New Economic Geography Perspective Research Articles

Influence of political risk environment in neighboring countries on FDI in host countries: the moderating role of green governance in neighboring countries.

This study examines whether political risks in neighboring countries affect foreign direct investment (FDI) by Chinese firms in host countries. Grounded in the perspective of new economic geography, it employs panel data comprising China's FDI across 37 countries along the Belt and Road, spanning from 2003 to 2021. It expands conventional research, which typically focuses on the two-country model, to include a broader examination involving third countries. Utilizing the spatial Durbin model, this study reveals that China's FDI in countries along the Belt and Road is affected by the host country's political risk environment and the spatial spillover effect of political risks from neighboring countries. Green governance practices in neighboring countries regulate this relationship. The results demonstrate that China's FDI in countries along the Belt and Road reveals a risk-averse tendency, with a preference for investing in countries characterized by relatively low overall political risk. After taking spatial factors into consideration, the spatial spillover effect of political risks is significant, as political risk levels in neighboring countries stimulate FDI from Chinese enterprises in the host country. As an effective way to mitigate ecological and environmental risks, green governance also shows significant spillover effects. By strengthening green governance, that can weaken the stimulating effect of political risks from neighboring countries on FDI inflow to host countries. Consequently, investors perceive fewer political risks in neighboring countries and are inclined to invest in those with higher levels of green governance. These research findings provide insights into Chinese investors to assess and mitigate political risks in countries along the "Belt and Road."

The Digital Economy and the Regional Economic Gap: An Inverted U-shaped Relationship

As a new economic form, the digital economy is profoundly changing China, and clarifying the relationship between the digital economy and the regional economic gap is of great practical significance for coordinating regional economic development. Based on the perspective of new economic geography, the digital economy is incorporated into the core marginal model, and the impact of digital economy development on the change of regional economic gap under long-term equilibrium conditions is deduced Provincial panel data are used to support this. The study found that with the continuous development of the digital economy, the regional economic gap showed an inverted U-shaped trend of first expanding and then narrowing; Considering regional heterogeneity, the inverted U-shaped impact of the digital economy in the eastern, central and western regions on the regional economic gap is still obvious. Finally, this paper puts forward policy suggestions from the perspective of "the digital economy provides a solution to alleviate the imbalance and incongruity of regional development".

The impact of environmental regulations on the location choice of newly built polluting firms: based on the perspective of new economic geography

Based on the unique micro-data of newly built polluting firms for the period of 2009–2018, this paper adopts the conditional logit model to empirically evaluate the impact of environmental regulations on the location choice of polluting firms. Moreover, we extend the theoretical model by considering that the environment regulations not only influence the pollution cost but also the level of technological innovation and labor cost. The empirical results show that polluting firms tend to flow into areas with stringent environmental regulations, which supports the Porter hypothesis, but the effect of environmental regulations have a divergent impact on heavily polluting firms. Heterogeneous analysis indicates that environmental regulations have shown a positive impact on the location choice of private and foreign-funded firms but no significant impact on that of state-owned firms; the impact of environmental regulation is consistent with pollution haven hypothesis for firms in the central region but is in line with Porter hypothesis for firms in other regions. Meanwhile, the probability of air polluting firms entering areas with stricter environmental regulations is higher than that of water-polluting ones. Finally, this paper further empirically tests the conduction mechanism, that is, environmental regulations can affect the location choice of polluting firms by affecting the regional technological innovation capabilities and labor cost.

The roles logistics agglomeration and technological progress play in air pollution -- New evidence in sub-regions of Chongqing, China

This study provides insights into the spatial relationships among logistics agglomeration, technological progress, and air pollution in the sub-regions. From the perspective of new economic geography, the positive environmental externality of logistics agglomeration should outstrip its negative externality as the result of technological spillover. However, significant impacts of technological progress on the environment have not been identified in the logistics agglomeration sub-regions of many developing countries currently grappling with various environmental problems. This paper applies spatial econometrics and extended STIRPAT model to explore the roles the logistics agglomeration (LA) and technological progress (T) play in air pollution (I) using panel data from sub-regions of Chongqing in China between 2009 and 2019. The main conclusions are as follows. (1) In a global context, logistics agglomeration is a meaningful way to reduce air pollution under the interaction effect of technological progress. (2) In a sub-regional context: first, the suppressive effect of logistics agglomeration on air pollution gradually rebounds with the increase in agglomeration degree; secondly, the rebound effect of technological innovation is also evident in air pollution, and the rebound area gradually spreads from the metropolitan area to the peripheral sub-regions; finally, the interaction effect of logistics agglomeration and technological progress has a noteworthy suppression effect on air pollution, especially after the occurrence of the rebound effect of the logistics agglomeration and technological progress. In this regard, local governments should suppress the negative externalities of agglomeration with the interaction effects of technological progress while strengthening logistics agglomeration.

Modeling determinants of tourism demand in Colombia

Purpose – This paper estimates the determinants of international tourist arrivals to Colombia from 1995 to 2014. Design – Tourist demand is related to interlinking relationships between origins and destinations. The international movement of travelers has grown exponentially in recent decades, and these dynamics have affected Colombia as well. Methodology/Approach – We propose a generalized linear mixed model, with a consideration of factors from the theory of consumer choice and those approached from the perspective of new economic geography. Findings – Apart from purchasing power and institutional factors as facilitators of travel, we found that general aspects of the country (such as language and geographical proximity) directly affect the flow of visitors, whereas exchange differences and physical distance reduce tourist attraction. Originality of the research – Estimation of tourist flows will serve as a diagnostic and planning tool for developing proposals of tourism attractiveness related to different environment.

Impact of high-speed rail on regional economic disparity in China

This paper investigates a fundamental question related to the massive railway infrastructure development in China. What is the impact of high-speed rail (HSR) on regional economic disparity? The question is investigated from three perspectives. First, the influence of HSR on regional economic disparity is discussed theoretically from the perspective of New Economic Geography. Second, the variation in economic disparity at both the national and regional levels is investigated using three indexes: the weighted coefficient of variation, the Theil index and the Gini index. Third, the linkages between regional economic growth and HSR is measured empirically from a quantitative and qualitative perspective using an endogenous growth modelling framework with a panel data covering the period 2000–2014. The rail network density is adopted as a proxy to reflect the quantity change in rail investment. Three accessibility indicators (weighted average travel time, potential accessibility and daily accessibility) are introduced to capture the improvement of HSR transport quality. Our findings confirm that regional economic disparity has been decreased since the development of HSR. HSR has promoted regional economic convergence in China. Specifically, the positive effect of rail network density on regional economic growth is found to be significant in the East and North, whereas the positive effect of accessibility change is found to be more significant in the Middle Reaches of Yangtze River, the Southwest and the South China.

A Simulation Research of the Effect of the Reform of the Household Registration System on the Flow of Rural Labor Force: A Perspective of New Economic Geography

Based on the intermediate inputs model in new economic geography, this paper incorporates factors such as the household registration system, land property right system and the modes of the flow of labor force, and constructs the evolution model of the household registration system in China. Then it simulates the influences of the reform of the household registration system and land property right system on the flow of rural labor force by numerical calculation. It arrives at the conclusions as follows: firstly, different routes to the reform of the household registration system greatly affect the flow of rural labor force and economic development; if the restriction of the household registration system on the flow of labor force reduces, the economic system will release huge reform dividends, and if current household registration system remains, we will suffer great losses; secondly, different routes to the reform of the land property right system affect the results of the reform of the household registration system, and if the flow of rural labor force is accompanied by land, the dividends from the reform of the household registration system will enlarge. It shows that the reform of the household registration system and land property right system should be carried out together; not only the restriction of the household registration system on the flow of labor force should reduce, but also agricultural land contract rights and the right to the use of residence base should remain. It enriches & perfects current labor migration theory, and also provides a new idea for related decision-making of local governments.

The viscous analysis on inter-district transfer of textile industry from the perspective of New Economic Geography in China

The viscous analysis on inter-district transfer of textile industry from the perspective of New Economic Geography in China