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     

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.     

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     

Inequities in the broadband revolution

Residential broadband options such as cable and digital subscriber lines are growing in popularity. However, evidence suggests that urban areas are receiving the majority of infrastructure investment, thereby leaving many rural locations with few options for broadband access. With access to telecommunication infrastructure becoming an increasingly important component to local economic development, issues of infrastructure equity are significant. This paper explores telecommunication equity and its effect on economic development by addressing the impact of geography on infrastructure investment and growth. A comprehensive database of broadband service providers and data from the Ecom-Ohio project (http://www.ecom-ohio.org), are used to explore broadband access options in the state of Ohio by examining the characteristics of market demand that are driving cable and digital subscriber line infrastructure investment. In addition, this paper develops an explanatory framework for identifying key market characteristics indicative of demand for residential broadband services through the use of statistical models and a geographic information system. Results suggest that income, education, age, location, and competition from alternative broadband platforms influence digital subscriber line infrastructure investment. Received: November 2001/Accepted: September 2002     

An application of a switching regimes regression to the study of urban structure

The purpose of this article is to propose and highlight a statistical estimation procedure for joint identification of irregularities in population distribution in urban areas having a directional dimension, and the estimation of the parameters of the model's separate regimes. The method we propose here is an application of the switching regimes regression technique developed by Quandt (1958, 1960) for identifying the most likely allocation of n observations into two separate regimes, each associated with a different mechanism that generates its own set of observations. A subsequent purpose is to apply empirically the switching regimes method to the city of Tel-Aviv – Yafo, and discern possible regimes where population densities are generated by different processes. Received: 28 August 2000 / Accepted: 16 March 2001     

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.     

Regional science: Parallels from physics and chemistry

Against the background of the fruitful application of the gravitational force from physics in the development of the gravity model extensively employed in regional science, possible parallels from the analysis of the coplay of the four basic forces of particle physics are examined. In particular, the possible parallels from the analysis of the bondings of the strong force and the diverse ones of the electromagnetic force, and specifically how these parallels can replace the relatively outmoded set of concepts of scale, localization and urbanization economies for regional shopping center analysis and related urban structure theory are studied. Received: 15 September 1998 / Accepted: 30 November 1998     

Sources of variation in regional economies

This paper employs a vector autoregressive (VAR) methodology to examine the role of oil price shocks, defense shocks, national, and local shocks in explaining fluctuations in non-farm employment in a sample of ten states/MSAs in the US in the period 1969–2000. These include a sample of energy rich states and a sample of presumed beneficiaries of defense spending. Existing literature provides mixed evidence on the effects of defense shocks and oil shocks or does not focus on individual states. Results of this paper indicate that oil shocks and defense shocks have more pronounced effects at the local level than they do at the national level. An increase in the price of oil has a fairly large and for the most part statistically significant positive impact on the energy rich states and has a negative and statistically significant impact in the case of the Detroit-Flint MSA. When defense shocks occur they have a sizable impact on local economies that are beneficiaries of defense spending, even though their importance over the whole sample is not always significant. A key policy implication that emerges is that macroeconomic policy at the aggregate level may not be sufficient to uniformly stabilize regional economies that face oil, defense, and local shocks. Furthermore, to the extent that some of these states are linked more to their own local economies rather than to the US economy, they would have to rely more on local stabilization policies when faced with adverse local shocks. Received: November 2001/Accepted: August 2002     

Demand for information and communication technology-based services and regional economic development

The relationship between the uptake of Information and Communication Technology-based services (ICT) and regional economic development is examined here; we address in particular the idea that ICT will promote regional economic convergence. We argue that ICT can generate contradictory trends of regional convergence and divergence and that, under conditions of non-regulated market supply, the effects leading to divergence can be dominant. The approach is based on the development of a regional demand model, which is the combination of two sub models, one dealing with the effects of network externalities and the other based on the concept of potential demand for ICT. The main conclusion is that less populous, more peripheral and poorer regions with weaker existing social and economic networking will encounter problems of insufficient demand. This in turn will delay the launch of new services and slow the rate of uptake. Negative dynamic effects of low ICT use on economic performance will generate a vicious circle of cumulative disadvantage. Received: 2 October 2000 / Accepted: 6 December 2001 RID="*" ID="*" Thanks are due to Miguel Jardim and Jo?o Marques for technical assistance with the graphics.     

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     

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     

Relaxing the nearest centre assumption in central place theory

Although a variety of modifications of classical central place theory has been proposed, one area that remains unexplored is the effect of relaxing the nearest centre assumption for the purchase of a specified basket of goods within a given hierarchical level. This article examines the effect of such a relaxation on central place market areas by using higher-order Voronoi diagrams. When used to model market areas, higher-order Voronoi diagrams can be interpreted as overlapping and probabilistic regions. These diagrams construct market areas based on the assumption that consumers choose from a set of nearest centres of the same hierarchical level. If consumers are assumed to be indifferent between the k centres, the appropriate market areas are given by the order-k Voronoi diagram. In this case, it is shown that sales potentials are consistent with those that result when the nearest centre assumption is in effect. If consumers are assumed to have a preference for nearer centres, market areas are defined by the ordered, order-k Voronoi diagram. This situation generates sales potentials which can vary between centres. Received: 2 February 1998 / Accepted: 21 January 1999     

Regional competition for the location of new facilities

A model of interregional competition for the location of new facilities is analyzed as a differential game. Two regions try to enhance their attraction by making concessions to a location decision maker in order to raise the probability that a new facility will be located in a specific region. The prospective benefits and costs of exerting influence are decisive for the final outcomes of the model. The open-loop (and feedback) Nash equilibrium solution is inefficient in comparison to the cooperative solution of joint benefit maximization of both regions. Received: May 2000/Accepted: December 2001 I thank Gudrun Bark, Hagen Bobzin, Marc Büdenbender, and Walter Buhr for helpful discussions on the first draft of this paper. The constructive comments of two anonymous referees are gratefully acknowledged. Any errors are my own.     

Social and institutional factors as determinants of economic growth: Evidence from the United States counties

In the search for explanations of persistent differences in economic growth rates, the conditional convergence growth model has introduced the possibility of incorporating a wide set of factors as determinants of growth. Controlling for spatial dependence, we assess the contribution of differences in social and institutional variables on growth rates of per capita income for counties in the United States. The empirical results indicate that, ceteris paribus, social and institutio variables explain some of the differences in convergence rates among counties. In particular, (i) ethnic diversity is associated with faster rates of economic growth; (ii) higher levels of income inequality are associated with lower rates; and (iii) higher levels of social capital have a positive effect on economic growth rates. Received: 14 August 2000 / Accepted: 16 April 2001     

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     

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     

Explaining regional economic performance: An historical application of a dynamic multi-regional CGE model

A multi-regional dynamic computable general equilibrium model of the Australian economy (federal-f) is used to identify the causes of the divergent growth performance of two Australian regional economies (Tasmania and the rest of Australia) over the period 1992–1993 to 1998–1999. These causes are traced to a large number of structural and policy changes in the two economies. Ultimately, no simple or mono-causal explanation for the divergent growth experience is found – the relatively slow growth of the Tasmanian economy is the net effect of a large number of countervailing influences. Nevertheless, from among these many influences, it is possible to distinguish those that had a sizeable impact from those that had a negligible impact. Received: 29 February 2000 / Accepted: 31 July 2000     

Multi-dimensional analysis of regional inequality: The case of higher educational facilities in Spain

Several major changes in educational policies have occurred in Spain over the last four decades. One of these is the re-organization of the educational system beginning in 1970. A policy to encourage the regional spread of universities was pursued over the seventies and eighties. There has also been devolution of power to some regions with respect to the management of the educational system. These policy changes are hypothesized to have resulted in an impact on inter-regional and intra-re gional inequality with respect to educational facilities. We investigate the change in inequality that occurred between the 60s and the70s, and also between the 80s and early 90s. Received: 21 February 2000 / Accepted: 12 February 2001     

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.     

Duality theory and cost function analysis in a regional context: the impact of public infrastructure capital in the Greek regions

The resurgent interest in the role of infrastructure on development, spurred by the work on Aschauer in the late eighties, has produced a voluminous research activity, both at national and regional levels. Even though the majority of this research is based on production function analysis, more recently has emerged the alternative analytical framework of duality theory and cost function analysis. The latter is utilised here, in an effort to investigate public capital's impact on manufacturing at the regional level (Greek prefectures). Public capital categories have been grouped to two major categories of `productive' and `social' infrastructure. The latter seems to play little role in reducing private costs, but the former appears to be an important cost reduction influence. It can also be demonstrated that infrastructure has a substitutional relationship with labour and intermediate inputs, and a complementary one with private capital. Received: November 1998/Accepted: August 2001