Regional Productivity Growth Research Articles

Identifying the Effects of Place-Based Policies - Causal Evidence from Germany

The German government provides discretionary investment grants to structurally weak regions to reduce regional disparities. We use a regression discontinuity design that exploits an exogenous discrete jump in the probability of receiving investment grants, to identify the causal effects of the investment grant on regional outcomes. We find positive effects for regional gross value-added and productivity growth, but no effects for employment and gross wage growth.

Modeling the development and utilization of bioenergy and exploring the environmental economic benefits

This paper outlines a complete bioenergy flow incorporating bioresource procurement, feedstock supply, conversion technologies and energy consumption to industrialize the development and utilization of bioenergy. An input–output optimization simulation model is developed to introduce bioenergy industries into the regional socioeconomy and energy production and consumption system and dynamically explore the economic, energy and environmental benefits. 16-term simulation from 2010 to 2025 is performed in scenarios preset based on bioenergy industries, carbon tax-subsidization policy and distinct levels of greenhouse gas emission constraints. An empirical study is conducted to validate and apply the model. In the optimal scenario, both industrial development and energy supply and demand are optimized contributing to a 8.41% average gross regional product growth rate and a 39.9% reduction in accumulative greenhouse gas emission compared with the base scenario. By 2025 the consumption ratio of bioenergy in total primary energy could be increased from 0.5% to 8.2%. Energy self-sufficiency rate could be increased from 57.7% to 77.9%. A dynamic carbon tax rate and the extent to which bioenergy industrial development could be promoted are also elaborated. Regional economic development and greenhouse gas mitigation can be potentially promoted simultaneously by bioenergy utilization and a proper greenhouse gas emission constraint. The methodology presented is capable of introducing new industries or policies related to energy planning and detecting the best tradeoffs of economy–energy–environment.

Analysis of Russia’s Regional Socio-Economic Situation Indicators

The article analyzes the socio-economic indicators that influence the future gross regional product growth. The mutual influence of the gross regional product (GRP) and socio-economic development indicators reflects the regional economic development perspective. The goal of the article is to show the theoretical analysis possibilities for practical use in regional planning and forecasting. The analysis of certain exogenous variables that affect the gross regional product is made. It is found that the preliminary indicator analysis may determine the most significant development factors for the region. The econometric models that quantify the contribution of the significant factors in the formation of the two most important regional socio-economic situation indicators - gross regional product and gross regional product per capita - are constructed. This analysis can be useful to flesh out the government support programs for the regions and determine the possible dynamics of GRP. DOI: 10.5901/mjss.2015.v6n3s7p47

Financially Sustainable University and Building Regional Knowledge Economy Evidence from the U.S.

This research measures the empirical perspective that examines the growing prominence of universities in knowledge production and innovation for national and regional socioeconomic impact of university’s ‘third mission’ thereby leading to revenue stream diversification and long-term financial sustainability. US colleges and universities in the last 3 decades have consistently achieved unquestionable scientific and prosperous global leadership unrivaled by any other industry in the United States. This is as a result of embarking on the “Third mission” for universities, and hence, repositioning national and regional economies to become engines for innovation, growth and knowledge production. A recent study by the Brookings institute (2012) showed that most U.S. patents of which have been consistently ranked 1st in the world for past decade, 63 percent — are developed by people living in 20 metropolitan areas, that account for only 34 percent of U.S. population. This reflects the advantages of large metropolitan economies and how it influences knowledge production. (Denneen & Dretler 2013, Roessner, et.al 2012, WIPO 2013, Brookings 2013) This research attempts to measure the role of universities and their ability to create new and build on existing stock of knowledge through independent and collaborative research of which its spillover creates revenue for the university and serves as a nurturing ecosystem for businesses and individuals in that cluster. Hence fostering regional knowledge production and economic growth.

Productivity growth and convergence: a stochastic frontier analysis

Purpose– The purpose of this paper is to assess the effect of human capital development on regional productivity growth and convergence in the Spanish provinces over the period 1991-2006.Design/methodology/approach– The stochastic frontier analysis (SFA) methodology is used to estimate production inefficiencies. This approach enables the assessment of the degree to which a given region’s observed output deviates from the maximal possible. Therefore, the resulting region specific productive efficiencies are modelled as outcomes of the level of human capital. Aβ-convergence equation for the regional efficiency levels is also estimated to detect any signs of regional catching-up.Findings– The results show that increasing levels of human capital development are associated with lower regional inefficiency. All levels of education contributed to reduce the inefficiency levels, however, secondary schooling played a stronger role than primary and even higher education. There is also evidence of regional convergence towards the best practice frontier through a process that is beneficially aided by human capital development.Originality/value– The paper combines the use of the SFA to study the effect of human capital on regional productivity with the estimation of aβ-convergence equation for the obtained regional efficiency levels.

Environmentally sensitive productivity growth and its decompositions in China: a metafrontier Malmquist–Luenberger productivity index approach

The metafrontier Malmquist–Luenberger (MML) index was used to measure the environmentally sensitive productivity and analyze its decompositions on China’s regional productivity growth. Using the MML index, the environmental undesirable outputs and regional heterogeneities were analyzed simultaneously. The empirical results showed that although China had accomplished rapid growth rate of GDP over the last decade, environmentally sensitive productivity has been relatively constant with a low growth rate. The productivity growth is driven mainly by technology innovation. Regarding the regional differences, the eastern area showed the highest productivity growth, whereas the central and western areas showed productivity deterioration. Some implications and suggestions on the regional differences are proposed based on the empirical results.

Regional convergence, road infrastructure, and industrial diversity in Mexico

This paper presents a convergence analysis of productivity growth in the manufacturing sector in Mexico using regional data from the National Economic Census 1999 and 2004. The absolute convergence analysis indicates that regional productivity growth follows a slow convergence trajectory. However, a conditional convergence analysis indicates that current productivity gaps can be directly attributed to divergences in the industrial profile of the regional economy as well as to differences in infrastructure endowments. The results of the paper suggest that the productivity gaps which originated from the liberalisation reforms of the 1980s and 1990s will be exhausted in 25 years approximately. The innovation of this paper is the extension of a convergence analysis to the industrial sector. The use of regional data improves the details of the analysis and allows the identification of growth patterns that had not been previously identified. Finally, it applies innovative metrics to model the industrial profile of a region and the value of transport infrastructure.

A Model for the Roles of FDI in Shaping Productivity Growth: With Empirical Evidence from China

This paper presents an analytic framework with empirical evidence aiming to improve our understanding of the roles of foreign direct investment (FDI) in shaping productivity growth. Specifically, the study empirically examines the effects of FDI on China’s regional productivity growth. Our analyses based on two versions of our model, one excluding and one including human capital, show that FDI has both a general growth effect and a convergence effect on productivity in the Chinese provinces over the period 1996–2012. Our findings imply, at least in the case of the Chinese provinces, that apart from its direct, static level effect on output as an accumulable factor of production, FDI also exerts indirect, dynamic impacts on output through its growth and convergence effects on productivity.

Regional economic growth in Hungary 1998–2005: What does really matter in clusters?

Although industry clusters are major targets of regional economic development in less developed regions as well, we still need a deeper understanding of how the spatial clustering of firms generates dynamics in lagging regions. These latter environments may differ from the typical cluster policy examples that are usually specialised global centres of dynamically growing industries. Using census-type data of Hungarian firms, we test the effect of major cluster indicators — regional specialisation and spatial concentration of industries — and the impact of FDI on regional productivity and employment growth in Hungary. Our results suggest that regional specialisation does not affect regional growth, while the spatial concentration of industries is found to influence productivity and employment growth with an overwhelmingly negative effect. Furthermore, regional employment growth is associated negatively with the initial level of regional specialisation. Results suggest that Hungary has evolved into a dual economy in which previously specialised regions and geographically concentrated industries have lost their pace, while the main factor that favoured regional economic growth was the presence of large foreign companies. Therefore, economic policies fostering regional specialisation and the spatial concentration of industries — such as cluster policy — may have minor effects unless the interaction of foreign-owned and domestic companies is encouraged.

Environmental pollution emissions, regional productivity growth and ecological economic development in China

Environmental pollution emissions have become an extremely serious problem in China that makes its rapid economic growth unsustainable. This paper estimates the energy and emission adjusted total factor productivity (TFP) and reveals the ecological economic transition by province in the light of their contributions to output. The results indicate that China's ecological development fluctuated before 1992, then turned to improve, and peaked between 1999 and 2002. Due to the reappearance of heavy industrialization, China's ecological development process has reversed course since the beginning of this century.

The Significance of Entry and Exit for Regional Productivity Growth

Brixy U. The significance of entry and exit for regional productivity growth, Regional Studies. This study addresses the debate about whether start-ups increase regional productivity growth through such effects as the fostering of competition. A new longitudinal dataset at the establishment level for eastern and western Germany is used to analyse the impact of the number of start-ups and their survival on the growth of total factor productivity and employment. It is demonstrated that start-ups do affect regional productivity growth. But the impact is not proved continually: it varies between the manufacturing and the service sector and between the two parts of Germany.

The Role of Structural Change in European Regional Productivity Growth

O’Leary E. and Webber D. J. The role of structural change in European regional productivity growth, Regional Studies. Recent literature suggests that inter-sectoral structural change has a negligible impact on aggregate productivity growth. Through the application of dynamic shift–share methods, this paper presents a re-examination of this perspective using data for 181 European regions from 1980 to 2007. Results suggest that the effect of the inter-sectoral component is far from negligible and is substantially stronger for those regions towards the higher deciles of the distribution. Moreover, its effects appear to be particularly growth enhancing when the region is either ‘high and improving’ or ‘low and deteriorating’. These results rehabilitate the importance of structural change for growth and convergence.

Labour Market Externalities and Regional Growth in Sweden: The Importance of Labour Mobility between Skill-Related Industries

Boschma R., Eriksson R. H. and Lindgren U. Labour market externalities and regional growth in Sweden: the importance of labour mobility between skill-related industries, Regional Studies. This study investigates the relationship between labour market externalities and regional growth based on real labour flows. In particular, it tests for the importance of labour mobility across so-called skill-related industries between 435 four-digit industries within 72 Swedish functional regions (1998–2002). Both the fixed-effect models and generalized method of moments (GMM) estimates demonstrate that a strong intensity of intra-regional labour flows between skill-related industries impacts positively on regional productivity growth, but less so on employment growth. Labour mobility between unrelated industries tends to dampen regional unemployment growth while a high degree of intra-industry labour flows is only found to be associated with rising unemployment.

Spatial Distribution of Foreign Direct Investment and Productivity Growth in Less Developed Regions of China

This study examines how the spatial distribution of foreign direct investment (FDI) affects productivity growth in less developed regions of China. A systematic theoretical framework is set up concerning the potential effects of FDI capital via different channels. Following the theoretical framework, this study presents empirical evidence showing that FDI spillovers from the developed regions play a crucial role in enhancing productivity growth in the less developed regions. Empirical results also show that local FDI spillovers in less developed regions promote local productivity growth. In addition, FDI spillovers from less developed regions are not shown to have a significant effect on productivity growth in other less developed regions.

The two faces of R&D and human capital: Evidence from Western European regions

AbstractThis paper investigates two channels through which R&D and human capital may affect regional total factor productivity growth in the manufacturing sector. Our model allows for both a direct effect on productivity growth, reflecting own innovation, and an indirect effect, reflecting imitation of frontier technology. The results provide evidence of a positive and significant direct effect of human capital, and a positive and significant indirect effect of R&D. Our estimates also suggest that R&D aids the imitation of technology from geographically close regions, while human capital raises productivity growth in regions that are closer to the frontier than their neighbours.

Regional disparities and productivity in China: Evidence from manufacturing micro data

AbstractIn this paper we first estimate firm‐specific total factor productivities within 2‐digit manufacturing industries using a semi‐parametric algorithm and micro data for the period 2000–2007. Next, to characterize regional disparities in China we compute aggregate productivity by the categories of three regional typologies, based on population density, coastal‐inland, and rural‐urban criteria. We analyse the productivity differentials across the categories of the typologies by decomposing regional productivity level and growth into productivity effect and industry composition effect. We find clear evidence of regional convergence. Besides density of economic activity, recent policy and structural factors seem to affect regional productivity level and growth differentials.

Regional Economic Growth in Hungary 1998-2005: What Does Really Matter in Clusters?

Although industry clusters are major targets of regional economic development in less developed regions as well, we still need a deeper understanding on how spatial clustering of firms generates dynamics in lagging regions. These latter environments may differ too much from those typical cluster policy examples that are usually very specialized global centres of dynamically growing industries. Using census-type data of Hungarian firms, we test the effect of major cluster indicators – regional specialization and spatial concentration of industries – and the effect of FDI on regional productivity and employment growth in Hungary. Our results suggest that regional specialization does not affect regional growth but spatial concentration of industries is found to influence productivity and employment growth with an overwhelmingly negative effect. Furthermore, regional employment growth is associated negatively with the initial level of regional specialization. We argue that Hungary has evolved into a dual economy; in which previously specialized regions and geographically concentrated industries have lost their pace. The main factor that favoured regional economic growth was the presence of large foreign companies. Therefore, economic policies fostering regional specialization and spatial concentration of industries – such as cluster policy – may have minor effects only if the interaction of foreign-owned and domestic companies is not fostered.

R&D offshoring and the productivity growth of European regions

The recent increase in R&D offshoring has raised fears that knowledge and competitiveness in advanced countries may be at risk of ‘hollowing out’. At the same time, economic research has stressed that this process is also likely to allow some reverse technology transfer and foster growth at home. This paper addresses this issue by investigating the extent to which R&D offshoring is associated with productivity dynamics of European regions.We find that offshoring regions have higher productivity growth, but this positive effect fades with the number of investment projects carried out abroad. A large and positive correlation emerges between the extent of R&D offshoring and the home region productivity growth, supporting the idea that carrying out R&D abroad strengthens European competitiveness.

Total Factor Productivity Growth in Local Enterprise Partnership Regions in Britain, 1997–2008

Harris R. and Moffat J. Total factor productivity growth in Local Enterprise Partnership regions in Britain, 1997–2008, Regional Studies. This paper decomposes aggregate total factor productivity (TFP) growth in Britain for 1997–2008 to show the contribution of different Local Enterprise Partnerships (LEPs) as well as manufacturing and services and UK- and foreign-owned plants within LEPs. These contributions are further decomposed to show the role of productivity growth in continuing plants vis-à-vis reallocations in output shares. The results show that the largest LEPs, in population terms, with higher levels of job density, a greater reliance on manufacturing, more skilled and better qualified workers, and a lower turnover of businesses achieved the highest TFP growth. This is mostly the result of reallocations of output shares towards high productivity plants.

The Origins of Inequality: Insiders, Outsiders, Elites, and Commoners

Hereditary economic inequality is unknown among mobile foragers, but hereditary class distinctions between elites and commoners exist in some sedentary foraging societies. With agriculture, such stratification tends to become more pronounced. We develop a model to explain the associations among productivity, population, property rights, and inequality. Using Malthusian dynamics, we show that regional productivity growth leads to enclosure of the best sites first, creating inequality between insiders and outsiders. Hereditary elite and commoner classes subsequently arise at the best sites. Food consumption becomes more unequal and commoners become poorer. These predictions are consistent with a wide range of archaeological evidence.