This monthly selection of articles has been carried out by Philippe Gugler and Michael Keller, the Center for Competitiveness, University of Fribourg.

Abstract: « Revisiting Marshall's agglomeration economies: technological relatedness and the evolution of the Sheffield metals cluster, Regional Studies. According to Alfred Marshall, firms receive increasing returns from a trinity of agglomeration economies: a local pool of skilled labour, local supplier linkages and local knowledge spillovers. This article re-examines the mechanisms underlying Marshall's agglomeration economies in the Sheffield metals cluster wherein Marshall discovered them. Despite the cluster's decline, empirical evidence is found that the mechanisms underlying Marshallian agglomeration economies continue to occur within the surviving metals industry. However, upon closer examination, Marshallian agglomeration economies have evolved to become more prevalent amongst plants that use related metals technology. The results highlight the importance of technological relatedness to cluster survival.» [ABSTRACT FROM AUTHORS]

Zooming In: A Practical Manual for Identifying Geographic Clusters

By : Juan Alcácer and Minyuan Zhao. Harvard Business School Working Paper, 14-042.

Abstract: « This paper takes a close look at the reasons, procedures, and results of cluster identification methods. Despite being a popular research topic in strategy, economics, and sociology, geographic clusters are often studied with little consideration given to the underlying economic activities, the unique cluster boundaries, or the appropriate benchmark of economic concentration. Our goal is to increase awareness of the complexities behind cluster identification, and to provide concrete insights and methodologies applicable to various empirical settings. The organic cluster identification methodology we propose is especially useful when researchers work in global settings, where data available at different geographic units complicates comparisons across countries.» [ABSTRACT FROM AUTHORS]

Job hopping, information technology spillovers, and productivity growth

By : Prasanna Tambe and Lorin Hitt. Management Science, Volume 60, Issue 2, pp. 338-355, 2014.

Abstract: « The movement of information technology (IT) workers among firms is believed to be an important mechanism by which IT-related innovations diffuse throughout the economy. We use a newly developed source of employee microdata—an online resume database—to model IT workers' mobility patterns. We find that firms derive significant productivity benefits from the IT investments of other firms from which they hire IT labor. Our estimates indicate that over the last two decades, productivity spillovers from the IT investments of other firms transmitted through this channel have contributed 20%–30% as much to productivity growth as firms' own IT investments. Moreover, we find that the productivity benefits of locating near other IT-intensive firms can primarily be explained by the mobility of technical workers within the region. Our results are unique to the flow of IT workers among firms, not other occupations, which rules out some alternative explanations related to the similarity of firms that participate in the same labor flow network.» [ABSTRACT FROM AUTHORS]

Global Pharmaceutical and Biotechnology Firms’ Linkages in the World City Network

By : Stefan Krätke. Urban Studies, Volume 51, Issue 6, Pages 1196-1213, 2014.

Abstract: « This article concentrates on the connectivity of global pharmaceutical and biotechnology firms in the contemporary ‘world city network’ that constitutes a ‘space of flows’ in which particular urban regions achieve an outstanding nodal centrality. World city network analyses have mostly concentrated on global service providers. Yet globally operating manufacturing firms also select distinct urban regions all across the world as locational anchoring points. Thus the network structures of distinct industrial sub-sectors need to be analysed in order to detect the differing nodal centralities and ‘sectoral profiles’ of cities functioning as geographical hubs of transnational production networks. A macro-scale analysis is presented of how the top 40 global firms in the pharmaceutical and biotechnology industry connected cities across the world in 2010. Subsequently, the nodal centralities of cities included in this sub-sector’s global network are compared with the findings of previous analyses that concentrate on the advanced producer services sector..» [ABSTRACT FROM AUTHOR]

Industrial Location and Spatial Dependence: An Empirical Application

By : Daniel Liviano and Josep-Maria Arauzo-Carod. Regional Studies, Volume 48, Issue 4, Pages 727-743, 2014.

Abstract: « Industrial location and spatial dependence: an empirical application, Regional Studies. This paper tries to resolve some of the main shortcomings in the empirical literature on location decisions for new plants, that is, spatial effects and over-dispersion. Spatial effects are omnipresent, being a source of over-dispersion in the data as well as a factor shaping the functional relationship between the variables that explain a firm's location decisions. Using count data models, empirical researchers have dealt with over-dispersion and excess zeros by developments of the Poisson regression model. This study aims to take this a step further by adopting Bayesian methods and models in order to tackle the excess of zeros, spatial and non-spatial over-dispersion, and spatial dependence simultaneously. Data for Catalonia (Spain) are used and location determinants are analysed to that end. The results show that spatial effects are determinant. Additionally, over-dispersion is decomposed into an unstructured independently and identically distributed (i.i.d.) effect and a spatially structured effect.» [ABSTRACT FROM AUTHORS]

Cognitive Capital and Islands of Innovation: The Lucas Growth Model from a Regional Perspective

By : Andrea Caragliu and Peter Nijkamp. Regional Studies, Volume 48, Issue 4, Pages 624-645, 2014.

Abstract: « Industrial location and spatial dependence: an empirical application, Regional Studies. This paper tries to resolve some of the main shortcomings in the empirical literature on location decisions for new plants, that is, spatial effects and over-dispersion. Spatial effects are omnipresent, being a source of over-dispersion in the data as well as a factor shaping the functional relationship between the variables that explain a firm's location decisions. Using count data models, empirical researchers have dealt with over-dispersion and excess zeros by developments of the Poisson regression model. This study aims to take this a step further by adopting Bayesian methods and models in order to tackle the excess of zeros, spatial and non-spatial over-dispersion, and spatial dependence simultaneously. Data for Catalonia (Spain) are used and location determinants are analysed to that end. The results show that spatial effects are determinant. Additionally, over-dispersion is decomposed into an unstructured independently and identically distributed (i.i.d.) effect and a spatially structured effect.» [ABSTRACT FROM AUTHORS]

Origin of FDI and domestic productivity spillovers: does European FDI have a ‘productivity advantage’ in the ENP countries?

By : Vassilis Monastiriotis. LSE ‘Europe in Question’ Discussion Paper Series, Paper No. 70/2014.

Abstract: « The process of approximation between the EU and its ‘eastern neighbourhood’ has created conditions for deepening economic interactions and market integration, giving to the EU –and to EU businesses– an elevated role in the process of economic modernisation and transition in the neighbourhood countries. This raises the question as to whether European business activity in these countries produces indeed measureable economic advantages both in absolute and in relative terms (e.g., compared to business activity from other parts of the world). Similarly, a question arises as to whether European business activity reduces or amplifies spatial imbalances within the partner countries. This paper examines these issues for the case of capital flows (foreign ownership) and the related productivity spillovers, using firm-level data from the Business Environment and Enterprise Performance Survey (BEEPS) covering 28 transition countries over the period 2002-2009. We estimate the direct and intra-industry productivity effects of foreign ownership and examine how these differ across regional blocks (CEE, SEE and ENP), according to the origin of the foreign investor (EU versus non-EU), across geographical scales (pure industry versus regional spillovers) and for different types of locations (capital-city regions versus the rest). Our results suggest that FDI of EU origin plays a distinctive role in the countries concerned helping raise domestic productivity significantly more than investments from outside the EU. However, this process appears to operate in a spatially selective manner, thus enhancing regional disparities and spatial imbalances. This, then, assigns a particular responsibility for EU policy, as it continues to promote economic integration (and FDI flows) to its eastern neighbourhood, to devise interventions that will help redress these problems.» [ABSTRACT FROM AUTHOR]

Something New: Where do new industries come from?

By : Maryann Feldman and Sam Tavassoli. CITR Electronic Working Paper Series, Paper No. 2014/2.

Abstract: « The focus of this paper is on the question of how new industries originate in places. There is often confusion between the process of diffusion and the locational factors that give rise to early stage creative discovery. There is a long and distinguished literature that considers the diffusion of ideas. Diffusion is important as it influences the general uptake and implementation of ideas across geography but it is a different process than our focus here. We advance the argument that the creation of new industries is a process that has inherently geographic features. Something new is created out of prior knowledge but a more complex process is required to develop an industry and reap the economic benefits.» [ABSTRACT FROM AUTHORS]

Media clusters and metropolitan knowledge economy

By : Charlie Karlsson and Philippe Rouchy. CITR Electronic Working Paper Series, Paper No. 2014/1.

Abstract: « Large media clusters have emerged in a limited number of large cities, characterizing the geographical concentration of the global media industry. This paper starts by exploring the effect of the rapid advancement of Information and Communication Technologies (ICT) had on the media economy. It concludes that the role of the “weightless economy” on media cluster has enhanced its production and distribution functions. We review the specificities of media cluster that ties agglomeration to creative, diversified attributes of production and distribution. The implication is that media firms hold strong tendencies to cluster in urban regions since they make full usage of its resources, namely its export capabilities and import transformation strength. Finally, we invite researchers to consider Jacobs’ metropolitan and global reciprocating system of city growth as a valid unit for analysing media clusters. The question leads envisaging if media clusters' strong metropolitan base allows them to grow further through globalised circuits. The paper concludes that large, media clusters drive on intellectually dense network of information, which can only be cultivated through large agglomerations existing capabilities. Consequently, the research question focuses upon the economic role of knowledge in media creation and export replacement. We emphasize the strength of Jacob’s model of media cluster for understanding its mechanism of value creation and endogenous system of globalisation.» [ABSTRACT FROM AUTHORS]

Optimal Agglomerations in Dynamic Economics

By : William Brock, Anastasios Xepapadeas and Athanasios Yannacopoulos. Athens University of Economics and Business, Working Paper Series, 14-03.

Abstract: « We study rational expectations equilibrium problems and social optimum problems in innite horizon spatial economies in the context of a Ramsey type capital accumulation problem with geographical spillovers. We identify sufficient local and global conditions for the emergence (or not) of optimal agglomeration, using techniques from monotone operator theory and spectral theory in innite dimensional Hilbert spaces. We show that agglomerations may emerge, with any type of returns to scale (increasing or decreasing) and with the marginal productivity of private capital increasing or decreasing with respect to the spatial externality. This is a fairly general result indicating the importance of the network structure of the spatial externality relative to the properties of the aggregate production function. Our analytical methods can be used to systematically study optimal potential agglomeration and clustering in dynamic economics.» [ABSTRACT FROM AUTHORS]

Innovation Systems Research in the Italian Food Industry

By : Ornella Wanda Maietta. CSEF Working Paper 358, 2014.

Abstract: « The objective of the paper is to determine the role that R&D networking, through the collaboration of firms with universities, plays among the determinants of product and process innovation in the Italian food and drink industry and how geographical proximity to a university affects both R&D university-industry collaboration and innovation. The data are sourced from the 7th (1995-1997), 8th (1998-2000), 9th (2001-2003) and 10th (2004-2006) waves of Capitalia survey data. The approach is a triprobit analysis in which the dependent variables are R&D collaboration with a university, process and product innovation; the independent variables are firm, territorial and university characteristics.» [ABSTRACT FROM AUTHOR]

Firm Knowledge, Neighborhood Diversity and Innovation

By : Sofia Wixe. The Royal Institute of Technology, Centre of Excellence for Science and Innovation Studies (CESIS), Electronic Working Paper Series, Paper No. 360, 2014.

Abstract: « This paper tests the importance of firm level knowledge and neighborhood diversity, as a source for localized knowledge spillovers, on firms propensity to innovate. Diversity is measured in terms of industries as well as employee education and occupation, of which the results show a positive neighborhood effect from diversity in education. In addition, an added positive effect from neighborhood diversity in education is found for firms with a larger share of highly educated employees, which points to the importance of absorptive capacity. However, firm characteristics, such as the knowledge of the own employees, provide to be the strongest determinants for the innovativeness of firms.» [ABSTRACT FROM AUTHOR]