Papers in Evolutionary Economic Geography

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’.

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January 6, 2018

# 18.05 The revenge of the places that don’t matter (and what to do about it)

Andrés Rodríguez-Pose

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Persistent poverty, economic decay, and lack of opportunities are at the root of considerable discontent in declining and lagging-behind areas the world over. Poor development prospects and an increasing belief that these places have ‘no future’ – as economic dynamism has been posited to be increasingly dependent on agglomeration economies – have led many of these so-called ‘places that don’t matter’ to revolt against the status quo. The revolt has come via an unexpected source: the ballot-box in a wave of political populism with strong territorial, rather than social foundations. I will argue that the populist wave is challenging the sources of existing well-being in both the less-dynamic and the more prosperous areas and that better, rather than more, place-sensitive territorial development policies are needed in order to find a solution to the problem. Place-sensitive development policies need, however, to stay clear of the welfare, income-support, and big investment projects of past development strategies if they are to be successful and focus on tapping into untapped potential and on providing opportunities to those people living in the places that ‘don’t matter’.

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.

February 3, 2016

# 16.01 The crisis and regional employment in Europe: what role for sheltered economies?

Filed under: 2016 — Tags: , , , , — mattehartog @ 6:32 pm

Ugo Fratesi, Andrés Rodríguez-Pose

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This paper examines how the evolution of employment trends in the regions of Europe since the outbreak of the crisis may have been shaped by the emergence of sheltered economies in certain regions of Europe in the pre-crisis period. The paper uses descriptive and econometric analysis to determine the relationship between the level of protection from the market of regional economies in the years of economic boom between 1995 and 2007 and employment trends in the first four years of the crisis (2008-2012). The analysis covers 272 NUTS2-level regions in 27 EU countries. The results of the analysis show that regions which had developed more sheltered economies during the boom years have not weathered the employment shock associated with the crisis well, while pre-crisis dynamism in employment generation has been connected to lower post-crisis employment destruction. The only exception are the most highly sheltered economies in the pre-crisis period, which have endured a lower level of job destruction than any other type of region. The question is whether this early resistance to job destruction can be maintained once the recovery starts.

December 11, 2015

# 15.35 Government quality and the economic returns of transport infrastructure investment in European regions

Riccardo Crescenzi, Marco Di Cataldo, Andrés Rodríguez-Pose

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Transport infrastructure investment is a cornerstone of growth-promoting strategies. However, in the case of Europe the relevant literature is increasingly failing to find a clear link between infrastructure investment and economic performance. This may be a consequence of overlooking the role of government institutions. This paper assesses the connection between regional quality of government and the returns of different types of road infrastructure in EU regions during the period between 1995 and 2009. The results unveil a strong influence of regional quality of government on the economic returns of transport infrastructure. In weak institutional contexts, investments in motorways – the preferred option by local governments – yield significantly lower returns than the more humble but possibly more efficient secondary road. Government institutions also affect the returns of transport maintenance investment.

April 16, 2015

# 15.09 Innovation in Russia: the territorial dimension

Filed under: 2015 — Tags: , , , , — mattehartog @ 5:03 pm

Riccardo Crescenzi and Alexander Jaax

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The debate on Russia’s innovation performance has paid little attention to the role of geography. This paper addresses this gap by applying an ‘augmented’ regional knowledge function approach to examine the territorial dynamics of innovation in Russia. The empirical results suggest that regional R&D investments are strong predictors of local innovative performance. However, R&D activities are inadequately connected to regional human capital resources. The activities of foreign firms play a fundamental role as ‘global knowledge pipelines’. Different territorial dynamics of innovation are observed in the European and the Asian part of Russia, with regions to the East of the Urals less likely to benefit from interregional knowledge spillovers. The historical legacy from the Soviet era still emerges as a strong predictor of current innovative performance, shedding light on the importance of long-term path dependency in the Russian geography of innovation.

March 28, 2015

# 15.08 Neighbor regions as the source of new industries

Filed under: 2015 — Tags: , , , , , , — mattehartog @ 1:41 am

Ron Boschma, Víctor Martín and Asier Minondo

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The development of new industries demands access to local capabilities. Little attention has yet been paid to the role of spillovers from neighbor regions for industrial diversification, nor has the role of network linkages between neighbor regions been investigated. As the spread of capabilities has a strong geographical bias, we expect regions to develop new industries in which their neighbor regions are specialized. To test this hypothesis, we analyze the development of new industries in US states during the period 2000-2012. We show that an US state has a higher probability of developing a comparative advantage in a new industry if a neighbor state is specialized in that industry. We also show that neighbor US states have more similar export structures. This export similarity seems to be explained by higher social connectivity between neighbor states, as embodied in their bilateral migration patterns.

April 9, 2014

# 14.10 Agents of structural change. The role of firms and entrepreneurs in regional diversification

Filed under: 2014 — Tags: , , , , , — mattehartog @ 3:58 pm

Frank Neffke, Matté Hartog, Ron Boschma, Martin Henning

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Who introduces structural change in regional economies: Entrepreneurs or existing firms? And do local or non-local firms and entrepreneurs create most novelty in a region? Using matched employer-employee data for the whole Swedish workforce, we determine how unrelated and therefore how novel the activities of different establishments are to a region’s industry mix. Up- and downsizing establishments cause large shifts in the local industry structure, but these shifts only occasionally require an expansion of local capabilities because the new activities are often related to existing local activities. Indeed, these incumbents tend to align their production with the local economy, deepening the region’s specialization. In contrast, structural change mostly originates via new establishments, especially those with non-local roots. Moreover, although entrepreneurs start businesses more often in activities unrelated to the existing regional economy, new establishments founded by existing firms survive in such activities more often, inducing longer-lasting changes in the region.

February 3, 2014

# 14.06 Quality of government and innovative performance in the regions of Europe

Filed under: 2014 — Tags: , , , , — mattehartog @ 2:48 pm

Andrés Rodríguez-Pose, Marco Di-Cataldo

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Although it has frequently been argued that the quality of institutions affects the innovative potential of a territory, the link between institutions and innovation remains a black box. This paper aims to shed light on how institutions shape innovative capacity, by focusing on how regional government quality affects innovative performance in the regions of Europe. By exploiting new data on quality of government (QoG), we assess how government quality and its components (control of corruption, rule of law, government effectiveness and government accountability) shape patenting capacity across the regions of the European Union (EU). The results of the analysis – which are robust to controlling for the endogeneity of institutions – provide strong evidence of a causal link between the quality of local governments and the capacity of territories to generate innovation. In particular, low quality of government becomes a fundamental barrier for the innovative capacity of the periphery of the EU, strongly undermining any potential effect of any other measures aimed at promoting greater innovation. The results have important implications for the definition of innovation strategies in EU regions.

December 1, 2013

# 13.24 Do inventors talk to strangers? On proximity and collaborative knowledge creation

Filed under: 2013 — Tags: , , , , , , — mattehartog @ 6:02 pm

Riccardo Crescenzi, Max Nathan and Andrés Rodríguez-Pose

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This paper investigates how physical, organisational, institutional, cognitive, social, and ethnic proximities between inventors shape their collaboration decisions. Using a new panel of UK inventors and a novel identification strategy, this paper systematically explores the net effects of all these ‘proximities’ on co-patenting.  The regression analysis allows us to identify the full effects of each proximity, both on choice of collaborator and on the underlying decision to collaborate. The results show that physical proximity is an important influence on collaboration, but is mediated by organisational and ethnic factors. Over time, physical proximity increases in salience. For multiple inventors, geographic proximity is, however, much less important than organisational, social, and ethnic links. For inventors as a whole, proximities are fundamentally complementary, while for multiple inventors they are substitutes.

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