Distribution Of Economic Activity Research Articles

The Shift-Share Method: An Instrument for Analyzing the Dynamics of Industry Structure of the Economy

The socio-economic events of the latest years and uncertainties in the vectors of development of the economic environment cause the need for robust statistical assessment. An important area of studies of the modern economy is determining the type of economic growth. The shift-share method is applied to determine the effect of the impact of national, industrial and regional factors on the dynamics of economic growth. The shares of effects (effects of the impact) caused by national economy trends, industry mix and region-specific factors are identified and analyzed.
 The position of economic activities in the industry mix of the Kyiv economy is analyzed and assessed by indicators of gross value added and number of employees with consideration to three components. The impact of each of them caused by the national factors, the established industry mix of the national economy and the internal competitiveness of a specific industry of the region are characterized. Factor decomposition of the change in the indicators caused by the national component, industry-specific and region-specific effects reveals that the overall growth in the gross value added by economic activity in Kyiv is to a large extent conditional on the effective industry policy and to the least extent on regional factors. However, the employment reduction in the Ukrainian capital was caused by the impact of national and industry factors, and was not compensated by the positive local effect.
 It is revealed that the stable flagship position is taken by financial and insurance activities, in spite of recent reforms in the bank sector with cleansing the bank system from ineffective and nontransparent entities. Kyiv remains to be the core center for concentration of financial services. The progressive growth in the construction market meets the needs of the megalopolis with its increasing population. The residents’ desire to expand the dwelling size and improve the living conditions helps improve business climate in the construction sector, increase its growth rates and share in the gross regional product (indirectly, through the gross value added). 
 The section “Information and telecommunications” stands steadily on the top positions. Its rapid development, as a signal of the digital economy, enables for momentary exchanges of information and services on the domestic and external market, thus creating favorable prospects. 
 The analysis of the composition of the problem group and the outsider group among the economic activities reveals the stable presence of manufacturing and social industries. Enterprises of the sections “Manufacturing”, “Supply of electricity, gas, steam and conditioned air”, “Supply of water, sanitation, treatment of wastes” have a stock of problems and system drawbacks; they suffer from lack of investment and innovation, they have no strong orientation on the challenges of modernity and market needs, which weakens the positions of the Ukrainian capitals’ economy as the industrial center.
 It is proposed to use the graphic method for illustrating the distribution of economic activities in Kyiv by quality characteristics of operation. The factors accelerating or hampering the development of economic activities in the region are determined. Recommendations on management decisions related with future operation of industries referred to as “leaders”, “regulars”, problematic industries and outsiders are given.

Market capacity of Ukrainian regions: dominants of forming and evaluation

The paper outlines the nature of the spatial approach to the evaluation of the market capacity of Ukrainian regions, which is based on the evaluation of accessibility and capacity of regional markets and their attractiveness. The paper substantiates the fact that the evaluation of regions’ market capacity requires a complex approach that takes into account the available economic capacity of a region from the viewpoint of evaluation of demand and supply on the regional goods market. The availability of the relationship between the volume of market capacity and the number of economic entities is empirically verified. The declining level of spatial inequality by the market capacity index is revealed. The fact that empirical models of the evaluation of the unequal distribution of economic activity represented in the research of foreign scientists confirm that the most densely populated regions and regions with high employment density have better consumer opportunities is emphasized. Based on regional data, the paper proves that density of population and employment density that characterize the consumer parameters of regional markets and testify to their size from the viewpoint of demand and production density that characterizes the degree of economic activity concentration in regions and shows the size of the regional market from the viewpoint of supply have an essential impact on forming of regions’ market capacity. Retail trade is emphasized as an important component of market capacity. Modern trends of trade development in Ukrainian regions that testify to substantial interregional differences regarding the scale (size) of markets and competitiveness level are characterized. The trends that characterize the dynamics of retail and wholesale trade, structural peculiarities, and specifics of spatial distribution at the territory of trade networks regions, available differentiation in the level of accessibility to trade services are detected. The conclusions on the opportunities to use the results of the evaluation of market capacity in the regions in regional planning are made.

Impacts of High-Speed Rail Construction on Urban Agglomerations: Evidence from Kyushu in Japan

High-speed rail integrates regions and cities, and thus can possibly have significant impacts on the distribution of economic activities. Using the opening and extensions of a high-speed rail, Shinkansen, in Kyushu, Japan, we examine its effects on the distribution of economic activities across urban agglomerations. We focus on changes in land prices and estimate hedonic price equations to conduct a difference-in-differences analysis. We find that the large metropolitan areas gained from the high-speed rail by experiencing increases in land prices, whereas small metropolitan areas located between them lost by experiencing decreased land prices.

The impact of the Tax Cut and Jobs Act on the spatial distribution of high productivity households and economic welfare

The Tax Cut and Jobs Act of 2017 capped state and local tax deductions. We show that this new cap primarily affects households in the top percentile of the income distribution residing in high-tax, high-cost cities. We develop a new dynamic spatial equilibrium model to evaluate the impact of this policy change on the distribution of economic activity and aggregate welfare. We show that the tax reform is likely to lead to a relocation of older high-productivity households to low-cost cities. If local agglomeration externalities depend on these high-productivity households, the tax reform may substantially lower aggregate income.

Reindustrialization of Old Industrial Regions in the South of Russia: Trends, Potential, Risks

In modern conditions, re-industrialization in Russia is aimed at leveling the trend of reducing the share of the manufacturing industry in the GRP of a number of old-industrial regions in recent years due to the implementation of the strategy of restoring the leading role of industry, transition to a new technological structure, the formation of productive forces. The article deals with the problem of modernizing the economy of the old industrial regions of the South of Russia based on the restoration of the industrial sector of the economy on a modern technological basis. It was noted that during the years of market reforms in the South Russian regions (Rostov, Volgograd, Astrakhan regions) almost all mining enterprises were closed, the activities of many enterprises of mechanical engineering, machine-tool construction, instrument engineering, enterprises for the production of bearings, fabrics, footwear were curtailed, which led to the destruction of existing industrial chains and provoked a new liquidation of production in other regions, the loss of its southern industry positions in the structure of the national economy. The main trends in the industrial development of the South Russian regions, which are reflected in a change in the distribution of economic activity and population in space, as well as in a change in the properties of the economic space of the region, are identified. The specific development factors are defined. They include multistructured regional economy and high dependence on economic instability factors in neighboring countries. It was concluded that it is necessary to move from the implementation of point projects to a comprehensive solution of the problems of structural imbalance in the regional economy related to increasing the capitalization level of the industrial modernization potential. The authors concluded that the strategy of re-industrialization should be based on the priority development of industrial production, allowing to enhance synergistic effects through a rational combination of the economic potentials of industrial production in central and peripheral territories of southern Russia.

Method for Monitoring of Managing the Modernization of Regional Economy

This paper proposes a new approach for monitoring of managing the modernisation of regional economic. The model built on proposed methodology will make it possible to smooth out the influence of non-urban areas on the unevenness of economic activity in spatial development. This paper has two goals. The first is to provide a new compilation of data on spatial distribution of economic activity at the sub-regional level. This data set allows us to monitoring of different indicators within macroregions such as Siberia. The second goal is to construct an instrument that helps to overcome the endogeneity problem using new economic geography hypothesis about the mechanisms of distribution of economic activity. Section 2 describes the data and method that we have proposed, discusses the construction of the Theil indexes using these data at the sub-federal and the sub-regional level. Section 3 presents the correlations between spatial distribution of economic activity and local market potential, discusses the robustness of the results; and the last section concludes.

Spatial concentration and regional distribution of economic activities in the Republic of Croatia

Spatial concentration and regional distribution of economic activities in the Republic of Croatia

Persistent shocks to urban density: Evidence from the Berlin air raids

Temporary shocks can have persistent effects on the distribution of economic activity across urban space, suggesting considerable “stickiness” in adjustment to spatial equilibrium. I examine the long-run effect of World War II air raids on Berlin’s contemporary population density profile, exploiting random variation in the extent of damage caused at the scale of street blocks, while controlling for a flexible, secular time trend in the citywide density gradient. 70 years after the end of the war, blocks affected by irreparable damage feature significantly lower population density, while repairable damage had no lasting effect. These findings are consistent with a vintage effect, where large fixed costs associated with the construction of new buildings retard adjustment of the housing supply to growing demand for low-density structures.

Spatial Distribution of Economic Activities, Growth Policies and Externalities in Developing Countries

In the developing countries, development policies have generated an uneven development. The economic activities are unevenly distributed and regional disparities are becoming increasingly noticeable. The role of growth policies is decisive in bridging spatial inequalities and enabling less-favored regions to catch up on their economic backwardness. The objective of this article is to clarify the stakes and levers of local growth policies in the current context of the developing countries and to understand the relationship between externalities and agglomeration of firms in order to influence the parameters of externalities and to allow a better distribution of economic activities in space. Keywords: Firm; Growth; Agglomeration Economies; Policy Making

Industry vs Services: Do Enforcement Institutions Matter for Specialization Patterns? Disaggregated Evidence from Spain

We exploit historical differences in foral law to consistently estimate the contribution of the quality of enforcement institutions to economic specialization across Spanish provinces in the period 1999-2014. The distribution of economic activity in Spain as of today shows a strong pattern of geographical specialization. Regions less specialized in manufacturing (industry) and oriented to services sectors (Andalusia, Extremadura) in the south are compared with industrialized/manufacturing regions in the north such as the Basque Country, Navarre or Aragon. We construct province-level congestion rates across three different jurisdictions (civil, labor and administrative) from real judicial data measuring the performance of the Spanish judicial system over time, and estimate the effect of judicial efficacy on the share of manufacturing and services in the total output. Using a variety of estimation techniques, the evidence unveils strong and persistent effects of judicial efficacy on province-level economic specialization with notable distributional differences. The provinces with a historical experience of foral law are significantly more likely to have more efficient enforcement institutions at the present day. In turn, greater judicial efficacy facilitates specialization in high-productivity manufacturing while greater judicial inefficacy encourages service-intensive specialization. The effect of judicial efficacy on economic specialization does not depend on confounders, holds across a number of specification checks and appears to be causal. Lastly, the three jurisdictions seem relevant to explain specialization, although the administrative jurisdiction appears to have a more pronounced impact than the labor or civil jurisdictions.

Industrial location and global restructuring in Australian cities

ABSTRACTGlobalisation has impacted both the balance of economic power between cities as well as the distribution of economic activities within them. Studies focusing on the impacts of globalisation often investigate one or the other, but rarely tie the two together. In Australian cities, central business districts (CBDs) and inner suburbs since the 1980s have become revalorised as strategic sites for multinational firm activities, complementing an already robust agglomeration of commodities-oriented firms, domestic manufacturing, and state-led industries. This paper compares the spatial organisation of Australian firm activity across Perth, Brisbane, Melbourne and Sydney. It first focuses on how the firms of each of these cities extend overseas through global branch office operations, and then shifts to the distribution of firms within each capital city region. Data are drawn from a complete set of 2196 listed Australian Securities Exchange (ASX) firms with operations in more than 100 countries. We find that while the mix of industries differs significantly between cities, the overall industrial patterns observed are relatively consistent from one city to the next. Australian cities are economically fairly centralised and services-oriented industries in particular are most prominent within CBDs. Sydney’s firms are found to be the most globalised, although all cities have significant numbers of global firms. However, we find that locational requirements are significantly varied from one industry to the next and between firm headquarters and branches. This has implications for planning cities to meet firm requirements in an economy that is digital and globally connected, and for national-level policy that distributes core economic competencies amongst Australian cities.

QUANTO VALE A ÁGUA QUE USAMOS? PROJEÇÕES DOS IMPACTOS ECONÔMICOS DE RESTRIÇÕES AO USO E ELEVAÇÃO DE PREÇOS DA ÁGUA NA REGIÃO METROPOLITANA DE BELO HORIZONTE

O problema da escassez de água no Brasil tem se intensificado nos últimos anos. Não diferente está a situação da região metropolitana de Belo Horizonte (RMBH) que presenciou a mais severa escassez hídrica de sua história em 2015. Este estudo estima o impacto econômico de restrições na oferta de água utilizando um modelo de equilíbrio geral computável inter-regional para os municípios da RMBH.Busca-se compreender a importância da água como insumo produtivo e no consumo das famílias, e como a limitação de seu uso afeta as decisões econômicas dos setores e das famílias. Os resultados indicam que para um corte de 1% no consumo total de água na RMBH seria necessária uma elevação média de tarifas de 7,3%. O efeito total sobre o uso de água mostra-se bastante inelástico, uma vez que a redução de consumo é 1/7 da elevação dos preços.

Exploring the Influence of Colonial Railways on Javaas Economic Geography

This study explores the impact on Java’s economic geography of railways built by the Dutch colonial government. Pre-1940 Dutch railway construction affords an historical experiment on the spatial distribution of economic activities across urban Java both before and after 1940. Using city data for over 100 years, the study finds that the railways had a short-term impact on the distribution of population, but that in the long run colonial railway investment lost its advantages. Until 1930, the railways substituted for the Great Mail Road. Between 1930 and 2010, however, the Great Mail Road regained an earlier importance in shaping urban Javanese patterns. The study also draws important lessons for recent Indonesian infrastructure development in Indonesia, notably in regard to the railway system itself.

Trends in the concentration of economic activity and disparities in Russia’s spatial development

The spatial distribution of economic activity in Russia is studied by quantitative methods and qualitative analysis. The characteristics of evolution of economic activity distribution have been obtained with an approach based on analysis of Markov chains and mobility indices. The study has shown that the processes of the spatial concentration of production continue to unfold in the modern Russian economy. In addition to preserving and strengthening positions of existing centers, it is possible to observe the formation of new ones and simultaneously a certain weakening of former resource centers. Analysis of the evolution of this distribution has demonstrated the presence of an active poverty trap and a wealth trap, as well as a tendency toward the formation of an intermediate group of federal subjects with regard to their economic activity level. With preserving trends of the study period, the final distribution of regions in terms of economic activity level shows the formation of a rather wide pole of relative poverty and a wealth pole that concentrates a significant share of produced value added. The emerging group of regions with the average level of development is relatively small. In such circumstances, regional policy aimed at stimulating developed regions only strengthens this polarization. We consider that a more sensible policy would be to reduce disproportions in territorial development in order to avoid excessive deepening of interregional disparities and inequality.

Quantitative Assessments of the Spatial Distribution of Business Clusters in Ireland

This research aims to provide a robust evidence base contributing to improving the quality of policy formation from local to national level in Ireland. The distributions of businesses within key economic sectors in Ireland are explored aiming to find clustering effects occurring across the country. The density mapping and hot spot analysis approaches were applied to find statistically significant clusters of companies for specific business sectors. The research was implemented in collaboration with Dublin Regional Authority and Dublin City Council to inform key policy makers in Ireland. It assists in the assessments of the nationwide spatial distribution of economic activities adding to the overall body of evidence on business intensive regions. The results show the continued statistically proven significance of the main urban growth centres or gateways as key centres for the main business sectors in Ireland, while public policy has prioritised rebalancing economic development to other regions.

Spatially blind policies? Analysing agglomeration economies and European Investment Bank funding in European neighbouring countries

Policies promoting development need to take into account the fact that globalisation has made space more rather than less important. To take full advantage of agglomeration economies that come with urban concentration, infrastructure plays a key role. For a long time development policies have focused on the provision of infrastructure. In this work, we analyse: first how urban concentration and infrastructure interact with each other for encouraging economic growth; and second whether policies promoting infrastructure have considered the spatial distribution of economic activity. As a case study, we focus on the European Investment Bank (EIB) projects financing infrastructures, for both the European Union and the EU neighbourhood. We perform panel data analysis considering different measures of infrastructure, and we also analyse the EIB projects. Our results suggest a relevant role of connectivity infrastructure (i.e. transport and communications) for agglomeration benefits to take place in European Neighbouring Policy countries. Our results also suggest that EIB funding in ENP countries is mostly country specific and displays no spatial dimension.

The Impact of the Institution of Religion on Organizational Decision Making: The Case of Leveraged Buyouts

This paper sheds light on the role of religion as a separated institutional logic on firm behavior and performance, particularly in the context of corporate development strategies and decision making. We argue that religiosity in a firm’s environment influences decision making of organizations when initiating and evaluating corporate development strategies and hence leading to uneven distribution of economic activity. We focus on leveraged buyouts (LBOs) an important strategic initiative associated with high levels of perceived risk from increased financial leverage, a drastic change in governance structure, and potential conflicts between stakeholders. We contend that local religiosity reduces the likelihood of LBO transactions that nonetheless creates a favorable selection process resulting in a lower rate of LBO bankruptcies. We find results supporting our predictions in a unique sample of 4,633 US buyouts in 1980-2003.

Industrial Structure and Firm's Agglomeration: A Study on Tunisian Data

Two distinct positions have emerged in recent economic literature to characterize the dynamics of agglomeration of firms. The first emphasizes the importance of specialization, while the other argues the span of diversity. This study analyses the relevance of these two designs in the context of a developing country. I also analyse the effect of the intra and inter-sectoral externalities on the agglomeration of economic activities and the spatial distribution of economic activities in Tunisian context. The article contends that agglomeration of economic activities in the Tunisian context depends on both inter and intra-sectoral externalities and possibly on technological intensity sectors.

Agglomeration, Tax Competition and Infinite Horizon

This paper examines tax competition in an agglomeration economy played by three forward-looking agents: internationally mobile firms and two national governments. Firms decide their current location taking the future payoffs into account while two governments choose an infinite time series of tax schedule to maximize their discounted sum of payoffs. In steady state, the government with a longer time horizon than its counterpart sets a lower tax rate and obtains a larger share of firms. Economic integration in terms of trade openness makes the tax rates of the countries converge but expands the unequal spatial distribution of economic activities.

Spatial distribution of economic activities and transboundary pollutions

Different empirical studies confirm that individuals consider environmental quality in their location choices. Nonetheless, little attention has been devoted to the role of transboundary pollution in the agglomeration or spreading of economic activities. This contribution introduces transboundary pollution in the field of new economic geography providing an extension of Ottaviano's core–periphery model (Ottaviano, 2001). In terms of long run equilibria, the introduction of pollution into the footloose entrepreneur model has two major consequences. First, it allows several original equilibrium configurations, which do not arise by considering only transport costs. Secondly, for a given level of transport cost, different equilibrium configurations may occur, depending on the environmental parameters.