Papers in Evolutionary Economic Geography

February 13, 2017

# 17.05 Institutional Change and Network Evolution: Explorative and Exploitative Tie Formations of Co-Inventors During the Dot-com Bubble in the Research Triangle Region

Filed under: 2017 — mattehartog @ 5:37 pm

Max-Peter Menzel, Maryann P. Feldman, Tom Broekel

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We investigate how institutions impact tie formation. In doing so, we describe Venture Capital as institution that can direct firm strategies towards exploration or exploitation. These strategies are translated into tie formations: explorative tie formation produces structural holes as a source of “good ideas”, exploitative tie formation closes structural holes to facilitate the mobilization of resources to put ideas into products. Using the example of co-inventors in ICT in the Research Triangle Park during the dot-com bubble, we expected explorative tie formation during the bubble and exploitative tie formations after its burst. Stochastic Actor Oriented Models did not clearly support our assumptions. We found that the emergence of venture capital lead to a large variance in connection patterns during the bubble, probably resulting from overlapping institutional effects. After the burst of the bubble, these incoherencies disappeared.

January 28, 2017

# 17.04 What drives employment growth and social inclusion in EU regions?

Filed under: 2017 — Tags: , , , , — mattehartog @ 7:38 pm

Marco Di Cataldo and Andrés Rodríguez-Pose

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The European Union promotes development strategies aimed at producing growth with “a strong emphasis on job creation and poverty reduction”. However, whether the economic conditions in place in EU regions are ideal for the generation of high- and low-skilled employment and labour market inclusion is unclear. This paper assesses how the key factors behind EU growth strategies – infrastructure, human capital, innovation, quality of government – condition employment generation and labour market exclusion in European regions. The findings indicate that the dynamics of employment and social exclusion vary depending on the conditions in place in a region. While higher innovation and education contribute to overall employment generation in some regional contexts, low-skilled employment grows the most in regions with a better quality of government. Regional public institutions, together with the endowment of human capital, emerge as the main factors for the reduction of labour market exclusion – particularly in the less developed regions – and the promotion of inclusive employment growth across Europe.

# 17.03 Does federal contracting spur development? Federal contracts, income, output, and jobs in US cities

Filed under: 2017 — Tags: , , , , , — mattehartog @ 7:36 pm

Michiel Gerritse and Andrés Rodríguez-Pose

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Government contracts are frequently courted by firms and governments alike as a solution to generate more jobs, income, and economic growth. However, the development impact of government contracts remains controversial. This paper uses georeferenced data on United States (US) federal contracts, distinguishing between the location of the recipient and the location of performance, for the years 2005-2014 in order to assess the extent to which federal government contracting has contributed to job and wealth generation and economic growth in metropolitan areas of the US. The results of the analysis show that individuals living in cities with a higher share of contract spending per capita witnessed improvements in employment. Aggregate GDP per capita also rose in cities hosting the companies receiving the contracts. However, the effects – once reverse causality and spurious trends are controlled for using a fine-scale fixed effect strategy and instrumentation – are very small, raising reasonable questions about the viability of federal contracting as a vehicle for economic development.

January 7, 2017

# 17.02 Relatedness as driver behind regional diversification: a research agenda

Filed under: 2017 — mattehartog @ 5:02 pm

Ron Boschma

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The regional diversification literature claims that regions diversify in new activities related to their existing activities from which new activities draw on and combine local capabilities. The paper makes a critical assessment and identifies a number of crucial issues for future research. The paper calls for: (1) a disentanglement of the various types of capabilities that make regions diversify; (2) the inclusion of more geographical wisdom in the study of regional diversification, like a focus on the effects of territory-specific contexts (like institutions) and non-local relationships; (3) an investigation in the conditioning factors of related and unrelated diversification in regions; (4) a micro-perspective on regional diversification that assesses the role of economic and institutional agents in a multi-scalar perspective.

# 17.01 When Buzz and Pipelines Fail

Filed under: 2017 — mattehartog @ 5:01 pm

Christopher R. Esposito, David L. Rigby

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Explanations for why some cities outperform others frequently rest on the assumed benefits of local and global interaction. Within the “buzz and pipelines” literature, the costs and returns to interaction have rarely been examined in formal settings. In this paper we extend research on knowledge sharing by modeling local and global interactions between firms distributed across city-regions. Our simulation model develops an evolutionary framework where firms explore and exploit knowledge sets that are accumulated over time by recombining technologies held by local and non-local firms. Our results make two contributions to the existing literature. First, we show why too much local interaction can induce technological lock-in and restrict cities’ innovative growth. Second, we illustrate that non-local interaction entails opportunity costs that can outweigh its benefits. Together, the results unearth the conditions under which local and non- local interactions strengthen the economies of cities and when they fail to do so.

November 9, 2016

# 16.30 A critical review of entrepreneurial ecosystems: towards a future research agenda

Filed under: 2016 — Tags: , , , , — mattehartog @ 5:13 pm

Yana Borissenko and Ron Boschma

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The Entrepreneurial Ecosystem (EE) literature has attracted much attention, especially in policy circles. However, the concept suffers from a number of shortcomings: (1) it lacks a clear analytical framework that makes explicit what is cause and what is effect in an entrepreneurial system; (2) while being a systemic concept, the EE has not yet fully exploited insights from network theory, and it is not always clear in what way the proposed elements are connected in an entrepreneurial system; (3) it remains a challenge what institutions (and at what spatial scale) impact on the structure and performance of EE; (4) studies have often focused on the EE in single regions or clusters, but lack a comparative and multi-scalar perspective; (5) the EE literature tends to provide a static framework taking a snapshot of EE without considering systematically their evolution over time. For each of these shortcomings, we make a number of suggestions to take up in future research on EE.

# 16.29 Climbing the Ladder of Technological Development

Filed under: 2016 — mattehartog @ 5:12 pm

Sergio Petralia, Pierre-Alexandre Balland, Andrea Morrison

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Despite being the main thriving force behind economic growth and industrial development, technological innovation remains highly concentrated on a handful of countries. It is therefore of a great interest to know how countries accumulate and develop their innovative capabilities, what kind of obstacles they need to overcome, and whether it is possible to identify opportunities to develop new areas of technological specialization. In this paper we analyze countries’ patterns of technological diversification and specialization along the development process. We provide evidence regarding the importance of existing technological capabilities and the relationship among technologies in shaping possible paths of technological development. We show that the likelihood of diversification is higher for those technologies that are related to countries’ existing profile of competences. Moreover, we show this effect to be stronger at earlier stages of development. Additionally, we show that countries tend to follow clear patterns of specialization along the development path, by moving towards more complex and valuable technologies.

# 16.28 Polarization and the growth of low-skill employment in Spanish Local Labor Markets

Filed under: 2016 — Tags: , , — mattehartog @ 5:11 pm

Davide Consoli, Mabel Sánchez-Barrioluengo

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This paper analyses the long-term transformations of local labor markets in fifty Spanish provinces to identify the extent and the drivers of employment polarization. We find that the decline of ‘routine’ mid-skill jobs is strongly driven by technology adoption and, also, that it is a strong predictor of the expansion of low-skill service employment. These results are not specific to large metropolitan areas, and are robust to various controls and instrumental variables that account for long-term industry specialisation. We also find a positive, albeit small, local multiplier effect of high-skilled workers on the demand for non-tradable service jobs.

October 11, 2016

# 16.27 Industrial diversification in Europe: The differentiated role of relatedness

Jing Xiao, Ron Boschma, Martin Andersson

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There is increasing interest in the drivers of industrial diversification, and how these depend on economic and industry structures. This paper contributes to this line of inquiry by analyzing the role of relatedness in explaining variations in industry diversification, measured as the entry of new industry specializations, across 173 European regions during the period 2004-2012. There are significant differences across regions in Europe in terms of industrial diversification. Relatedness has a robust positive influence on the probability that new industry specialization develops in a region. A novel finding is that the influence of relatedness on the probability of new industrial specializations depends on innovation capacity. We find that relatedness is a more important driver of diversification in regions with a weaker innovation capacity. The effect of relatedness appears to decrease monotonically as the innovation capacity of a local economy increases. This is consistent with the argument that high innovation capacity allows an economy to ‘break from its past’ and to develop, for the economy, truly new industry specializations. We infer from this that innovation capacity is a critical factor for economic resilience.

August 29, 2016

# 16.26 Agglomeration economies: the heterogeneous contribution of human capital and value chains

Dario Diodato, Frank Neffke, Neave O’Clery

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We document the heterogeneity across sectors in the impact labor and input-output links have on industry agglomeration. Exploiting the available degrees of freedom in coagglomeration patterns, we estimate the industry-specific benefits of sharing labor needs and supply links with local firms. On aggregate, coagglomeration patterns of services are at least as strongly driven by input-output linkages as those of manufacturing, whereas labor linkages are much more potent drivers of coagglomeration in services than in manufacturing. Moreover, the degree to which labor and input-output linkages are reflected in an industry’s coagglomeration patterns is relevant for predicting patterns of city-industry employment growth.

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