Analysis (DEA), the efficiency of these lead sectors is investigated and the future competitiveness of these sectors is evaluated. By incorporating input-output analysis the impact of inter-sectoral transactions on sectoral efficiency is assessed. Since in most cases state economic development planning and implementation processes also involve political judgements, based on the findings of the above models, the study suggests a decision support framework which combines the above mentioned quantitative tools with other qualitative decision factors. An Analytical Hierarchy Process (AHP) is employed as a multi-objective decision making device to integrate the relevant policy components. Received: March 2001/Accepted: January 2002 The findings, interpretations, and conclusions are entirely those of authors, and do not necessarily represent the views of the World Bank, its executive directors, or the countries the represent.     

The confusing relationship between environmental policy and location behaviour of firms: A methodological review of selected case studies

The literature on the effects of environmental policy on the location behaviour of firms has so far failed to draw any firm conclusions. Different studies have shown that the effects may be zero, negative or positive. They always tend to be small. This paper argues that methodological issues form a major explanation for the contradictory results. It discusses the methodological strengths and weaknesses of data collection and secondary data analysis. Moreover, several typical studies are reviewed both in terms of methodology and findings. The paper finds that methodological issues tend to affect the results. The main substantive result is that at the present intensity of environmental policy plant closing is most likely to result, followed by reduced location of new firms whereas relocation is the least likely response. The results have to be interpreted with caution, however, because of methodological problems inherent to most studies.     

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     

Measuring the spillover effects: Some Chinese evidence

Based on recently developed methods of exploratory spatial data analysis, this article seeks to prove the desired spread effects in the Chinese space economy from a core-periphery perspective. Recently developed methods of exploratory spatial data analysis provide new insights on the spatial pattern of the interaction of Chinese provincial output growth rates over the 1978–1994 period. Findings indicate that the economic spillover effects are most evident at the first order of province contiguity from Guangdong, where the two coastal provinces of Hainan and Guangxi are identified with a significant spread pattern, while non-coastal provinces Hunan and Jiangxi are observed with a strong polarization pattern. A further analysis indicates that the state preferential policies favoring the coastal region are the fundamental force in determining the direction of spread-polarization processes in the Chinese space economy. This finding confirms Friedmann's hypothesis on spatial interaction, namely, that the spread process is a successful diffusion of the core's existing institutions into the periphery. Received 14 August 1997 / Accepted 12 July 1999     

Impacts of regional development strategies on growth and equity of Korea: A multiregional CGE model

This paper is concerned with the assessment of major regional development strategies such as the three Coastal area development strategies (East Coast Development, South Coast Development, and West Coast Development) and the Seoul-Pusan development corridor strategy in terms of efficiency and equity. Multiregional Computable General Equilibrium for Korea is developed to capture the economic impact of regional investment expenditures, estimating the time-series influences of regional development alternatives on economic growth, inflation, welfare, income distribution, and interregional economic inequality for ten periods. In a sense that the main point of concern in the national development planning of Korea is with the question of improvement of national competitiveness with more equitable interregional income distribution, it is necessary to promote the West Coast region rather than the Seoul-Pusan development corridor. The West Coast regional development can lead to substantial gain in GDP and reduction in regional income disparity. In a multinational economic perspective, this regional development is expected to contribute to the economic cooperation of Northeast Asia and to enhancing the joint comparative advantages between China and Korea. However, it might worsen the income inequality in the long run. Received: September 1999/Accepted: September 2001     

Regional density functions and growth patterns in major plains of China, 1982–1990

This research analyzes the spatial patterns of regional development in China through the change of population density functions from 1982 to 1990, using several online digital data sets. To minimize the influence of physical environment on population densities, the study areas are limited to four major plains of China: the Northeast (Dongbei), North China (Huabei) and Hubei-Hunan (Lianghu) Plains, and the Sichuan Basin. A gravity-based delineation approach is used to delineate the influen ce regions of 17 cities. Regional densities in China decline with distance from a city, similar to western countries. In addition, areas close to central cities grew faster than remote areas, described as a trend of centralization. However, regions with strong core growth are generally associated with stagnant hinterlands (‘core growth-hinterland stagnation’); and regions with moderate core growth are usually matched by similar growth rates in the hinterlands (‘spread through growth’ ). Received: 8 March, 2000 / Accepted: 5 September 2000     

Firm clustering and innovation: Determinants and effects

In this article we ask why innovator firms engage in innovation networks, and which factors explain the spatial dispersion of these networks. Benefits of the use of internal and external knowledge resources for innovative performance of firms were partially confirmed. Especially the utilisation of external competences drawn from buyers and suppliers had stronger effects on innovative performance if complexity of innovation projects was high. Spatial concentration of innovation networks of buyers and suppliers turned out to have a reciprocal, positive relation with interaction intensity between firms. Interaction enhances spatial concentration of relations and vice versa, although the strength of effects differs for ties with buyers and suppliers. Finally we found that higher regional economic embeddedness increases spatial concentration of innovation networks, whereas R& D effort had no effect at all. Received: 11 October 2000 / Accepted: 18 April 2001     

Trade policy and regional inequalities

This article aims to analyze the effects of trade policies on the pattern of regional inequalities within a country. It is inspired, firstly, by the debate concerning the role of protectionist policies in the development of a pattern of striking regional inequalities during the Spanish industrialization process and, secondly, by current evidence of an increase in these inequalities following Spain's entry in the EU, in 1986. We employ an economic geography model comprising three regions: two domestic and one external. Labor mobility is permitted between the domestic regions but not with the external region. The model shows that trade liberalization increases regional inequalities. Received: 4 March 1999 / Accepted: 17 February 2000     

Two frontiers for regional science: Regional policy and interdisciplinary reach

In this note, I address two frontiers where we, as regional scientists, can raise the visibility and impact of regional science and enlarge the community of scholars in our fold. The first is the resurgence of regionalism as a phenomenon and policy arena. My argument here is that many politicians, practitioners and citizens are actively debating the health and future of metropolitan regions, but we are not playing the intellectual role that we could be. The second frontier involves expanding the interdisciplinary reach of regional science towards the 'softer' social and policy sciences, especially in the direction of sociology, political science, and city and regional planning. My argument here is that our tools of analysis, especially our understanding of agents and institutions, would be more powerful if amplified by selected contributions from neighboring fields. Received: 6 January 2001 / Accepted: 21 January 2002     

Negotiation versus manipulation: The impact of alternate forms of LDC government behavior on the design of international environmental agreements

This article addresses the problem faced by an asymmetrically informed supra-national governmental authority (SNGA) with limited funds that wishes to design an international environmental agreement (IEA) for less developed countries (LDCs). The SNGA can only deal with polluting firms in the LDCs through their national governments. This tripartite hierarchical interaction is studied for two LDCs. The private information of the firms and the governments across the two countries is perfectly correlated. In this setting, we study the effects of two kinds of behavior by the governments of the LDCs. We show that despite the perfect correlation in the private information of governments and firms across the two countries, the SNGA cannot design a first-best IEA. Our analysis suggests that problems arising from the SNGA's inability to monitor the actions of the polluting firms and the national governments are less salient than is commonly believed. However, there is no denying the fact that the succ ess of IEAs is dependent not only on the funds available for environmental protection, but also on the manner in which LDC governments represent polluting firms in their countries. Received 15 January 2000 / Accepted 28 June 2000     

A micro-simulation model of firms: Applications of concepts of the demography of the firm

Recently, there is an increasing demand in spatial planning for models based on the demographic concepts of birth and death of firms. This article describes the structure of a spatial demographic simulation model of firms, and its application within The Netherlands. The model structure is essentially of the familiar demographic cohort component type, where an initial cohort of firms ages in a number of discrete steps, and where in each step additions and subtractions to and from the population are modelled using birth, death and migration components. Apart from the central processes of birth, death and migration, the type of economic activity and firm size are highly important for understanding firm behaviour over time. The article describes the transition functions for each of the demographic components and for firm growth. In addition, some empirical results are presented of a number of model simulations in The Netherlands. The results were partly validated using observed economic demographic data. It is concluded that a substantial amount of work remains to be done in this new field. The model presented here has direct implications for the research agenda of the study of the demography of the firm. Received 28 April 1999 / Accepted 6 December 1999     

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     

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.     

Links between rural development and crime

Over the past few years, metropolitan crime has fallen in the United States while nonmetropolitan crime has continued to increase. This article examines nonmetropolitan crime during the period 1977–1995, and describes its characteristics and spatial dynamics. The article outlines eight categories of causal factors and investigates their role in nonmetropolitan county crime variation using regression analysis. This analysis shows that many variables commonly identified with “rural development” are associated with crime. The article concludes by recommending that planners anticipate the social effects of popular rural revitalization strategies, such as tourism, retirement communities, highways, and service sector development. Received: 3 March 1998 / Accepted: 23 November 1998     

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     

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.     

An alternative approach to developing science parks: A case study from Korea

In 1973, the Korean government initiated a plan to establish a major high-technology research complex, called Daeduck Science Park (DSP). The Ministry of Science and Technology (MST) designated 27 square kilometers of land in Taejon, a city of 1.3 million people (1999) for the creation of the park. By 1998, the DSP had grown to host some 60 institutions employing about 12,000 scientists and technicians, and approximately 5000 support staff. This research note reviews the process involved in developing the DSP, evaluates the outcome of the project, and suggests policy alternatives. Data used were collected from a planning project and from interviews with officials of the MST and the DSP Management Office. It can be concluded that the plan for the DSP was successfully implemented and the guidelines contained in the original plan were well observed. Some problems that emerged in the earlier stages, such as a lack of local economic benefits and political input, are now being corrected. The DSP does provide adequate working and residential environments for those who work for the research and educational institutions that contribute to the advancement of the nation's scientific and technological research. Received: 14 February 2000 / Accepted: 25 August 2000     

Impacts of national development and decentralization policies on regional income disparity in Korea

This paper analyzed the effects of national development and decentralization policies on the regional income disparity in Korea. It also attempted to test whether there was a structural change in the causal relationship between income inequality and its determinant factors. This study found that the degree of variation in regional incomes was positively correlated with the spatial distribution of decentralization instruments such as educational services, employment, infrastructure facilities, and information network variables. The effects of some decentralization policies on regional income inequality were fully realized within a period of three years. Finally, the impacts of the spatial decentralization of public goods on regional inequality fluctuated until the early 1980s but were stabilized as industrial restructuring and spatial reorganization progressed during the 1990s. Received: December 2001/Accepted: June 2002