Papers in Evolutionary Economic Geography

September 5, 2017

# 17.22 R&D Policy and Technological Trajectories of Regions: Evidence from the EU Framework Programmes

Filed under: 2017 — Tags: , , , — mattehartog @ 6:00 pm

Wolf-Hendrik Uhlbach, Pierre-Alexandre Balland and Thomas Scherngell

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It is widely acknowledged that new technological specializations of regions are to a large extent driven by the recombination of existing knowledge and capabilities. Since this process is path-dependant and self-reinforcing, it can easily lead to technological lock-ins. A key issue is therefore to evaluate whether public policy can impact technological trajectories of regions and how it can be more effective. To address this issue, we analyze quantitatively and systematically the relation between R&D subsidies and new technological specializations of European regions from 1999 to 2010. R&D subsidies are identified by using the EU Framework Pro- grammes (FP) from the EUPRO database, and matched with patent documents from the OECD-REGPAT database. Using a fixed-effects linear probability model, our results indicate that FP participations have a positive but relatively small effect on the development of new specializations of regions, and that it can compensate for a lack of local related capabilities. We also find evidence that R&D subsidies have the highest impact if the level of relatedness with the new technology is neither too low (policy can not build a cathedral in the desert) nor too high (if all the capabilities are already present there is no need for policy).

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# 17.21 A concise history of the knowledge base literature: challenging questions for future research

Filed under: 2017 — mattehartog @ 5:59 pm

Ron Boschma

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This chapter aims to sketch a short history of the differentiated knowledge base (DKB) literature that has been initiated and pioneered by Bjorn Asheim. In its formative years, the DKB approach described three knowledge bases and explored the nature of knowledge sourcing and its geographical extent within each knowledge base. We identify seven claims proposed by DKB scholars concerning the geography of knowledge bases. Lately, DKB 1.0 has been challenged on several grounds. In recent years, a second generation of DKB literature, dubbed as DKB 2.0, has emerged, becoming more tightly connected to the evolutionary approach in economic geography. DKB 2.0 takes a combinatorial approach to innovation and links it to evolutionary concepts like related variety and proximity. Its prime focus is on identifying combinations between knowledge bases and, to an increasing extent, combinations within knowledge bases, and assessing whether these combinations enhance innovative performance. As DKB 2.0 is still in an embryonic stage, we identify promising avenues for future research, inspired by evolutionary thinking.

# 17.20 The Determinants of Foreign Direct Investment in sub-Saharan Africa: What Role for Governance?

Andrés Rodríguez-Pose and Gilles Cols

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For the past quarter of a century, foreign direct investment (FDI) flows have grown exponentially across the world. Sub-Saharan Africa has, however, lagged behind and only lured on average a mere 2% of global FDI. The investment that the region attracts tends, moreover, to be concentrated in a number of commodity-rich countries. Natural resources and the size of national markets have generally been considered as the main drivers of FDI. The quality of local institutions has, by contrast, attracted less attention. This paper uses institutional data for 22 countries in order to demonstrate that the quality of governance plays a far from negligible and enduring role in the distribution of FDI in sub-Saharan Africa. It is shown that factors such as political stability, government effectiveness, lower corruption, voice and accountability, and the rule of law not only are more important determinants of FDI than the size of local markets, but also that their influence on the capacity of African countries to attract FDI is long-lasting.

July 19, 2017

# 17.19 Industrial Clusters, Organized Crime and Productivity Growth in Italian SMEs

Filed under: 2017 — Tags: , , , , — mattehartog @ 2:30 pm

Roberto Ganau, Andrés Rodríguez-Pose

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We examine whether organized crime affects firms’ performance (defined using Total Factor Productivity growth) both directly and indirectly, by downsizing the positive externalities arising from the geographic concentration of (intra- and inter-industry) market-related firms. The analysis uses a large sample of Italian small- and medium-sized manufacturing firms over the period 2010-2013. The results highlight the negative direct effects of organized crime on firms’ productivity growth. Any positive effect derived from industrial clustering is thoroughly debilitated by a strong presence of organized crime, and the negative moderation effect of organized crime on productivity growth is greater for smaller than for larger firms.

# 17.18 Following Your Job

Filed under: 2017 — mattehartog @ 2:29 pm

Martijn J. Smit

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Evolutionary economic geography has awoken an interest in the question how regions can attract new human capital. One method is to attract migration firms, who will bring (part of) their existing employees. These people can then attract or generate new jobs (Hoogstra, van Dijk, & Florax, 2005). In this paper, we study the mobility of employees when their firm decides to move: do they stick with their employer or not? And if they do, do they commute or not? Finally, we link the decision to commute longer distances to the availability of a company car. We use microdata on individual firms and employees to test whether employees choose to follow their firm to another region. We control for personal and job characteristics. We find that having a company car is not correlated with the decision to stay with or to leave the current firm, but those who have one are less likely to move house, as long as the employee has a wage in the top quartile, or lives in the urban areas of the Randstad with their stressed housing market. Employees who already experienced long commutes before their employer moved are not influenced by the presence of a company car.

July 1, 2017

# 17.17 Smart Specialization policy in the EU: Relatedness, Knowledge Complexity and Regional Diversification

Pierre-Alexandre Balland, Ron Boschma, Joan Crespo and David L. Rigby

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Smart specialization has become a hallmark of the EU’s Cohesion Policy. Envisaged as a bottom-up initiative identifying local knowledge cores and associated competitive advantages, the operationalization of smart specialization has been rather limited, as a coherent set of analytical tools to guide the policy directives remains elusive. To tackle the weak underpinning of smart specialization policy, we propose a policy framework around the concepts of relatedness and knowledge complexity. We use EPO patent data to provide evidence on how EU regions develop new technologies in the period 1990-2009. We find that diversifying into more complex technologies is highly attractive but difficult for EU regions to accomplish. Regions can overcome this diversification dilemma by developing new complex technologies that build on local related capabilities. We use these findings to construct a policy framework for smart specialization that highlights the potential risks and rewards for regions of adopting competing diversification strategies. We show how potential costs of alternative strategies in regions may be assessed by making use of the relatedness concept, and how potential benefits of various smart specialization strategies can be derived from estimates of the complexity of technologies. A series of case-studies of different types of regions illustrate the utility of this policy framework.

# 17.16 Industry Evolution in Varieties of Capitalism: a Comparison of the Danish and US Wind Turbine Industries

Max-Peter Menzel, Johannes Kammer

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In this study, we combine Klepper’s framework on the evolution of industries with the Varieties of Capitalism approach to argue that industry evolution is mediated by institutional differences. We expect that new industries will evolve with a stronger connection to established industries in coordinated marked economies than in liberal market economies. Our assumptions are supported by the survival analysis of US and Danish wind turbine manufacturers from 1974 to 2014.

June 16, 2017

# 17.15 Co-inventor Networks and Knowledge Production in Specialized and Diversified Cities

Filed under: 2017 — Tags: , , , , , — mattehartog @ 6:44 pm

Frank van der Wouden, David L. Rigby

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Why do some cities produce more knowledge than others? The standard explanation rests upon the social networks that connect economic actors, within and between cities, and that structure the quantity and the quality of interactions from which new ideas are generated. These interactions are increasingly understood as shaped by different forms of proximity that congeal, at different times in different places, in complex assemblies that give rise to different forms of competitive advantage. Recent research focusing on the U.S. urban system has shown that metropolitan regions characterized by more extensive local and non-local network ties outperform cities where economic agents are isolated. However, across most of this work, little attention is given to the character of the local knowledge base and whether that is related to the structure of co-inventor networks. In this paper, we show that the social networks linking co-inventors differ between cities that produce specialized knowledge and those that produce diversified knowledge. These ideas are extended in models of tie-formation that show inventors in specialized cities value spatial proximity less and cognitive proximity more than inventors in diversified cities as they partner with collaborators from other urban areas.

# 17.14 Promoting regional growth and innovation: relatedness, revealed comparative advantage and the product space

Filed under: 2017 — Tags: , , , — mattehartog @ 6:43 pm

Gloria Cicerone, Philip McCann, Viktor A. Venhorst

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We adapt the product-space methodological approach of Hausmann and Klinger to the case of Italian provinces and regions in order to examine the extent to which the network connectedness and centrality of a province’s exports is related to its economic performance. We construct a new Product Space Position (PSP) index which retains many of the Hausmann-Klinger features but which is also much better suited to handling regional and provincial data. We also compare PSP performance with two other export composition indices. A better positioning in the export-network product space is indeed associated with a better local economic outcomes.

# 17.13 Technological Coherence and the Adaptive Resilience of Regional Economies

Filed under: 2017 — Tags: , , , , — mattehartog @ 6:42 pm

Silvia Rocchetta, Andrea Mina

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This paper explores the effect of different regional technological profiles on the resilience of regional economies to exogenous shocks. We conduct an empirical examination of the determinants of resilience through panel analyses of UK NUTS III level data for the 2004-2012 period. The results indicate that regions endowed with technologically coherent – and not simply diversified – knowledge bases are better prepared to face an unforeseen downturn and display resilience. Moreover, local economies tend to be more adaptable if they innovate in sectors with the strongest growth opportunities, even though firms’ net entry does not appear to contribute significantly towards resilience.

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