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

Comparing Cluster Policies: An Analytical Framework

By : Anastasiia Konstantynova and James Wilson. Orkestra Working Paper Series in Territorial Competitiveness, Number 2014-R01.

Abstract: « This working paper is a part of the dissertation research and is determined to outline and deliver key triggers of a successful regional cluster policy. It first makes a broad reflection on the theory of cluster and cluster policy concepts and subsequently focuses on elaboration of an analytical scheme for policy analysis. The development of the framework is proceeded into two steps, first of all the stages of cluster policy process are defined. After that key factors affecting policy building are selected from various existing theoretical and practical cluster policy cases and later on attributed to a particular stage of cluster policy. The advantages of the designed analytical approach are in its ability to offer a deeper and more comprehensive view on different cluster policies while making comparisons and generating policy learning. Finally the framework can also be applied as a toolbox for policy makers keen to identify strengths and weaknesses in their cluster policies.» [ABSTRACT FROM AUTHORS]

A probabilistic modeling approach to the detection of industrial agglomerations

By : Tomoya Mori and Tony E. Smith. Journal of Economic Geography, Volume 14, Issue 3, Pages 547-588, 2014.

Abstract : «Dating from the seminal work of Ellison and Glaeser in 1997, a wealth of evidence for the ubiquity of industrial agglomerations has been published. However, most of these results are based on analyses of single (scalar) indices of agglomeration. Hence, it is not surprising that industries deemed to be similar by such indices can often exhibit very different patterns of agglomeration—with respect to the number, size and spatial extent of individual agglomerations. The purpose of this article is thus to propose a more detailed spatial analysis of agglomeration in terms of multiple-cluster patterns, where each cluster represents a (roughly) convex set of contiguous regions within which the density of establishments is relatively uniform. The key idea is to develop a simple probability model of multiple clusters, called cluster schemes, and then to seek a ‘best’ cluster scheme for each industry by employing a standard model-selection criterion. Our ultimate objective is to provide a richer characterization of spatial agglomeration patterns that will allow more meaningful comparisons of these patterns across industries.» [ABSTRACT FROM AUTHORS]

Counteracting innovative constraints: insights from four case studies of African knowledge-intensive metalworking and automotive clusters – ‘the Akimacs’

By : Nasiru Daiyabu Taura and David Watkins. Entrepreneurship & Regional Development, Volume 26, Issue 3-4, Pages 313-336, 2014.

Abstract: « We respond to repeated calls over the years to further develop cluster theory specifically in an African context. Our contribution is to construct a framework which integrates theories focusing on path dependency, transaction cost economics (efficiency and systemic interdependency models) and regional development (lock in models). Our focus is on the innovativeness of African clusters and constraints on such innovation. Thus, drawing on cluster literature on constraints to innovation coupled with insights from current empirical work within African automotive clusters, we examine the challenges of counteracting the multilevel constraints which hinder innovation in African clusters. We develop a model for counteracting cluster constraints focusing on the impact of variations in innovative frequency, diffusion of innovations, innovative speed and protection of innovation. The model emphasizes the opportunities that arise when new entrant and incumbent firms interact to neutralize constraints at transactional, social, ecological and knowledge levels.» [ABSTRACT FROM AUTHORS]

Spatial Determinants of Entrepreneurship in India

By : Ejaz Ghani, William R. Kerr and Stephen O'Connell. Regional Studies, Volume 48, Issue 6, Pages 1071-1089, 2014.

Abstract: « Spatial determinants of entrepreneurship in India, Regional Studies. The spatial determinants of entrepreneurship in India in the manufacturing and services sectors are analysed. Among general district traits, the quality of the physical infrastructure and workforce education are the strongest predictors of entry, with labour laws and household banking access also playing important roles. Extensive evidence is also found of agglomeration economies among manufacturing industries. In particular, supportive incumbent industrial structures for input and output markets are strongly linked to higher establishment entry rates. In comparison with the United States, regional conditions in India play a stronger relative role for the spatial patterns of entrepreneurship compared with incumbent industry locations.» [ABSTRACT FROM AUTHORS]

Assessing the Localization Pattern of German Manufacturing and Service Industries: A Distance-based Approach

By : Hyun-Ju Koh and Nadine Riedel. Regional Studies, Volume 48, Issue 5, Pages 823-843, 2014.

Abstract: « Assessing the localization pattern of German manufacturing and service industries: a distance-based approach, Regional Studies. This paper assesses the agglomeration pattern of four-digit industries in Germany using a rich data set on the population of German firms. To identify geographical agglomeration, the distance-based approach of Duranton and Overman of 2005 is followed. It is found that the location pattern of 71% of the manufacturing industries departs from randomness in the sense that plants exhibit significant geographical localization. In line with previous studies for the United Kingdom and France, the analysis suggests that especially traditional manufacturing industries exhibit strong localization patterns. Moreover, it is found that geographical localization is not restricted to the manufacturing sector, but that it plays an equally important role for service industries.» [ABSTRACT FROM AUTHORS]

The Dynamics of Technical and Business Networks in Industrial Clusters: Embeddedness, status or proximity?

By : Pierre-Alexandre Balland, José Antonio Belso-Martínez and Andrea Morrison. Papers in Evolutionary Economic Geography, 14.12, 2014.

Abstract: « Although informal knowledge networks have often been regarded as a key ingredient behind the success of industrial clusters, the forces that shape their structure and dynamics remain largely unknown. Drawing on recent network dynamic models, we analyze the evolution of business and technical informal networks within a toy cluster in Spain. Empirical results suggest that the dynamics of the two networks differ to a large extent. We find that status drives the formation of business networks, proximity is more crucial for technical networks, while embeddedness plays an equally important role in the dynamics of business and technical networks.» [ABSTRACT FROM AUTHORS]

Do Regions with Entrepreneurial Neighbours Perform Better? A Spatial Econometric Approach for German Regions

By : Katharina Pijnenburg and Konstantin A. Kholodilin. Regional Studies, Volume 48, Issue 5, Pages 866-882, 2014.

Abstract: « Do regions with entrepreneurial neighbours perform better? A spatial econometric approach for German regions, Regional Studies. A Neoclassical production function is used to analyse the effects of knowledge spillovers via entrepreneurship on economic performance of 337 German districts. To take the spatial dependence structure of the data into account, a spatial Durbin model was estimated. The importance of the choice of the appropriate weight matrix is highlighted. Positive knowledge spillover effects via entrepreneurship and competitiveness – improving the effects of entrepreneurship capital within a certain region as well as between regions – are found. However, the significance of the spatial spillover effects largely depends on the choice of the weight matrix. This is seen as evidence that positive and negative spatial spillover effects of entrepreneurship capital cancel out.» [ABSTRACT FROM AUTHORS]

Inward Foreign Direct Investment and Domestic Entrepreneurship: A Regional Analysis of New Firm Creation in Korea

By : In Hyeock Lee, Eunsuk Hong and Laixiang Sun. Regional Studies, Volume 48, Issue 5, Pages 910-922, 2014.

Abstract: « Inward foreign direct investment and domestic entrepreneurship: a regional analysis of new firm creation in Korea, Regional Studies. This paper assesses the intra- and inter-regional impacts of inward foreign direct investment on the decisions of establishing new firms in a given location by prospective local entrepreneurs, an important topic which has been largely neglected in the literature. Using a large firm-level dataset of 44 434 newly created small firms in 234 regions of South Korea in 2000–2004, the econometric estimations indicate that both intra- and inter-regional foreign direct investment spillovers influence entrepreneurs' decisions to situate new firms in a specific region, with inverted ‘U’-shaped curvilinear effects. The findings also suggest that the effect of regional foreign direct investment spillover on new firm creation is largely a localized phenomenon.» [ABSTRACT FROM AUTHORS]

Measuring the Impact of Agglomeration on Productivity: Evidence from Chilean Retailers

By : Sergio Garate and Anthony Pennington-Cross. Urban Studies, Volume 51, Issue 8, Pages 1653-1671, 2014.

Abstract: « This research extends the agglomeration literature to a country that has not been studied and a market sector that has received little attention. The majority of research that examines how density affects productivity has indirectly measured productivity through worker wages or property prices. The research uses individual supermarkets’ store productivity, proxied by 10 years of annual sales per square foot. Studying supermarkets permits the examination of the effect consumers might have on productivity. Agglomerations (density) could increase or decrease productivity depending on the relative extent of increased competition versus productivity gains, as consumers choose where to shop based on their interests in reducing shopping time (transport costs) and comparison shopping (product quality and pricing). Stores are described by who operates the store, the brand of the store and the size of the store. Results indicate that density has a differential impact depending on the store itself and the mix of stores nearby.» [ABSTRACT FROM AUTHORS]

Building talented worker housing in Shenzhen, China, to sustain place competitiveness

By : Nicola Morrison. Urban Studies, Volume 51, Issue 8, Pages 1539-1558, 2014.

Abstract: « In China, economic reforms over the last three decades, have transformed its urban governments so that economic growth takes priority over other policy goals. The purpose of this paper is to explore how talented worker housing policies have emerged within one of China’s first-class cities, namely Shenzhen, to address its affordability problems but also to enhance local economic competitiveness. Whilst Shenzhen is heading in the direction of an international, entrepreneurial city focusing, in particular, on high value-added industry, it needs to attract and retain professional, skilled workers to sustain this growth trajectory. Drawing on the concept of urban entrepreneurialism, the paper examines how talented worker housing policies and procedures have been initiated and implemented in Shenzhen in relation to its economic development strategy and affordable housing programme. The paper suggests that not only is policy delivery proving problematic, but affordability problems remain insurmountable, thus potentially limiting the effectiveness of this particular urban entrepreneurial strategy in supporting place competitiveness.» [ABSTRACT FROM AUTHORS]

Assessing the Importance of Local Supporting Organizations in the Automotive Industry: A Hybrid Dynamic Framework of Innovation Networks

By : Joana Almodovar and Aurora A.C. Teixeira. European Planning Studies, Volume 22, Issue 4, Pages 841-865, 2014.

Abstract: « The advancement of knowledge on networks entails acknowledging the heterogeneity of their participants, more precisely, the organizations that lie beyond the scope of the activities of firms. Adopting a dynamic perspective of networks, and considering different types of innovation exchanges, we propose a hybrid and wider notion of industry which implies taking account of a set of local supporting organizations (LSOs) in domains such as research and technology, production factors, consultancy and training, and public support. Based on a rich data set built from face-to-face interviews with Portuguese automotive organizations, which resulted in a network comprising 867 organizations, we apply social network analysis techniques to analyse the structure, content and dynamics of the networks. The evidence gathered unveiled huge industry turbulence and significant changes in the boundaries of the Portuguese automotive networks over a 20-year period, with the emergence (and decline) of different prominent organizations. Specifically, following AutoEuropa major foreign direct investment (in 1995), the analyses reflect a clear increase in connectivity within the industry (from 524, before 1995, up to 2327 connections after 1995), with greater involvement among suppliers and between suppliers and LSOs, with the latter achieving top positions in the ranking of innovation networks.» [ABSTRACT FROM AUTHORS]

Clustering, competition, and spillover effects – Evidence from Cambodia

By : Sokty Chhair and Carol Newman. WIDER Working Paper 2014/065.

Abstract: « The potential benefits of the geographical clustering of economic activity have been well documented in the literature, yet there is little empirical evidence quantifying these effects in developing country contexts. This is surprising given the emphasis in industrial policy on productivity growth and the potential gains that could be made by facilitating cluster formation. It is also possible that for some firms there may be disadvantages associated with locating close to competitors, in particular if they sell to customers located in the same geographic area. These represent a large proportion of firms in developing country settings at the early stage of industrialization, where physical infrastructure is underdeveloped and there are a large number of informal and service sector firms that often exclusively rely on customers in local markets. Using data on the population of all firms in Cambodia we investigate the pattern of firm clustering and explore the extent to which it leads to productivity-enhancing effects. We focus on two channels, a competition and a spillover channel and investigate the types of firms that benefit or suffer as a result of geographical clustering. We find strong negative competition effects associated with clustering for formal and manufacturing firms. We find some evidence of productivity spillovers for informal firms and firms in the manufacturing sector but they are not of a large enough magnitude to outweigh the negative competition effects observed.» [ABSTRACT FROM AUTHORS]

Globalization, Recession and the Internationalization of Industrial Districts: Experiences from the Italian Gold Jewellery Industry

By : Valentina De Marchi, Joonkoo Lee and Gary Gereffi. European Planning Studies, Volume 22, Issue 4, Pages 866-884, 2014.

Abstract: « Globalization and the recent recession crisis are significantly challenging Italian industrial districts (IDs), leading to deep transformations in their internationalization, innovation and organization strategies. With our empirical focus on a single industry (gold jewellery) and a specific country (Italy) and through the theoretical lenses of the global value chain (GVC) approach, the evidence in this article sheds light on the differences in how three IDs within Italy's gold jewellery sector (Valenza Po, Arezzo and Vicenza) compete in the global arena. Our comparative analysis reveals striking differences among these districts with regard to their upstream and downstream internationalization strategies in response to two industry shocks: increasing global competition in the early 2000s and the world economic recession of 2008–2009. Our explanation for the varied gold jewellery district responses to these two global crises involves both internal and external factors: (1) structural differences between the three IDs; (2) distinct business strategies; and (3) how these districts are linked to the gold jewellery GVC.» [ABSTRACT FROM AUTHORS]

Partners Connection Process and Spatial Effects: New Insights from a Comparative Inter-Organizational Partnerships Analysis

By : Marie Ferru. European Planning Studies, Volume 22, Issue 5, Pages 975-994, 2014.

Abstract: « This article attempts to give new explanations of the spatial patterns of collaborations focusing on the partners' connection process. Taking into account actors are embedded in an historical, interpersonal and institutional space, we first consider organizations can construct a new collaboration or renew an old one when they decide to build a research project with a partner. Then, going back to the moment when they initially connect with their partners through the analysis of the genesis of collaborations, we assume that they can turn to their interpersonal ties or to coordination resources. This process of connection may influence the spatial dimensions of collaborations regarding notably the literature linking the use of interpersonal ties and the spatial proximity effects observed in innovation activities. We test empirically these theoretical propositions through the collection of individual data about more than 200 histories of inter-company (IC) and science-industry (SI) partnerships. The qualitative and quantitative treatments of these data reveal the way partners connect each other and the spatial patterns of collaborations are significantly dependent on the nature of the partnerships. A strong regularity is nevertheless highlighted: for both partnerships (IC and SI ones), actors renewed prior collaborations in 57% of the total of studied partnerships.» [ABSTRACT FROM AUTHOR]

The Dynamics and Evolution of Local Industries—The Case of Linköping, Sweden

By : Sabrina Fredin. European Planning Studies, Volume 22, Issue 5, Pages 929-948, 2014.

Abstract: « This article aims to analyse how innovative, individual actions influence the evolution of local industries according to three stages. When discussing the evolution of industries or economies, the concept of path dependency is often a central element. Its vague nature makes it however difficult to be used as an interpretative lens when studying the evolution of local industries. In order to limit the broad concept, several aspects have been identified for discussion; all are explicitly linked to path dependency in economic geography literature and all are acknowledged to be of significance for stimulating the evolution of local industries. Based on a review of the evolutionary economic theory literature, the following three stages have been identified: first, the entering of new knowledge which may, or may not, be the starting point for a new local industry; second, the formation of the new local industry; third, the anchoring process of the new local industry. All three stages are intertwined and include the question how the new emerging industry and the existing local structures relate to each other. The three stages will be illustrated through the discussion of the evolution of the IT industry in Linköping, Sweden.» [ABSTRACT FROM AUTHOR]

Regional Scientific Production and Specialization in Europe: The Role of HERD

By : Manuel Acosta, Daniel Coronado, Esther Ferrándiz and M. Dolores León. European Planning Studies, Volume 22, Issue 5, Pages 949-974, 2014.

Abstract: « This paper analyses the effects of R&D expenditure in the higher education sector on the scientific production across regions in Europe 15. Our research questions relate to the regional production of science and the role of academic R&D expenditures on regional scientific output. The results show that money affects the production of scientific results in regions. On average, we found different impacts and lags of R&D expenditure according to the level of regional development. Our findings also suggest that scientific specialization is a significant factor affecting scientific outputs, although its effects differ across disciplines and regions.» [ABSTRACT FROM AUTHORS]

(International) R&D collaboration and SMEs: The effectiveness of targeted public R&D support schemes

By : Hanna Hottenrott and Cindy Lopes-Bento. Research Policy, Volume 43, Issue 6, Pages 1055–1066, 2014.

Abstract: « This study analyses the impact and effectiveness of targeted public support for R&D investment at the firm level. We test whether the policy design aiming at incentivizing (international) collaboration and R&D in SMEs achieves input as well as output additionality. Our results show that the targeted public subsidies trigger R&D spending, especially so in internationally collaborating SMEs. We further evaluate the different impact of privately financed and publicly induced R&D investment on innovation performance. The results confirm that the publicly induced R&D is productive as it translates into marketable product innovations. While both types of R&D investments trigger significant output effects, the effect of policy-induced R&D investment on sales from market novelties is highest for international collaborators as well as for SMEs.» [ABSTRACT FROM AUTHORS]

The communal roots of entrepreneurial–technological growth – social fragmentation and stagnation: reflection on Atlanta's technology cluster

By : Dan Breznitz and Mollie Taylor. Entrepreneurship & Regional Development, Volume 26, Issue 3-4, Pages 375-396, 2014.

Abstract: « Why do some entrepreneurial high-technology industrial clusters grow and prosper, while others stagnate? Even after several decades of research, we have yet to find a definitive answer. One of the main debates in the literature revolves around the importance of societal variables, such as the growth of a cohesive community, versus the importance of factor availability, such as the supply of highly educated labour. Employing a critical case study design to analyse the technology industry in metropolitan Atlanta, this article shows that although the availability of certain factors might be necessary, it is not sufficient without the crystallization of a cohesive social structure. More specifically, we argue that unless a local high-technology industry develops rich multiple, locally centred social networks, which embed companies in the region, cluster development will stagnate. This is true even if the region is extremely rich in all the factors identified as growth-inducing in the literature.» [ABSTRACT FROM AUTHORS]

Urban agglomerations, knowledge-intensive services and innovation: establishing the core connections

By : Sverre J. Herstad and Bernd Ebersberger. Entrepreneurship & Regional Development, Volume 26, Issue 3-4, Pages 211-233, 2014.

Abstract: « This paper investigates how resources available in urban agglomerations influence the organizational form, innovation activity and collaborative linkages of knowledge-intensive business services (KIBS) firms. Compared with their counterparts elsewhere, KIBS located in Norwegian large city labour market regions are more likely to be independent of multi-establishment business organizations and thus reliant on resources available externally, in their locations. This is most pronounced in the central and Western business districts of the capital, wherein independent KIBS exhibit high turnover of professionals and are less inclined to engage actively in innovation. Yet, those that do engage use the capital region economy as a platform for engaging with both domestic and international collaboration partners. Only by consecutively analysing these aspects and accounting for the selection processes involved is the empirical analysis able to uncover contrasting firm-level responses to the same urban economy resource base.» [ABSTRACT FROM AUTHORS]

The dynamics of the inventor network in German biotechnology: geographic proximity versus triadic closure

By : Anne L. J. Ter Wal. Journal of Economic Geography, Volume 14, Issue 3, Pages 589-620, 2014.

Abstract : «Economic geography has developed a stronghold analyzing how geography impacts innovation. Yet, despite increased interest in networks, a critical assessment of the role of geography in the evolution of networks is still lacking. This article attempts to explore the interplay between geographic distance and triadic closure as two main forces that drive the evolution of collaboration networks. Analyzing the evolution of inventor networks in German biotechnology, the article theoretically argues and empirically demonstrates that—as the technological regime of an industry changes over time—inventors increasingly rely on network resources by forming links to partners of partners, while the direct impact of geographic distance on tie formation decreases. Although initially triadic closure reinforces the geographic distance effect by closing triads among proximate inventors, over time triadic closure becomes an increasingly powerful vehicle to generate longer distance collaboration ties as the effect of geographic proximity decreases.» [ABSTRACT FROM AUTHOR]

A Network-based view of regional growth

By : Robert Huggins and Piers Thompson. Journal of Economic Geography, Volume 14, Issue 3, Pages 511-545, 2014.

Abstract : «The need to better understand the mechanisms underlying regional growth patterns is widely recognized. This article argues that regional growth is partly a function of the value created through inter-organizational flows of knowledge within and across regions. It is proposed that investment in calculative networks by organizations to access knowledge is a form of capital, termed network capital, which should be incorporated into regional growth models. The article seeks to develop a framework to capture the value of network capital within these models based on the spatial configuration and the nature of the knowledge flowing through networks.» [ABSTRACT FROM AUTHORS]

On the spatial stickiness of UK new firm formation rates

By : Georgios Fotopoulos. Journal of Economic Geography, Volume 14, Issue 3, Pages 651-679, 2014.

Abstract : «This research explores persistence of new firm formation at the UK NUTS II level for the 1994–2007 period. The results obtained herewith suggest that interregional differences in new firm formation and their determinants are time persistent. The evidence produced shows that past new firm formation rates determine future ones and that, depending on the econometric specification, human capital, local industry structure, sources of external economies and local economic conditions and wealth are significant determinants. The analysis of new firm formation distribution dynamics suggests that whatever changes may arise in the external shape of distribution are not significant and intra-distribution mobility is limited.» [ABSTRACT FROM AUTHOR]

Productivity-enhancing manufacturing clusters – Evidence from Vietnam

By : Emma Howard, Carol Newman, John Rand and Finn Tarp. WIDER Working Paper 2014/071.

Abstract: « In this paper we explore the extent to which firms experience productivity spillovers from clustering using a rich data source from Vietnam for 2002 to 2007, a period of significant transition. We address issues of simultaneity, self-selection and endogenous location choice of firms in an estimation of firm level productivity. Controlling for competition effects and distinguishing between urbanization and localization economies, we find strong evidence for productivity spillovers from clustering. The effects of these spillovers are found to be particularly large for foreign-owned firms. Our results provide support for spatial clustering policies in developing countries aimed at attracting foreign investment.» [ABSTRACT FROM AUTHORS]

Urban Economics And Urban Policy

By : Paul C. Cheshire, Max Nathan and Henry G. Overman. Edward Elgar Publishing Limited, Cheltenham, UK, 2014.

Abstract: « In this bold, exciting and readable volume, Paul Cheshire, Max Nathan and Henry Overman illustrate the insights that recent economic research brings to our understanding of cities, and the lessons for urban policy-making. The authors present new evidence on the fundamental importance of cities to economic wellbeing and to the enrichment of our lives. They also argue that many policies have been trying to push water uphill and have done little to achieve their stated aims; or, worse, have had unintended and counterproductive consequences. It is remarkable that our cities have been so successful despite the many shortcomings of urban policies and governance. These shortcomings appear in both rich and poor countries. Many powerful policies intended to influence urban development and spatial differences have been developed since the late 1940s, but they have been subject to little rigorous economic evaluation. The authors help us to understand why economic growth has emerged so unevenly across space and why this pattern persists. The failure to understand the forces leading to uneven development underlies the ineffectiveness of many current urban policies. The authors conclude that future urban policies need to take better account of the forces that drive unevenness and that their success should be judged by their impact on people, not on places – or buildings. This groundbreaking book will prove to be an invaluable resource and a rewarding read for academics, practitioners and policymakers interested in the economics of urban policy, urban planning and development, as well as international studies and innovation.» [ABSTRACT FROM EDITORS]