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.

Unravelling the forces underlying urban industrial agglomeration

By: N. O’Clery, S. Heroy, F. Hulot, M. Beguerisse-Díaz. University of Oxford, Mathematical Institute, arXiv:1903.09279v1, 2019.

Abstract: “As early as the 1920’s Marshall suggested that firms co-locate in cities to reduce the costs of moving goods, people, and ideas. These ’forces of agglomeration’ have given rise, for ex- ample, to the high tech clusters of San Francisco and Boston, and the automobile cluster in Detroit. Yet, despite its importance for city planners and industrial policy-makers, until recently there has been little success in estimating the relative importance of each Marshallian channel to the location decisions of firms. Here we explore a burgeoning literature that aims to exploit the co-location patterns of industries in cities in order to disentangle the relationship between industry co-agglomeration and customer/supplier, labour and idea sharing. Building on previous approaches that focus on across- and between-industry estimates, we propose a network-based method to estimate the relative importance of each Marshallian channel at a meso scale. Specifically, we use a community detection technique to construct a hierarchical decomposition of the full set of industries into clusters based on co-agglomeration patterns, and show that these industry clusters exhibit distinct patterns in terms of their relative reliance on individual Marshallian channels.” [ABSTRACT FROM AUTHORS]

Do institutions determine economic geography? Evidence from the concentration of foreign suppliers

By: F. Kamal, A. Sundaram. U.S. Census Bureau, CES 19-05, 2019.

Abstract: “Do institutions shape the geographic concentration of industrial activity? We explore this question in an international trade setting by examining the relationship between country-level institutions and patterns of spatial concentration of global sourcing. A priori, weak institutions could be associated with either dispersed or concentrated sourcing. We exploit location and transaction data on imports by U.S. firms and adapt the Ellison and Glaeser (1997) index to construct a product- country-specific measure of supplier concentration for U.S. importers. Results show that U.S. importers source in a more spatially concentrated manner from countries with weaker contract enforcement. We find support for the idea that, where formal contract enforcement is weak, local supplier networks compensate by sharing information to facilitate matching and transactions.” [ABSTRACT FROM AUTHORS]

The relationship of policy induced R&D networks and inter-regional knowledge diffusion

By: M. Bednarz, T. Broekel. Utrecht University, Human Geography and Planning, Papers in Evolutionary Economic Geography No. 19.08, 2019.

Abstract: “Knowledge diffusion is argued to be strongly influenced by knowledge networks and spatial structures. However, empirical studies primarily apply an indirect approach of measuring their impact. Moreover, little is known about how policy can influence the spatial diffusion of knowledge. This paper seeks to fill this gap by empirically testing the effects of policy induced knowledge networks on the propensity of inter-regional patent citations. We use patent citation data for 141 labor market regions in Germany between 2000 to 2009, which is merged with information on subsidized joint R&D projects. Based on the latter, we construct a network of subsidized R&D collaboration. Its impact on inter-regional patent citations is evaluated with binomial and negative binomial regression models. Our findings do not indicate that inter- regional network links created by public R&D subsidies facilitate patent citations and hence, inter-regional knowledge diffusion.” [ABSTRACT FROM AUTHORS]

Regional innovation clusters and firm innovation performance: an interactionist approach

By: E. Turkina, B. Oreshkin, R. Kali. Regional Studies, DOI: 10.1080/00343404.2019.1566697, 2019.

Abstract: “How is firm innovation affected by location in an innovation cluster? How does the interplay of firm and cluster characteristics matter? We examine these questions by conducting an empirical analysis of firm innovation performance in regional innovation clusters. Our theoretical framework is based on a synthesis of the literature on industrial clustering, regional agglomeration economies and social networks. We test the framework empirically through the analysis of data on patent citations from 578 firms located in 26 European regional clusters in the information technology industry over 10 years. We find that location in these clusters offers benefits and at the same time poses certain constraints. One of the central findings is that connectedness to highly performing firms (in horizontal relationships), research institutions and universities located in a cluster moderates the onset of diminishing returns between firm innovation performance and research and development effort, and helps firms cope with the negative effects of locating in clusters.” [ABSTRACT FROM AUTHORS]

The impact of foreign technological innovation on domestic employment via the industry mix

By: L. Gagliardi. Research Policy, Vol. 48, Iss. 6, pp. 1523-1533, 2019.

Abstract: “This paper analyses how differences in the industry composition of British local labour markets moderate the impact of foreign technological competition in manufacturing on domestic employment, both overall and across subsamples of workers with different skill levels (high, intermediate and low). To this scope, it exploits both variations across industries in the exposure to the introduction of new technologies, and information on how such industries are combined in shaping the industrial structure of each place. The analysis shows that places that specialise in industries undergoing substantial technological competition due to foreign innovation experience a reduction in total employment that is 4.5% larger than places less exposed based on their initial industry mix. This negative performance is mainly explained by a decrease in the employment opportunities for intermediate-skilled workers. Limited support is found for successful adaptation trajectories over time across British local labour markets.” [ABSTRACT FROM AUTHOR]

A critical review of competitiveness measurement in Northern Ireland

By: E. Birnie, R. Johnston, L. Heery, E. Ramsay. Regional Studies, DOI: 10.1080/00343404.2019.1569757, 2019.

Abstract: “The measurement of regional competitiveness is an important and complex issue. Previous research has mostly considered national economies. However, indicators and measures identified at the national level may not apply well to regions. This paper contributes to knowledge by providing an analytical narrative of how the concept of the measurement of competitiveness has developed over time in Northern Ireland. The various stages in the development of measurements are critically evaluated. The region’s chronic competitiveness shortfall is identified and possible explanations are indicated. The conclusions assess the most recent position regarding competitiveness measurement alongside a review of future research needs.” [ABSTRACT FROM AUTHORS]

Technological coherence and the adaptive resilience of regional economies

By: S. Rocchetta, A. Mina. Regional Studies, DOI: 10.1080/00343404.2019.1577552, 2019.

Abstract: “This paper explores the effect of different regional technological profiles on the resilience of regional economies to exogenous shocks. It presents an empirical examination of the determinants of resilience through panel analyses of UK NUTS-III-level data for the period 2004–12. The results indicate that regions endowed with technologically coherent – and not simply diversified – knowledge bases are better prepared to face an unforeseen downturn and display adaptive resilience. Moreover, local economies tend to be more adaptable if they innovate in sectors with the strongest growth opportunities, even though firms’ entry does not appear to contribute significantly towards resilience.” [ABSTRACT FROM AUTHORS]

Agglomeration effects and spatial spillovers in efficiency analysis: a distribution-free methodology

By: L. Kutlu, U. Nair-Reichert. Regional Studies, DOI: 10.1080/00343404.2019.1590543, 2019.

Abstract: “Technical efficiency estimates using standard stochastic frontier models do not include spillover effects, although the existence of such spillovers is well documented in the productivity literature. This paper proposes a regression-based, distribution-free estimation method applicable to both time-varying efficiency spatial stochastic frontier and fixed effects spatial autoregressive models, which is relatively easy to estimate. The empirical results from the Indian chemical industry illustrate that ignoring spatial dependence may seriously distort estimates for efficiency rankings. The average overall spillover effect on a firm’s efficiency is 7.20 percentage points, or an average positive spillover effect of US$4.9 million in sales revenue.” [ABSTRACT FROM AUTHORS]

The economic microgeography of diversity and specialization externalities – firm-level evidence from Swedish cities

By: M. Andersson, J. P. Larsson, J. Wernberg. Research Policy, Vol. 48, Iss. 6, pp. 1385-1398, 2019.

Abstract: “We employ finely geo-coded firm-level panel data to assess the long-standing question whether agglomeration economies derive from specialization (within-industry), diversity (between-industry) or overall density. Rather than treating the city as a single unit, we focus our analysis on how the inner industry structures of cities influence firm-level productivity. Our results illustrate the co-existence of several externalities that differ in their spatial distribution and attenuation within cities. First, we find robust positive effects of neighborhood-level specialization on TFP as well as a small effect of diversity at the same fine spatial level. These effects are highly localized and dissipate beyond the immediate within-city neighborhood level. Second, we also find that firms benefit from the overall density of the wider city. The results emphasize the relevance of “opening up” cities to study the workings of their inner organization and support the idea that location in a within-city industry cluster in a diversified and dense city boosts productivity.” [ABSTRACT FROM AUTHORS]