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.

Cluster presence and economic performance: a new look based  on European data

By: C. Ketels, S. Protsiv. Regional Studies, DOI: 10.1080/00343404.2020.1792435, 2020.

Abstract: “This paper takes a fresh empirical look at how cluster presence matters for economic performance. It analyses a new data set developed for the European Cluster Observatory to assess the impact of clusters on industry-level wages and regional prosperity. It is found that industry-level wages are associated with industry- and surrounding-cluster agglomeration levels to a similar degree. For regional prosperity, cluster portfolio strength is found to matter, while the specific mix of clusters is insignificant once business environment conditions are accounted for. The data show a meaningful relationship between clusters and economic outcomes, independent of other locational qualities.” [ABSTRACT FROM AUTHORS]

The  supply chain economy: A new industry categorization for understanding  innovation in services

By: M. Delgado, K. G. Mills. Research Policy, Vol. 49, Iss. 8, 2020.

Abstract: “An active debate has centered on the importance of manufacturing for driving innovation in the U.S. economy. This paper offers an alternative framework that focuses on the role of suppliers of goods and services (the “supply chain economy”) in national performance. We identify three conceptual attributes of suppliers that make them important for innovation: they produce specialized inputs; have more downstream linkages with other industries; and benefit especially from co-locating with their customers, creating externalities. Using the 2002 Benchmark Input-Output Accounts, we estimate a new industry categorization that separates supply chain (SC) industries (i.e., those that sell primarily to businesses or government) from business-to-consumer (B2C) industries (i.e., those that sell primarily to consumers). We find that the supply chain economy is a distinct and large segment of the economy that includes primarily service providers. The SC industries, especially traded services, have higher average wages than B2C industries. The supply chain economy also has higher innovative activity as captured by the concentration of the vast majority of STEM jobs (primarily in traded services) and patents (in manufacturing). Finally, we find that employment in the economy has evolved from manufacturing into two distinct types of services (1998–2015): SC Traded Services (with the highest STEM intensity and wages) versus B2C Main Street (with the lowest STEM intensity and wages).” [ABSTRACT FROM AUTHORS]

Territorial  patterns of R&D+I grants supporting Smart Specialisation  projects funded from the ESIF in Poland

By: K. Mieszkowski, J. Barbero. Regional Studies, DOI: 10.1080/00343404.2020.1782877, 2020.

Abstract: “This paper identifies territorial patterns of location of R&D+I grants supporting projects within the Polish Smart Specialisation framework. Using a data set of R&D+I grants from the European Structural and Investment Funds (ESIFs), the paper analyses the geographical concentration of projects, the link between local characteristics and the implementation of projects, and attempts at cooperation among organizations implementing projects. The results show an urban–rural divide and confirm the agglomeration of projects around the main Polish cities and industrial locations. By contrast, less-than-adequate conditions in rural areas and smaller counties may limit the potential for attraction and implementation of Smart Specialisation Strategies (S3).” [ABSTRACT FROM AUTHORS]

Geographic  Clustering and Resource Reallocation Across Firms in Chinese Industries

By: D. Guo, K. Jiang, C. Xu, X. Yang. CEPR Discussion Papers, No. 14506, 2020.

Abstract: “We examine the effects of China's industrial clustering on resource reallocation efficiency across firms. Based on our county-industry level DBI index panel, we find that industrial clustering significantly increases local industries' productivity by lifting the average firm productivity and reallocating resources from less to more productive firms. Moreover, we find major mechanisms through which resource reallocation is improved within clusters: (i) clusters facilitate higher entry rates and exit rates; and (ii) within clusters' environment the dispersion of individual firm's markup is significantly reduced, indicating intensified local competition within clusters. The identification issues are carefully addressed by instrumental variable (IV) regressions.” [ABSTRACT FROM AUTHORS]

Exploring  evidence of spatial economic agglomeration in Ekurhuleni Metropolitan  Municipality, Gauteng, South Africa

By: K. Cheruiyot. ERSA working paper, No. 808, 2020.

Abstract: “Since Marshall's (1890) work on industrial districts in 19th century England, agglomeration economies are credited for providing the needed catalytic role to economic growth and development. It does this by allowing critical masses, where knowledge spillovers among firms; labour market pooling; and sharing of industry-specific non-traded inputs, prosper. This research employs advanced spatial statistical approaches to analyse the spatial locations and economic sectors data of about 14,000 firms in Ekurhuleni Metropolitan Municipality, a major sub-regional economy in Gauteng economic metropolis and in South Africa. It attempts to answer the following questions; Is there evidence of spatial sectoral clusters, and if present, which kind of spatial economic clusters are they? What is the footprint of these spatial business clusters? The results of four selected industrial clusters show evidence of varying global and localised agglomeration. Localised agglomeration was established to be statistically significant as well. This research complements existing research in suggesting policies that ensure economic growth and development of the regional economy benefits from agglomeration economies.” [ABSTRACT FROM AUTHOR]

Smart  Specialisation strategies on the periphery: a data-triangulation approach to  governance issues and practices

By: S. Ghinoi, B. Steiner, T. Makkonen, R. Hassink. Regional Studies, DOI: 10.1080/00343404.2020.1791321, 2020.

Abstract: “In spite of our current understanding of Smart Specialisation Strategy (S3) design and implementation, an understanding of interrelated governance practices aimed at addressing S3 governance issues is lacking. Applying a data-triangulation approach to a large peripheral Finnish region (Lapland), the analysis suggests that S3 implementation faces two key challenges: first, the development of stakeholder networks to support diversified specialization; and second, the lack of entrepreneurial discovery activity and associated differentiation of specialization. Policy solutions aimed at successful S3 implementation could focus on more targeted stakeholder engagement to mobilize resources for further diversified specialization.” [ABSTRACT FROM AUTHORS]

Theory-based  evaluation criteria for regional smart specializations and their application in  the Podkarpackie voivodeship in Poland

By: E. Wojnicka-Sycz. Regional Studies, DOI: 10.1080/00343404.2020.1802419, 2020.

Abstract: “The article proposes a conceptual framework that can be used to identify and verify priority areas selected under the Regional Innovation Strategies in the European Union for the purposes of their evaluation. Five blocks of criteria for evaluation are proposed, referring to specialization and critical mass, diffusion of knowledge, related diversification, international competitiveness and entrepreneurial discovery. For each block, a set of indicators is defined. These were applied to the evaluation of the smart specialization priority areas in the Podkarpackie voivodeship of Poland. This article addresses a need for a more complete list of evaluation criteria for smart specialization areas.” [ABSTRACT FROM AUTHOR]

Innovation  efficiency in European high-tech industries: Evidence from a Bayesian  stochastic frontier approach

By: R. E.Haschka, H. Herwartz. Research Policy, Vol. 49, Iss. 8, 2020.

Abstract: “Innovation output is key to the long run business success in high-technology markets. Since research is costly, the absorption of external knowledge might be a powerful device for improving innovation processes. Considering four high-technology sectors in Europe, we examine to what extent local networking, competitive spillovers, or (unobserved) locational advantages influence innovation processes at the firm level. Since high-technology markets require strong innovative capacity, we specifically investigate the effectiveness of patent blocking as a promising strategy to exclude competition and to improve own competitiveness. We model innovation processes empirically by means of a recent Bayesian stochastic frontier approach that allows for spatial dependence and spillover effects. Our results indicate that growing pressures to innovate could create vicious levels of innovation competition. Moreover, the access to local networks boosts the pursuit of innovation and enhances innovativeness.” [ABSTRACT FROM AUTHORS]