FDI and immigration: a regional analysis

Does immigration affect foreign direct investment? Existing studies on immigration and FDI have all looked at aggregate flows at the national level, arguing that immigrant networks lower the risk of foreign investment through increased information flows and a built in market. However, these national-level studies suffer from identification problems since many of the factors that attract immigrants also attract FDI. This study improves upon identification by looking at the regional distribution of both FDI and immigration from 10 source countries to the 50 US states. Using a unique measure of immigrant network size in each state, I find that immigration is not only positively correlated with FDI, it tends to lead it as well. Comparing a state with an average sized immigrant network to one with a network twice as large, I estimate that the stronger network state will get on average 20 more foreign-owned affiliates opening per year, an effect that is quite persistent over time. On average, more skilled immigrant communities attract more FDI, while the pull effect of immigration on FDI also increases with immigrant ties to native countries and with immigrant influence in local communities. These results suggest that immigration creates a positive externality in foreign investment that must be considered when assessing the costs and benefits of labor mobility.     

Welfare effects of regional income taxes Results of an interregional CGE analysis for Germany

 This paper deals with the question, whether in a federal state the regions should obtain the right to levy regional income taxes. It is shown that a revenue sharing system influences the optimal income tax rates and causes distortions. In a federal system with other distorting taxes, several states and a revenue sharing system the welfare effects of regional income taxes can be positive or negative due to second best problems. Therefore the welfare effects of regional income taxes are computed by means of an interregional computable general equilibrium analysis (CGE). The results suggest that in the German federal economy the sign of the welfare effects of the introduction of regional income taxes is very sensitive to the particular institutional arrangements. Received: February 1996 / Accepted in revised form: April 1997     

中德建筑产业之文化比较

当德国的建筑师正在为自身的建筑个性和风格而努力时,他们的中国同行则被视为繁荣的市场经济中的服务提供者和空间生产者。他们根据客户的要求生产建筑。首先重视的是建筑的外观及其形象价值。建筑的内在生命基本上是标准化的产物。在德国,建筑师扮演的角色和所处的地位和中国迥然不同。他更多地被当作专业的顾问。通常情况下他必须负责建筑的全过程：从第一张草图到建筑最后的验收。相应的,对建筑的要求不仅仅限于一个具有标准化房间的精美外壳。建筑应具有更多的价值,契合其所处的城市建设环境,通过富有创意的内部设计激发在其中工作或居住者的活力,提供生活的享受,或者增强建筑所有者的“公司形象”。在中国,市场是新生而无序的,客户本身毫无经验,企划过程非常混乱。数量依然比质量重要。这方面,建筑师事务所也只能是所处的时代的产物,这个时代的最高目标就是增长。如果在相同对间内能做三个项目,为什么只作一个呢？几乎所有的方案都有人买单,因为在德国的市场或多或少的已经饱和了的今天,中国却依然具有庞大的需求。因此,建筑的生产过程在中德两国有显著的区别。就像Joseph Rykwert所言,一个城市的肌理“是对无形事物,对其所在的社会以及对其精神的有形的反映。“城市的面貌和建筑的样式只是社会的一面镜子。而中国是个正处在巨大变动中的社会。     

Start-up activities,individual characteristics,and the regional milieu: Lessons for entrepreneurship support policies from German micro data

This paper contributes to empirical research on the role of regional policy for entrepreneurship by focusing on the link between two stylized facts that emerged from a number of studies for Germany and other countries: Entry rates differ between regions, and the propensity to become an entrepreneur is influenced by socio-demographic variables and attitudes. We develop a theoretical framework to discuss this link, and we test whether for a person of a given age, degree of schooling, attitude towards risk etc. regional variables and, therefore, regional policies, do matter for the decision to start a new business ceteris paribus. Our econometric study is based on data for 10.000 persons from a recent representative survey of the population in ten German planning regions, the Regional Entrepreneurship Monitor (REM). We use a version of the probit model that takes care of the regional stratification of the data, and the results of the nonlinear models are carefully interpreted and illustrated. We find that the propensity to step into self-employment is, among others, higher for males, unemployed, people with contacts to a role model, and with past entrepreneurial experience, who live in more densely populated and faster growing regions with higher rates of new firm formation, while risk aversion and high prices of land have the opposite impact. Interestingly, it does not matter whether the region has a left or right government. However, many implications for entrepreneurship supporting policies in German regions are discussed in the final section.Research for this paper was done as part of the project Regional Entrepreneurship Monitor REM Germany financially supported by the German Research Foundation (DFG STE 628/7-1/2 and WA 610/2-1/2). We thank two anonymous referees and the guest editors of this issue for comments that led to an extensive revision of an earlier version.     

R&;D accessibility and regional export diversity

This paper examines the influences of accessibility to R&D on the export diversity in Swedish regions. A theoretical model with fixed R&D cost predicts that spatial knowledge spillovers generate external economies of scale in R&D activities. These external effects are presumed to increase regions’ innovative capacity. Moreover, the model implies that the effects of R&D on regional export performance are reflected by the size of the export base rather than by the export volumes. The empirical analysis focuses on three different indicators of export diversity: the number of exported goods, the number of exporting firms and the number of export destinations. The hypothesis that regional accessibility to R&D facilities in the private business sector, on the one hand, and university research departments on the other hand, increases the export diversity in regions is tested in a spatial cross-regressive model. Since knowledge cannot be regarded as a spatially trapped resource the empirical analysis includes two measures of R&D accessibility: intra-regional and inter-regional. The empirical results indicate that the three indicators of regional export diversity are positively affected by the intra-regional accessibility to company R&D in commodity groups that have a relatively high R&D-intensity in production. Inter-regional accessibility to company R&D has significant positive impacts on the number of export goods and the number of export destinations also in less R&D-intensive industries. In the case of university R&D, the empirical results are weaker, in particular in the case of intra-regional accessibility. Yet, the inter-regional accessibility to university R&D has a significant positive impact on the number of export goods and the number of export destinations in the majority of commodity groups.     

Nonlinearities in regional economic growth and convergence: the role of entrepreneurship in the European union regions

Nonlinearities have been identified in recent literature on growth and convergence at the cross-country level and they have been associated with a number of variables of interest such as initial conditions and human capital accumulation. This research takes the analysis at the regional level within a European context while focusing on entrepreneurship and, using semiparametric regression techniques, provides evidence for nonlinear effects of the base-year income per capita on growth suggesting that convergence may be a phenomenon restricted to particular income bands. Entrepreneurship has a positive effect on regional growth and no serious departures from linearity are detected, while evidence for an almost L-shaped relationship between income per capita levels and self-employment rates was produced. A quality-adjusted proxy for human capital stock was found to be a positive and significant determinant of economic growth across European regions but, again, no departures for linearity were detected for this effect.     

Growth effects of regional policy in Germany: results from a spatially augmented multiplicative interaction model

Private investment subsidies are a key instrument for regional policy making to foster the economic development in lagging regions. In this paper, we analyze their effect on labor productivity growth for German labor market regions for the period from 1994 to 2006. A spatially augmented multiplicative interaction model based on neoclassical growth theory is used, which allows us to assess the marginal effect of regional policy proxied by overall payments of the main German regional development program on the region’s convergence speed conditional on its initial income position as well as policy-related spillovers from its spatial neighborhood. Our results show a statistically significant positive effect of regional policy on labor productivity growth, which increases, the further away the supported region is from its steady-state income level, and the more grants are provided to its geographical neighborhood. The latter effect highlights the existence of positive spatial spillover effects from regional policy in Germany, which enhance the attractiveness of the whole macro region for private sector investments. The additional growth stimulus provided by a 1 % increase in the region’s funding volume is thereby related to an up to 0.3 % gain in terms of labor productivity growth. For regions with the highest initial gaps to steady-state income in the sample distribution, the regional policy stimulus accounts for almost 8 % of the regions’ productivity growth performance.     

Universities’ effects on regional GDP and unemployment: The case of Germany

There is a large consensus that higher education institutions exert notable effects on their regional environment. So far, however, much of the related evidence is based on case studies. Few findings are available on a more generalizable level. To bridge this gap, our study uses spatial panel‐data models to identify the impacts of higher education institution (HEI) activities on GDP per capita and unemployment in Germany. Beyond demand‐side effects, we seek to identify the, arguably more important, indirect long‐term effects of knowledge generation. Accounting for regional spillovers, we find that on average HEI contributed €8,300 to regional GDP per capita in the period 2000 to 2011. Furthermore, we find that they help to significantly reduce unemployment rates in the long run.     

Industrial design as a producer service: A framework for analysis in regional science

Industrial design can be used to explore some ideas in producer services research. Its geographical location and position in a corporate structure can indicate much about the character of regions and corporations because it represents a way that knowledge is incorporated into production. Hence the size, location and organisation of industrial design can be an important indicator of the vitality of regions. This paper illustrates how these perspectives can be derived, and provides two frameworks that could be used to structure detailed empirical research on firms, industries and regions.     

Interrelations between the urban wage premium and firm-size wage differentials: a microdata cohort analysis for Germany

At the interface of regional and labor economics, our paper deals with two central topics in the analysis of wage formation, the urban wage premium and the firm-size earnings differential. Choosing a cohort of workers from a large panel microdata set, we obtain an urban wage premium of 8% and a large firm premium of 11%. We find that large firms play a crucial role in explaining higher productivity levels in urban areas. The urban wage growth effect, however, is not tied to the firm level. Hence our findings confirm the view that externalities are operating in the urban environment and not only within firms.     

Input-output models for regional demographic-economic analysis: some structural comparisons

"In this paper is presented a comparative survey of the many ways in which a static Leontief input-output model can be extended to include demographic-economic relationships. A family of ten input-output models is identified, with individual members defined according to their representation of household income, employment, and unemployment. Miyazawa's fundamental equation of income formation is generalised and used to establish structural relationships between the models, as reflected in income and employment impact-multipliers. Although the emphasis of the paper is theoretical, examples are given of the empirical application of existing models."     

Law as a variable in urban and regional analysis

Conclusion This paper has argued that the law itself constitutes an important variable that needs to be taken into account in analysis of urban and regional phenomena. We have begun to do impact analyses of public and private actions as required by law. We have not gone very far in analyzing the impact of existing or projected laws themselves. Formidable technical and data problems will be encountered. Yet, the growing legislative and judicial constraints and imperatives toward action in the market suggest that if we are to build models that address reality, we will have little choice but to include them specifically.The support of the National Science Foundation, Division of Law and Social Science, is gratefully acknowledged. My thanks to David Jones and Lyna Rossi for examples.