Local Spillovers Research Articles

The Prominent Role of the Matrix in Ecology, Evolution, and Conservation

As the Anthropocene proceeds, the matrix in which remaining habitats are embedded is an increasingly dominant component of altered landscapes. The matrix appears to have diverse and far-reaching effects, yet our understanding of the causes and consequences of these effects remains limited. We first synthesize the broad range of perspectives on the matrix, provide a generalized framing that captures these perspectives, and propose hypotheses for how and why the matrix matters for ecological and evolutionary processes. We then summarize evidence for these hypotheses from experiments in which the matrix was manipulated. Nearly all experiments revealed matrix effects, including changes in local spillover, individual movement and dispersal, and use of resources in the matrix. Finally, we discuss how the matrix has been, and should be, incorporated into conservation and management and suggest future issues to advance research on and applications of the matrix in ecology, evolution, and conservation.

Measuring transboundary disease spread - ASF in wild boars straddling Piedmont and Liguria

The aim of this paper is to describe the impact, dynamics and risk factors of the incursion of the African Swine Fever (ASF) virus detected in early 2022 in the wild boar population straddling Piedmont and Liguria, 24 months after its emergence.A study area of 4,162.2 square kilometres, comprising 234 municipalities in Liguria and Piedmont (north-western Italy), along with an external buffer zone, was considered. The epidemiological units were wild boars tested for ASF using real-time PCR between late December 2021 and December 31, 2023. The data were obtained from passive and active surveillance. Conventional methodologies were applied in the analysis of time series of tests, cases, or prevalence rates of positive animals. Maps were used to visualise and compare the monitoring activities, the location of cases and municipal standardised prevalence ratios. Clustering of high and low trends was studied by semester using a space-time permutation model. Risk factors analysis was based on multivariate Poisson regression modelling.Over the 2-year study period, the epidemic's spread was closely monitored by testing 10,412 wild boars (25% of them from passive surveillance). Probability of disease detection was 10.9 times higher among found dead animals compared with animals tested in active surveillance. Difficulties in carcass searching led to heterogeneities in surveillance sensitivity achieved locally and inherent uncertainties. A total of 1,165 wild boars that tested positive for ASF have been detected in 125 municipalities across three provinces. The outbreak has expanded over time and exhibited an increasing trend, with an epidemic doubling time of 10.7 months. There was seasonality, with an increasing trend from summer to spring. Prevalence rates followed the same temporal pattern. Significant low and high clusters respectively indicated endemic episodes in the interior areas of virus circulation and an ongoing invasion of surrounding regions.The characteristics of this outbreak align with the cycle of wild boar habitat transmission observed in other outbreaks across Europe. The measures implemented were not sufficient to stop the epidemic: however, targeted interventions such as depopulation campaigns, reinforcement of physical barriers and increased biosecurity measures have prevented local spillover to domestic pigs and partially hindered the advance of the disease. In addition, the shown seasonality of the disease, likely can enhance control measures. The ongoing studies of the local wild boar populations and the evolution the epidemic along with the lessons learned so far will improve the efficiency and effectiveness of efforts to limit and ultimately eradicate the disease.

Fiscal adjustments and TFP dynamics: addressing reverse causality within a heterogeneous panel framework with global shocks

PurposeThe purpose of this study is to provide new insights into the relationship between fiscal policy and total factor productivity (TFP) while accounting for several economic and econometric issues of the phenomenon like non-stationarity, fiscal feedback effects, persistence in productivity, country heterogeneity and unobserved global shocks and local spillovers affecting heterogeneously the countries in the sample.Design/methodology/approachThe paper is empirical. It builds an Error Correction Model (ECM) specification within a dynamic heterogeneous framework with common correlated effects and models both reverse causality and feedback effects.FindingsThe results of this study highlight some new findings relative to the existing related literature. The outcomes suggest some relevant evidence at both the academic and policy levels: (1) the causal effects going from fiscal deficit/surplus to TFP are heterogeneous across countries; (2) the effects depend on the time horizon considered; (3) the long-run dynamics of TFP are positively impacted by improvements in fiscal budget, but only if the austerity measures do not exert slowdowns in aggregate growth.Originality/valueThe main originality of this study is methodological, with possible extensions to related phenomena. Relative to the existing literature, the gains of this study rely on the way econometric techniques, recently proposed in the literature, are adapted to the economic relationship of interest. The endogeneity due to the existence of reverse causality is modelled without implying relevant performance losses of the models. Moreover, this is the first article that questions whether the effects of fiscal budget on productivity depend on the impact of the former on aggregate output growth, thus emphasising the importance of the quality of fiscal adjustments.

Using payment for ecosystem services to meet national reforestation commitments: impacts of 20+ years of forestry incentives in Guatemala

International environmental initiatives, such as the Bonn Challenge and the UN Decade on Restoration, have prompted countries to put the management and restoration of forest landscapes at the center of their land use and climate policies. To support these goals, many governments are promoting forest landscape restoration and management through financial forestry incentives, a form of payment for ecosystem services. Since 1996, Guatemala has implemented a series of forestry incentives that promote active forest landscape restoration and management on private and communal lands. These programs have been widely hailed as a success with nearly 600 000 ha enrolled since 1998. However, there has been no systematic assessment of the effectiveness of these programs on preserving and restoring Guatemalan forests. This study evaluates the impacts of over 16 000 individual PES projects funded through two incentive programs using a synthetic control counterfactual. Overall, a program for smallholders resulted in lower rates of forest loss, while a program for industrial timber owners led to greater gains in forest cover. Across policies, we found dramatically higher forest cover increases from restoration projects (15% forest cover increase) compared to plantation and agroforestry projects (3%–6% increase in forest cover). Projects that protected natural forest also showed a 6% reduction in forest loss. We found forest cover increases to be under 10% of total enrolled area, although positive local spillovers suggest this is an underestimate. Restoration projects show the most promise at promoting forest landscape restoration, but these benefits need to be weighed against priorities like resilience and rural development, which may be better served by other projects.

A road map to capture the spatial dependence underlying regions’ economic resilience

ABSTRACT Regions are embedded in complex webs of interactions that influence, among other things, their economic resilience. However, a general lack of attention is given to the spatial dependence underlying regions’ economic resilience. This paper advocates investigating such spatial interactions and, in doing so, provides a road map to guide researchers through the specification search. The road map is theoretically underpinned by the argument that regions’ resilience is influenced by local spillovers. The several articles in the resilience literature that incorporate spatial dependence are evaluated, and their shortcomings discussed. The paper provides an empirical illustration of the road map.

Revisiting the role of secondary towns: How different types of urban growth relate to poverty in Indonesia

There is increasing interest in assessing whether big city growth has effects that differ from the effects of secondary town growth, especially in terms of impacts on poverty. It can be difficult to study these issues with typical sub-national economic data because urban growth often occurs outside the administrative boundaries of cities. An emerging literature therefore uses remote sensing to measure patterns of urban growth without being restricted by limitations of data for administrative areas. We add to this literature by combining poverty estimates from annual socio-economic surveys fielded from 2011 to 2019 with remote sensing data on night-time lights for 41 big cities and for secondary towns in 497 Indonesian districts. We measure growth on the extensive (lit area) and intensive (brightness within lit area) margins, and distinguish between growth of big cities and of secondary towns and our spatial econometric models allow global and local spillovers. The extensive margin growth of secondary towns is associated with lower rates of poverty but no similar association holds for big city growth. These patterns corroborate earlier findings from India. Potential productivity advantages of big cities and concerns about agricultural land loss to expanding towns may imply that urban growth patterns that favour big cities are warranted, while on the other hand these new results suggest, from a poverty reduction point of view, that policies to favour secondary towns may be warranted. Policymakers in countries like Indonesia therefore face difficult trade-offs when developing their urbanization strategies.

Militarized Conflict, Trade, and Economic Development in a Structural Equation Model With Spatial Considerations

While conflict pervades virtually every aspect of society, there have been relatively few crossovers between Regional Science and Peace Science. This paper pays tribute to Walter Isard, pioneer of peace science research, and Kieran Donaghy, who has contributed to research on arms race dynamics and macroeconomic stability. We review studies that examine the impact of (i) trade on conflict, (ii) the economy on militarized disputes, and (iii) conflict on economic development. The analysis develops a structural equation model (SEM) to test the hypotheses simultaneously using the Correlates of War project data. Consistent with the liberal proposition, we found that the pacifying effect of trade is robust across alternative SEM specifications. Controlling for standard explanatory variables, the SEM estimates reveal that the indirect impact of economic development on conflict mediated by trade is statistically significant at the 0.1-percent level. Trade is, therefore, a critical intervening variable that transforms conflict-inducing economic expansion into a pacifying influence on militarized disputes. The spatial version of the SEM confirms that democracies do not attack each other. While trade does not appear to have a local spillover effect on conflict, proximity to neighboring democracies does lead to fewer conflicts. The final hypothesis argues that conflict affects national economic performance, which Donaghy refuted in his 1995 Conflict Management and Peace Science paper. Consistent with Donaghy’s finding, the estimates reject the claim that conflict disrupts economic stability. The conclusion section discusses the implications for Kieran Donaghy’s larger body of work.

Pollution havens and agglomeration: The effect of globalization and technological spillover

ABSTRACT The statistical significance of the pollution haven hypothesis remains low. This suggests that some elements may have been overlooked in hypothesis testing. Here, pollution havens due to trade liberalization may depend on the degree of technological spillover. This spillover affects the industrial concentration of polluting firms. Using an agglomeration model with technological spillover, we analysed the effect of transport costs on pollution havens to clarify this relationship. Interactions between an international emission permit trading market and local spillover in innovation bring about the following multiple equilibria: the poverty trap equilibrium leads to similar results in the case of global spillover, where lower transport costs encourage economic growth in addition to relocation from the South to the North. By contrast, equilibrium with a higher concentration of firms leads to the pollution havens hypothesis because decreased transport costs prompt polluting firms to relocate to South with relatively small markets due to the home market effect, leading to lower economic growth. Our findings imply that the type of spillover in innovation (local or global) determines the pollution haven hypothesis. In a global economy, narrowing the North-South technology gap could contribute to eliminating pollution havens.

Cash Transfers, Food Prices, and Nutrition Impacts on Ineligible Children

AbstractCan cash aid harm nonrecipients by raising local prices? We show that a household-targeted cash transfer in the Philippines increases the prices of perishable foods in some markets and raises stunting among nonbeneficiary children by 11 percentage points (34%). Impacts increase in the size of the village income shock and remoteness---and are sustained two and a half years after program introduction. Price effects from an experimental sample are confirmed with national expenditure surveys collected during program scale-up. Household-targeted cash transfers can thus generate local spillovers that undermine program goals. Selected geographic targeting may avoid price spillovers at moderate additional cost.

Farmers’ social networks and regional spillover effects in agricultural climate change mitigation

Climate change poses a severe threat to global agricultural production and rural livelihoods, and since agriculture itself is a significant source of greenhouse gas (GHG) emissions, it can also play an important role in climate change mitigation. This article investigates how farmers’ social networks influence the adoption of on-farm mitigation strategies. More precisely, we use a network autocorrelation model to explore the relationship between a farmer’s own mitigation behavior and the mitigation behavior and knowledge of his fellow farmers. The analysis is based on a regional case study in Switzerland and uses data obtained from personal network interviews combined with survey and census data of 50 farmers. Half of them are members of a local collective action initiative for agricultural climate change mitigation, while the others do not participate in the initiative. We find that, on average, farmers with a larger network adopt more mitigation measures, and furthermore, mitigation adoption is linked with the level of knowledge within farmers’ networks. Indeed, the likelihood that non-members will adopt mitigation measures increases if they are closely associated with members of the collective action, suggesting a local spillover effect. It follows that strengthening knowledge exchange among farmers and supporting local farmers’ initiatives can potentially contribute to the diffusion of agricultural climate change mitigation practices.

Agglomeration, recombinant innovation and the role of market reforms in a transitioning China

ABSTRACT This paper estimates a knowledge production function to study the effects of local spillovers on the patenting activity and new innovation sales of Chinese firms during a period marked by rapid economic reform. We show that local spillovers expected to arise between co-located firms in related industries encourages firm innovation outcomes, especially among firms that diversify their core competencies into new related (versus unrelated) technological domains. Exploiting the gradual and spatially uneven economic transitioning process as a quasi-natural experiment, we find that the positive effects of relatedness on firm innovation are significantly larger in size following more intense market-oriented reforms. The results are potentially relevant for policy-makers in transitioning economies, highlighting for the first time the importance of firms' own diversification process and market-oriented reforms for encouraging innovation-enhancing technological related spillovers.

Effects of mass layoffs on local employment—evidence from geo-referenced data

Abstract Using an event study approach and a novel data set that links administrative information on German establishments with exact distance measures from geo-referenced address data, we analyze the net impact of mass layoffs on local employment. We find that local spillovers significantly attenuate the direct impact of mass layoffs on municipal-level employment. About a quarter of the 1-year direct employment loss due to a mass layoff event is absorbed within the same municipality. Local spillovers are especially pronounced very close to the mass layoff site; the majority of the absorption is concentrated within a 1000-m radius. There is little evidence of spillovers beyond the affected municipality.

Spatial Spillover Effects of Co-Agglomeration of Producer Services on the Upgrading of Global Value Chain: Evidence from China's Spatial Panel Data

With the rapid development of information technology and transportation, will industrial co-agglomeration present spatial spillover effect on the upgrading of global value chain? This paper studies the effect of co-agglomeration of producer services and manufacturing on the upgrading of global value chain, especially its spatial spillover effect. Results show that a significant spatial correlation exists in the upgrading of global value chain in Chinese cities, and the trends of geographical agglomeration and spatial correlation of the function links of global value chain are strengthened. Furthermore, the co-agglomeration of inter industries has a significant spatial spillover effect on the upgrading of global value chain, which shows that the spatial synergy effect of China's urban secondary and tertiary industries is gradually emerging. Moreover, compared with external radiation spillover effect, the local spillover effect is more obvious, which suggests the significance of constructing mechanism of cross regional industrial cooperation. To accelerate the industrial integration and spatial connection, it is necessary to build a new pattern of multipolar network space development, and strengthen the spatial externality of service provision as well as the upgrading of global value chain.

Behavioral change promotion, cash transfers and early childhood development: Experimental evidence from a government program in a low-income setting

Signs of development delays and malnutrition are widespread among young children in low-income settings. Social protection programs such as cash transfers are increasingly combined with behavioral change promotion or parenting interventions to improve early childhood development. This paper disentangles the effects of behavioral change promotion from cash transfers to poor households through an experiment embedded in a government program in Niger. The study is also designed to identify within-community spillovers from the behavioral change intervention. The findings show that behavioral change promotion affects a range of practices related to nutrition, health, stimulation, and child protection. Moderate gains in children's socio-emotional development are observed, but there is no improvement in anthropometrics or cognitive development. Cash transfers alone do not alter parenting practices or improve early childhood development. Cash transfers raise food security and consumption at the household level, including the purchase of non-food items privately consumed by adults. The behavioral intervention offsets these changes and instead improves children's food security, pointing to some intra-household reallocations toward children. Local spillovers on parenting practices are found, which further highlights that cash alone is not the main driver of changes in parenting behaviors.

Innovation Catalysts: How Multinationals Reshape the Global Geography of Innovation

abstract We study whether and when research and development (R&D) activities by foreign multinationals facilitate the formation and growth of new innovation clusters. Combining information on nearly four decades’ worth of patents with socioeconomic data for regions that cover virtually the entire globe, we use matched difference-in-differences estimation to show that R&D activities by foreign multinationals have a positive causal effect on local innovation rates. This effect is sizeable: over a five-year period, foreign research activities help a region climb fourteen centiles in the global innovation ranks. This effect materializes through a combination of knowledge spillovers to domestic firms and the attraction of new foreign firms to the region. However, not all multinationals generate equal benefits. In spite of their advanced technological capabilities, technology leaders generate fewer spillovers than technologically less advanced multinationals. A closer inspection reveals that technology leaders also engage in fewer technological alliances and exchange fewer workers with local firms abroad than less advanced firms. Moreover, technology leaders tend to set up their foreign R&D activities in regions with lower levels of economic development than less advanced firms, yet with comparable public-sector research capacity. These findings suggest that technologically leading multinationals face comparatively unfavorable trade-offs between the costs and benefits of local spillovers, underscoring the importance of taking the strategic choices that firms face into account when analyzing innovation clusters.

Impact of Industrial Policies on the Regional Reverse Technology Spillover from OFDI

By sorting out the important industries mentioned in China's “11th Five-Year Plan” and “12th Five-Year Plan” and utilizing inter-provincial OFDI panel data from 2006-2015, this paper examines whether industrial policies effectively promote reverse technology spillovers from OFDI channel through a linear regression using the fixed effects model. In addition, this paper also examines the heterogeneity of industrial policy implementation by policy sources and regions, proving the robustness of the results. The empirical results show that industrial preferential policies have significantly promoted local OFDI reverse technology spillover, and the effect differed significantly between regions. The rationalisation of industrial structure, the regional economic growth and regional openness all have a positive impact on OFDI reverse technology spillover. Finally, in order to contribute to China's high-quality economic development, this paper puts forward some suggestions on how to implement industrial policies more effectively.

University spillovers, absorptive capacities, and firm performance

This study investigates the impact of both university spillovers and firms’ absorptive capacities on firms’ financial performance, using a multilevel approach. Considering internal firm characteristics as well as external regional characteristics, our results clearly show that university spillovers do not have a per se stimulating effect. It is the interaction between firms’ absorptive capacities and local university spillovers, which proves to have a positive and significant effect on firms’ economic performance. We further find that there is an optimal level of absorptive capacities, implying that ‘a more the better’ logic does not apply. Our findings give impetus to a call for more comprehensive public policy strategies. Policy makers have to balance the support provided to knowledge producing regional actors such as universities as well as knowledge exploiting actors such as knowledge-based firms to leverage local resources and ultimately create economic value within regional innovation systems by enabling efficient technology transfer processes.

Investment Tax Credits and the Response of Firms

This paper studies the effects of investment tax credits on firms' input choices by exploitinga sudden shift in the tax credit rate by firm size for manufacturing firms in Germany in 1999. I find that more generous tax credits lead to a significant increase in both investment and employment, with implied elasticities with respect to capital costs of 2.8 and 1.1, respectively. Local spillovers between firms generate an additional positive effect. The employment effect is due to the increased hiring of new employees rather than a decrease in separations, with direct flows out of unemployment constituting about half of the inflow of workers. A heterogeneity analysis reveals that firms with larger capital cost shares are more responsive to tax credits and that spillovers tend to be stronger for firms operating in the same industry. While there is little evidence that the average firm adjusts its skill mix or occupational structure, firms in industries with higher investment shares into information and communications technology (ICT) are more likely to shift towards highly educated labor and high-skilled occupations.

Welfare Cuts, Local Spillovers and Financial Fragility

Welfare Cuts, Local Spillovers and Financial Fragility

Mysteries of the trade? Skill-specific local agglomeration economies

ABSTRACT Do workers benefit from proximity to other workers with similar skill sets? This question dates back at least to Alfred Marshall. We use occupation groups to proxy skill sets and show that the answer likely depends on geographical levels, as well on regional hierarchy. Using longitudinal Swedish data, we document robust evidence consistent with highly localized spillovers at the level of sub-city districts between individuals in similar occupations. We further demonstrate less distance-sensitive benefits of working in districts and regions, characterized by high overall density (of employees in other occupations). We find no evidence of benefits from overall density outside Sweden’s three main metropolitan areas.