Papers in Evolutionary Economic Geography

May 10, 2018

# 18.20 Heterogeneous Foreign Direct Investment and Local Innovation in Italian Provinces

Filed under: 2018 — Tags: , , , — T.Broekel @ 12:24 pm

Andrea Ascani & Pierre-Alexandre Balland

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Abstract: Countries and regions all over the world compete to attract Foreign Direct Investment (FDI) as a way to access knowledge, technology, and boost economic development. Although the literature shows a positive impact of FDI on local economies, little is known about (1) the impact on innovation of neighbouring regions and the type of FDI that generates the strongest learning effects. To fill this gap, this article investigates the relationship between FDI and the innovation capacity of Italian provinces (NUTS3). In order to capture the heterogeneity of FDI in terms of knowledge inputs, we apply the Pavitt categorisation of manufacturing sectors to inward FDI within Italian provinces, thus accounting for the nature and sources of knowledge in different sectors where foreign multinationals are active. Our results suggest that only some specific typologies of inward FDI, such as that in “Science based” sectors and to a lesser extent in “Specialised supplier” activities, benefit local economies. Nevertheless, other types of inward FDI can produce possible negative outcomes in terms of local innovation. We detect only weak evidence on the spatial implications of inward FDI

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April 23, 2018

# 18.19 Relatedness and growth: The impact of creative industries to the wider economy

Filed under: 2018 — Tags: , , , , — T.Broekel @ 7:17 am

Niccolò Innocenti & Luciana Lazzeretti

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Abstract: The role of the cultural and creative industries (CCIs) in fostering both innovation and growth in the wider economy has been much debated, beginning with Bakhshi et al.’s (2008) seminal contribution. Such studies of creative environments tend to assign a strategic role to territories, but they provide little empirical evidence. In this paper, the issues of the creative economy are combined with evolutionary economic geography (EEG) topics in an attempt to understand whether the CCIs are able to foster innovation and growth in the wider economy. Using an indicator of the relatedness density between the creative and other sectors for the Italian provinces, we analyse employment growth and innovation over a period of ten years (2006–2015) by drawing from the AMADEUS database. A panel data analysis is then applied to investigate the role of relatedness and the clustering of the creative industries in wider economic growth, which shows that, at a local level, the creative industries require the presence of other sectors with a high degree of cognitive proximity/relatedness, while the capacity for development and innovation does not merely depend on their presence, but also on their relations and interdependencies with other economic sectors.

# 18.18 On the evolution of comparative advantage: path-dependent versus path-defying changes

Filed under: 2018 — Tags: , , , — T.Broekel @ 7:13 am

Nicola D. Coniglio & Davide Vurchio & Nicola Cantore & Michele Clara

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Abstract: The diversification of production and trade is considered almost unanimously a fundamental policy goal, particularly for developing economies whose export baskets are heavily concentrated on a few products. In what direction trade diversification ought to take place is, however, subject to fierce debate. The Product Space (PS) framework (Hausmann and Klinger, 2007; Hidalgo et al. 2007) is a recent contribution in the economic literature that has proved very influential in policy circles. It argues that the endowment of production capabilities (technologies, production factors, institutions etc.) determines what countries produce today but it also constrains what they can produce in the future as it is uncommon that countries develop a comparative advantage in goods that do not draw from the same pool of capabilities (unrelated products). Contributions along such line argue that defying the initial comparative advantage can be a risky policy decision with high probability of failure. The main objective of this contribution is to use a novel methodology to investigate whether the patterns of diversification of a sample of 177 countries over the period 1995-2015 conform or not to the prediction of the PS framework. We find evidence of a high degree of path-dependence but our analysis suggests also that a significant number of new products that entered countries’ export baskets were unrelated to the initial productive specialization (path-defying changes). We shed light on the determinants of these ‘radical’ patterns of diversification and show they are associated with higher economic growth. The results of this study have important policy implications in particular for the design of industrial policies aimed at actively shaping countries’ structural transformation.

April 11, 2018

# 18.17 Regional inequality in Europe: evidence, theory and policy implications

Filed under: 2018 — Tags: , , , , — T.Broekel @ 3:37 pm

Simona Iammarino & Andrés Rodriguez-Pose & Michael Storper

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Abstract: Regional economic divergence has become a threat to economic progress, social cohesion and political stability in Europe. Market processes and policies that are supposed to spread prosperity and opportunity are no longer sufficiently effective. The evidence points to the existence of several different modes of regional economic performance in Europe, responding to different development challenges and opportunities. Both mainstream and heterodox theories have gaps in their ability to explain the existence of these different regional trajectories and the weakness of the convergence processes among them. Therefore, a different approach is required, one that strengthens Europe’s strongest regions but develops new approaches to promote opportunity in industrial declining and less-developed regions. There is ample new theory and evidence to support such an approach, which we have labelled ‘place-sensitive distributed development policy’.

April 6, 2018

# 18.16 Towards economically dynamic Special Economic Zones in emerging countries

Filed under: 2018 — Tags: , , , — T.Broekel @ 7:12 pm

Susanne A. Frick & Andrés Rodríguez-Pose & Michael D. Wong

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Abstract: Despite a massive recent proliferation of Special Economic Zones (SEZs), there is virtually no quantitative research on what drives their dynamism. The aim of this paper is to address this gap and analyse the factors influencing SEZ performance – proxied by economic growth – in emerging countries. The paper relies on two novel datasets, using night-lights data to proxy for SEZ performance and containing a wide range of SEZ policy variables and characteristics across a large number of countries. The main results of the analysis indicate that a) zone growth is difficult to sustain over time; that b) trying to upgrade the technological component or value-added of the economy through SEZ policies is often challenging; and that c) zone size matters: larger zones have an advantage in terms of growth potential. Furthermore, country context significantly determines SEZ performance. Firms look for low cost locations, but in close proximity to large cities. Proximity to large markets as well as pre-existing industrialization also increase SEZ performance. In contrast, incentives and other program specific variables are highly context-specific and not structurally correlated with SEZ performance.

# 18.15 A woman’s touch? Female migration and economic development in the United States

Filed under: 2018 — Tags: , , , , , — T.Broekel @ 7:10 pm

Viola von Berlepsch & Andrés Rodríguez-Pose & Neil Lee

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Abstract: Does the economic effect of immigrant women differ from that of immigrants in general? This paper examines if gender has influenced the short- and long-term economic impact of mass migration to the US, using Census microdata from 1880 and 1910. By means of ordinary least squares and instrumental variable estimations, the analysis shows that a greater concentration of immigrant women is significantly associated with lower levels of economic development in US counties. However, immigrant women also shaped economic development positively, albeit indirectly via their children. Communities with more children born to foreign mothers and that successfully managed to integrate female immigrants experienced greater economic growth than those dominated by children of foreign-born fathers or American-born parents.

March 16, 2018

# 18.14 Why do industries coagglomerate? How Marshallian externalities differ by industry and have evolved over time

Dario Diodato and Frank Neffke and Neave O’Clery

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Abstract: The fact that firms benefit from close proximity to other firms with which they can exchange inputs, skilled labor or know-how helps explain why many industrial clusters are so successful. Studying the evolution of coagglomeration patterns, we show that which type of agglomeration benefits firms has drastically changed over the course of a century and divers markedly across industries. Whereas, at the beginning of the twentieth century, industries tended to colocate with their value chain partners, in more recent decades the importance of this channels has declined and colocation seems to be driven more by similarities industries’ skill requirements. By calculating industry-specific Marshallian agglomeration forces, we are able to show that, nowadays, skill-sharing is the most salient motive in location choices of services, whereas value chain linkages still explain much of the colocation patterns in manufacturing. Moreover, the estimated degrees to which labor and input-output linkages are reflected in an industry’s coagglomeration patterns help improve predictions of city-industry employment growth.

March 15, 2018

# 18.13 What drives the geography of jobs in the US? Unpacking relatedness

Teresa Farinha Fernandes & Pierre-Alexandre Balland & Andrea Morrison & Ron Boschma

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Abstract: There is ample evidence of regions diversifying in new occupations that are related to pre- existing activities in the region. However, it is still poorly understood through which mechanisms related diversification operates. To unpack relatedness, we distinguish between three mechanisms: complementarity (interdependent tasks), similarity (sharing similar skills) and local synergy (based on pure co-location). We propose a measure for each of these relatedness dimensions and assess their impact on the evolution of the occupational structure of 389 US Metropolitan Statistical Areas (MSA) for the period 2005-2016. Our findings show that new jobs appearing in MSA’s are related to existing ones, while those more likely to disappear are more unrelated to a city’s jobs’ portfolio. We found that all three relatedness dimensions matter, but local synergy shows the largest impact on entry and exit of jobs in US cities.

March 6, 2018

# 18.12 Foreign-owned firms as agents of structural change in regions: the case of Hungary 2000-2009

Zoltán Elekes and Ron Boschma and Balázs Lengyel

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Abstract: A growing body of literature shows that related diversification in regions is more common but unrelated diversification also happens. However, we have little understanding of what types of firms induce related and unrelated diversification in regions. We investigate the extent to which foreign-owned firms induce structural change in the capability base of 67 regions in Hungary between 2000 and 2009. Doing so, we aim to connect more tightly the disparate literatures of Evolutionary Economic Geography and International Business. Using novel methodology developed by Neffke et al. (2018), we find that foreign-owned firms show a higher deviation from the region’s average capability match than domestic firms, and therefore, tend to contribute more to structural change in regions.

# 18.11 On the evolution of the Castel Goffredo hosiery cluster: A life cycle perspective

Giulio Carli and Andrea Morrison

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Abstract: The life cycle approach has become popular in studies on industrial clusters. However, some concerns have been raised over the inherent determinism of this approach and its tendencies to focus exclusively on cluster internal dynamics while neglecting the role of external factors and socio-economic contingencies. This paper addresses these criticisms by investigating the long term development of Castel Goffredo, a traditional textile cluster in Italy. In our analysis we identify and characterise the main stages of the life cycle and its antecedents. We singled out the main triggering factors behind each of these stages and show that a variety of factors, both external and internal to the cluster, contributed to its development. Our findings confirm that an adaptive cycle approach, which focuses also on contingencies and external factors, appear to be appropriate for investigating the long term evolution of clusters.

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