This monthly selection of articles has been carried out by Philippe Gugler and Damiano Lepori, the Center for Competitiveness, University of Fribourg. The entire selection, carried out since 2013, can be consulted on the academic articles page of our web.

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

By: D. Diodato, F. Neffke, N. O’Clery. Center for International Development at Harvard University, Working Paper No. 89, 2018.

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 differs 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.” [ABSTRACT FROM AUTHORS]

Regional Economic Development In Europe, 1900-2010: A Description Of The Patterns

By: J. R. Rosés, N. Wolf. London School of Economics and Political Science, Department of Economic History, Working Paper No. 278, 2018.

Abstract: “We provide the first long-run dataset of regional employment structures and regional GDP and GDP per capita in 1990 international dollars, stretching over more than 100 years. These data allow us to compare regions over time, among each other, and to other parts of the world. After some brief notes on methodology we describe the basic patterns in the data in terms of some key dimensions: variation in the density of population and economic activity, the spread of industry and services and the declining role of agriculture, and changes in the levels of GDP and GDP per capita. We next discuss patterns of convergence and divergence over time and their explanations in terms of short-run adjustment and long-run fundamentals. Also, we document for the first time a secular decrease in spatial coherence from 1900 to 2010. We find a U-shaped development in geographic concentration and regional income inequality, similar to the finding of a U-shaped pattern of personal income inequality.” [ABSTRACT FROM AUTHORS]

What Shapes Local Innovation Policies? Empirical Evidence from Japanese Cities

By: H. Okamuro, J. Nishimura. Center for Research on Contemporary Economic Systems, CCES Discussion Paper Series No.68, 2018.

Abstract: “Increasing attention has been paid to regional innovation systems. However, previous studies have so far only focused on (the regional impact of) national policies or specific regions. To date, no studies have been carried out on the implementation and variety of local research and development (R&D) subsidy programs at the municipality level. Our research fills this gap by using information on R&D subsidy programs from local authorities in Japan collected via websites and our original survey. Our research confirms 151 R&D subsidy programs conducted by 131 cities among all cities in 2015 and investigates the determinants of the implementation and design of local R&D subsidy programs at city level (length and upper limit of subsidies, and flexibility of subsidy conditions) considering both demand- and supply-side factors. The empirical results suggest that, after controlling for city type and population size, supply-side factors including local government conditions significantly affect the implementation of public R&D subsidy programs. In contrast, we find that demand-side factors matter more for the design of subsidy programs than supply-side factors.” [ABSTRACT FROM AUTHORS]

Economic Diversity and Regional Economic Performance: A Methodological Concern from Model Uncertainty

By: J. Chen. West Virginia University, Regional Research Institute, Working Paper No. 2018-05, 2018.

Abstract: “Although the role of spatial dependence has been considered in studying the relationship between economic diversity and regional economic performance, the existing literature seldom mentions model un- certainty, which mainly arises from at least two sources. One source of model uncertainty is the choice of an appropriate spatial weight matrix that describes the spatial interactions between two regions, which can be specified in a variety of ways. The second source of model un- certainty is choosing a set of control variables to model the diversity- performance relationship. To overcome these limitations, a Bayesian Model Averaging (BMA) method is used to address model uncertainty when studying the effects of economic diversity on short-term employment growth and long-term economic stability among 359 Metropolitan Statistical Areas (MSA) in the contiguous U.S. The potential spatial spillovers are also considered through spatial regression models. This empirical analysis suggests that ignoring model uncertainty can impact the estimates and our understanding of economic diversity, and it also confirms that economic diversity of neighbors plays an important role in regional economic development.” [ABSTRACT FROM AUTHOR]

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

By: G. Carli, A. Morrison. Utrecht University, Papers in Evolutionary Economic Geography, No. 18.11, 2018.

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.” [ABSTRACT FROM AUTHORS]

Growth and the Geography of Knowledge

By: M. Aloi, J. Poyago-Theotoky, F. Tournemaine. University of Nottingham, Research Paper No. 2018/04, 2018.

Abstract: “We analyse how spatial disparities in innovation activities, coupled with migration costs, affect economic geography, growth and regional inequality. We provide conditions for existence and unique- ness of a spatial equilibrium, and for the endogenous emergence of industry clusters. Spatial variations in knowledge spillovers lead to spatial concentration of more innovative firms. Migration costs, however, limit the concentration of economic activities in the most productive region. Narrowing the gap in knowledge spillovers across regions raises growth, and reduces regional inequality by making firms more sensitive to wage differentials. The associated change in the spatial concentration of industries has positive welfare effects.” [ABSTRACT FROM AUTHORS]

What Drives the Geography of Jobs in the US? Unpacking Relatedness

By: T. Farinha Fernandes, P.-A. Balland, A. Morrison, R. Boschma. Utrecht University, Papers in Evolutionary Economic Geography, No. 18.13, 2018.

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.” [ABSTRACT FROM AUTHORS]

Regional innovation policies for new path development – beyond neo-liberal and traditional systemic views

By: F. Tödtling, M. Trippl. European Planning Studies, DOI: 10.1080/09654313.2018.1457140, 2018.

Abstract: “How new regional growth paths emerge and what policy concepts are most adequate for nurturing their evolution constitute recurring themes in regional innovation and development studies. New industrial paths are often portrayed as the result of market-driven processes and Schumpeterian entrepreneurial efforts. This view goes along with a neoliberal policy approach that restricts the role of public interventions to setting up a suitable regulatory frame and supporting an entrepreneurial climate. The theoretical underpinnings and policy perspectives of this approach have been challenged by the innovation system literature, which offers a systemic view on the rise of new growth paths and advocates a more proactive role of public policy. This paper investigates the role of policy models beyond these traditional ones. We contrast different variants of systemic and multi-scalar policy concepts for new regional industrial path development. Our literature-based study shows that more recent models go beyond new path development and growth per se, paying more attention to the direction of innovation and change, and to policy approaches for achieving more sustainable forms of development. We scrutinize the theoretical and empirical bases of these new policy models and discuss why they are superior to neoliberal and older systemic ones.” [ABSTRACT FROM AUTHORS]

Fostering place-based innovation and internationalization – the new turn in German technology policy

By: D. Dohse, D. Fornahl, J. Vehrke. European Planning Studies, DOI: 10.1080/09654313.2018.1458285, 2018.

Abstract: “Since the mid-1990s German technology policy has experienced a paradigmatic shift from standard grant schemes towards a region-oriented and competition-based R&D policy. Currently, a new policy experiment, the InterClust contest, is under way, trying to simultaneously foster place-based innovation, R&D internationalization and the internationalization of innovative places. The current paper analyses the new policy, relating it to the recent literatures on heterogeneous firms and on cluster-life cycles, and presents results from a firm survey performed in 21 winner regions of InterClust. Findings show that the new funding scheme takes insights from recent theoretical developments into account and addresses important impediments to firm and cluster internationalization. Although it is too early for an overall assessment, it is argued that the long-term impact will critically depend on the inflow of heterogeneous knowledge and the strength of intra-regional mobilization effects.” [ABSTRACT FROM AUTHORS]

Manufacturing (co)agglomeration in a transition country: Evidence from Russia

By: E. Aleksandrova, K. Behrens, M. Kuznetsova. National Research University Higher School of Economics, WP BRP 186/EC/2018, 2018.

Abstract: “We document geographic concentration patterns of Russian manufacturing using microgeographic data. About 42–52% of 4-digit and 63–75% of 3-digit industries are localized, with a higher share in the European part than in the Asian part. About 70% of 3-digit industry pairs are coagglomerated, especially those with stronger buyer-supplier links, more knowledge sharing, and lower transport costs. Pairs with a more similar workforce are, however, less coagglomerated, which points to impediments in labor mobility between regions and firms. Over- all, the agglomeration forces are fairly similar to those operating in developed countries, with transportation likely to be a key driver.” [ABSTRACT FROM AUTHORS]

Do Software and Videogames firms share location patterns across cities? Evidence from Barcelona, Lyon and Hamburg

By: C. Médez-Ortega, J.-M. Arauzo-Carod. Universitat Rovira i Virgili, CREIP Working Paper No. 9, 2018.

Abstract: “The aim of this paper is to analyse common location patterns of Software and Videogames (SVE) industry in Barcelona, Lyon and Hamburg. This is a key industry in developed countries that mainly located at core of bigger metropolitan areas, looking for agglomeration economies, skilled labour and a wide range of spillover effects existent there. Cities used in our empirical application share some common features in terms of size, manufacturing tradition and, specially, economic strategies, as they have managed to promote high-tech neighbourhoods through ambitious urban renewal policies. When analysing location patterns of firms from these industries, although our results highlight predominant role of urban cores of three cities, also indicate important specificities in terms of core-periphery distribution of SVE’s firms.” [ABSTRACT FROM AUTHORS]

University-led innovation in and for peripheral urban areas: new approaches in Naples, Italy and Newark, NJ, US

By: J.-P. D. Addie, M. Angrisani, S. De Falco. European Planning Studies, DOI: 10.1080/09654313.2018.1459505, 2018.

Abstract: “This paper focuses on the spatial development problem of university-led innovation in peripheral urban areas. Highlighting issues of proximity, uneven geographic development, and multi- scalar urban governance as weaknesses of the regional innovation systems literature, we provide a novel synthesis of regional economics, innovation policy, and critical urban studies to assess the development roles of universities in concrete contexts. A comparative investigation of Naples and Newark, NJ captures the functional operation of regional innovation and urban development as a contested product of discourses, technologies (material and governance), and territorial arrangements. Our analysis demonstrates the significance of multi-scalar relationships in structuring innovation policy and practice in peripheral urban areas. The architecture of innovation is not simply rolled out into pre-determined spatial containers in places lacking established ‘institutional thickness’ or urban centrality. The spatial development of university-led innovation is a social product: material and governance infrastructures are essential components of the urban fabric and are essential to its co-constitution. Universities are shown to contribute differing resources dependent on their institutional strategic goals and the capacities and spatial imaginaries afforded to them by their situation in broader territorial governance regimes. We conclude by drawing comparative lessons and identifying directions for future research.” [ABSTRACT FROM AUTHORS]