Papers in Evolutionary Economic Geography

June 26, 2018

# 18.24 Historical Roots of Entrepreneurial Culture and Innovation Activity―An Analysis for German Regions

Michael Fritsch & Martin Obschonka & Michael Wyrwich

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Abstract: There is a research gap with respect to understanding the role of entrepreneurial culture and tradition for actual start-up behaviour. We combine historical self-employment data (entrepreneurial tradition) with a psycho- logical measure for entrepreneurial attitudes (entrepreneurial culture). The results reveal a positive relationship between the historical level of self- employment in a region and the presence of people with an entrepreneurial personality structure today. Our measure for a regional culture of entrepreneurship is positively related not only to the level of new business formation but also the amount of innovation activity.

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May 31, 2018

# 18.23 Does related variety affect regional resilience? New evidence from Italy

Filed under: 2018 — Tags: , , , — T.Broekel @ 3:45 pm

Giulio Cainelli & Roberto Ganau & Marco Modica

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Abstract: Although several contributions have studied the effect of related variety on the economic performance of firms and regions, its influence on regional resilience – that is, regions’ capacity to adapt to external shocks – has received little attention. This paper contributes to this debate by analysing empirically the relationship between related variety and regional resilience at the Italian Local Labour Market (LLM) level. The analysis adopts the definition of regional resilience developed by Martin (2012), and employs spatial econometric techniques − besides standard non-spatial models − to analyse the role played by related variety as a short-run shock absorber with respect to the 2008 Great Recession. The results obtained from the estimation of Spatial Error Models suggest that LLMs characterised by a higher level of related variety have shown a higher capacity to adapt to an external shock, that is, the Great Recession. This evidence is confirmed with respect to two different short-run time horizons, the one-year period 2012-2013 and the three-year period 2010-2013.

#18.22 Industrial Relatedness and Regional Resilience in the European Union

Filed under: 2018 — Tags: , , , — T.Broekel @ 3:42 pm

Giulio Cainelli & Roberto Ganau & Marco Modica

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Abstract: The 2008 Great Recession prompted interest in the concept of regional resilience. This paper discusses and empirically investigates the relationship between industrial relatedness and economic resilience across European Union regions over the 2008-2012 crisis period. The analysis focuses on two types of industrial relatedness: technological and vertical (i.e. market-based). The empirical analysis is performed on a sample of 209 NUTS-2 regions in 16 countries. Our results highlight a positive effect of technological relatedness on the probability of resilience in the very short run (i.e. the 2008-2009 period), while the negative effect of vertical relatedness seems to persist for longer.

# 18.21 The high importance of de-industrialization and job polarization for regional diversification

Filed under: 2018 — Tags: , , — T.Broekel @ 3:08 pm

Jacob Rubæk Holm & Christian Richter Østergaard

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Abstract: The process of regional diversification has received a growing interest in recent years with a focus on the role of relatedness between economic activities. The main argument is that regions diversify into economic activities closely related to their current activities. However, there are also processes working against this rather path dependent process, such as de-industrialization, job polarization, skill-biased technological change, and urbanization. The purpose of this paper is to analyse the importance of relatedness and these major processes in regional diversification with specific emphasis on the role of job polarization and de-industrialisation. The paper draws on linked employer-employee census data from Denmark 2008-2013. Results show that, while relatedness does matter for regional diversification, job polarization and deindustrialisation entail that the most related industries tend to contract. Hence, the results show that regional diversification is affected by relatedness, but its effect is overshadowed by job polarisation and de-industrialization. This effect is consistent across regions. The results show a role for policy and entrepreneurship in introducing unrelated diversification.

 

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

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.

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