Spatial Concentration Of Economic Activity Research Articles

Agglomeration and the Italian North–South divide

Abstract This article offers new evidence on agglomeration economies by examining the link between total factor productivity (TFP) and employment density in Italy. We investigate whether and how the TFP–density nexus contributes to explaining a relevant share of the marked productivity gap between the northern and the southern Italian regions. We estimate TFP for a large sample of manufacturing firms and then aggregate it at the level of local labour market areas. We tackle the endogeneity issues stemming from the presence of omitted covariates and reverse causation with an innovative set of diagnostic tests and an instrumental variable approach that relies on geological and historical data. Our estimate of the TFP elasticity to the spatial concentration of economic activities is about 0.045, a magnitude comparable to those measured for other developed countries. We also show that no significant heterogeneity emerges in the intensity of agglomeration economies across the country and that the positive TFP difference in favour of the firms located in the North is not due to the tougher competition taking place in those areas.

Reflections on effects of the urban development policy. A study in Montes Claros, Minas Gerais, Brazil

The implementation of the City Master Plan of 2001 and its successive updates aimed to promote significant changes in the urban morphology of Montes Claros, MG, Brazil, in terms of decentralization. This study aims to understand the effects of the master plan guidelines related to urban mobility and the alignment of dialogues at the local development level through a set of indicators commonly found in specialized literature. This is an exploratory case study developed based on data and information available from the Brazilian Institute of Geography and Statistics, João Pinheiro Foundation, and others. Additionally, some statistical exercises were conducted to highlight the assumptions regarding the effects of implementation this plan, using the PAST 4.3 software. As a result, Montes Claros does not have a significant urban concentration among the 19 planning regions, with a compactness index of 0.658 (moderate). The spatial concentration of economic activities in this city decreased by half between 2001 and 2021, reflecting the effectiveness of the plan.

Yield Curves for Main Street: Housing and financial capital returns in a developing economy

AbstractTotal housing real returns in large agglomerations in Kazakhstan are approximately 1% per year lower than in the rest of the country. Our results are also supportive of emerging literature, that housing real rent returns, adjusted for population, are generally lower in large agglomerations compared to the rest of the country. We indicate that within‐country heterogeneity of housing returns mainly result from the spatial concentration of economic activity in urban centers. Our findings also suggest that residential real estate in a developing economy produces higher returns compared to financial capital over the long‐run. At the same time, the volatility of holding housing investment is substantially higher than its “safe” alternative (i.e. deposit rate paid for savings deposits). As such, “Yield Curves for Main Street” concept refers to the general positive spread between total housing returns and financial capital returns in a developing economy.

Agglomeration and innovation effort: A longitudinal study on small and medium manufacturing enterprises in Vietnam

AbstractThis paper analyzes agglomeration effects on innovation behavior by small and medium manufacturing enterprises in Vietnam. We use a novel data set of 1,520 small and medium enterprises from 2011 to 2015. We focus on the spatial concentration of economic activities that influence firms’ innovation outcomes. Moreover, we outline firms' and owners' characteristics as we examine the role of entrepreneurs and other covariates such as firm size, age, and the number of establishments in fostering their firm's innovation. Empirical results show the following: agglomeration contributes to the firms' innovation. Firms were less likely to innovate when they become larger in size, but microfirms were less innovative than others. Firms were found to be more innovative if they produce more than one product and operate in different cities or provinces. In contrast to the strong effects of agglomeration on firm innovation, firm‐level characteristics, especially that of owners, exhibit a weaker or insignificant role.

Effects of the concentration of manufacturing industry on Croatian regional growth

Spatial concentration of economic activity is a phenomenon that has important implications for the development potential of the local, regional and national economy. This statement stems from two facts: first, there is a tendency of people and economic activity to concentrate in major cities and regions; and second, similar and connected companies sometimes agglomerate together at a particular location to take advantages of the external economies. This paper examines the effects of spatial concentration of manufacturing industry on Croatian regional growth. The industrial concentration (especially of the manufacturing sector) improves competitiveness among firms, enhances knowledge spillovers and increases the demand for labor and industrial products, leading ultimately to potentially higher growth rates. To examine the effects of concentration of manufacturing industry on Croatian regional growth, a panel analysis is conducted combining spatial (21 Croatian counties) and time (16 time periods) dimensions. The best way to measure concentration is by using the location formula to calculate location quotients weather on the basis of employment or gross value added. Therefore, the location quotients are independent variables of interest in the model whereas GDP, GDP p.c. and Gross value added of manufacturing put, regional economic prosperity and industrial output, respectively. Based on the results of the panel analysis it can be concluded that manufacturing industry is still an important factor of regional growth in Croatia, although its relative significance in Croatian economy is continuously declining over the last two decades.

Analisis Aglomerasi Pada Koridor Ekonomi di Indonesia

Economic development that tends to be centered on developed regions causes a spatial concentration of economic activity. One of the efforts to build growth centers in each corridor, the Master Plan for the Acceleration of Expansion of Indonesian Economic Development (MP3EI) divides Indonesia into six economic development corridors. The purpose of this study is to determine the level of economic agglomeration in each economic corridor in Indonesia, and to analyze the determinants of economic agglomeration in these corridors. This type of research data uses secondary data consisting of time series data for 2010-2019 and cross section data of six economic corridors in Indonesia. Data analysis using Herfindahl-Hirschman Index and Panel Data Regression. The results of this study are that the regional government budget has a significant and positive effect on economic agglomeration in economic corridors in Indonesia. The number of workers has a significant and negative relationship to economic agglomeration. Meanwhile, investment does not have a significant positive effect on economic agglomeration in economic corridors in Indonesia.
 Keywords: Economic Agglomeration, Regional Government Budget, Investment, Herfindahl-Hirschman Index, Panel Data Regression.

ТРАНСФОРМАЦІЯ СТРУКТУРИ ЕКОНОМІКИ МІСТ ЗАХІДНОГО РЕГІОНУ УКРАЇНИ: СЕКТОРАЛЬНИЙ ВИМІР

Анотація. Досліджено особливості трансформації структури економіки міст Західного регіону України. Для цього проаналізовано просторову концентрацію економічної діяльності в містах обласного значення Західного регіону України, а також швидкість та інтенсивність трансформації структури їхніх економік. Залежно від структури економіки міст обласного значення в базовому періоді та інтенсивності структурних зрушень у ній упродовж досліджуваного періоду виокремлено два типи досліджуваних адміністративних одиниць: 1) міста обласного значення, які зберегли профільність економічної структури; 2) міста обласного значення, які диверсифікують структуру економіки. До останніх, зокрема, належать: а) міста обласного значення — промислові центри, які диверсифікували свою діяльність шляхом розвитку сервісної економіки; б) міста обласного значення, які трансформували структуру економіки в напрямі розвитку промисловості; в) міста обласного значення, які, попри поліпрофільність економічної структури в базовому періоді, наростили упродовж наступних років економічний потенціал лише в певному секторі економічної діяльності; г) інші міста обласного значення, зокрема ті, які змінили вектор економічної діяльності в напрямі розвитку суміжних галузей. Констатовано існування позитивних тенденцій (вища адаптивність структури економіки досліджуваних адміністративних одиниць до сучасних умов соціально-економічного розвитку), а також негативних тенденцій (асиметричність регіонального суспільно-економічного розвитку внаслідок концентрації ділової активності та капіталу в містах обласного значення; диспропорційність секторальних і просторових структурних змін в економіці міст обласного значення; посилення монопрофільності економічного розвитку окремих міст обласного значення в контексті загострення ризиків економічної діяльності) у трансформаційних процесах економіки міст обласного значення. Ключові слова: трансформація економіки, міста обласного значення, структура економіки, регіональна економіка, сектор економіки. Формул: 2; рис.: 0; табл.: 2; бібл.: 10.

Agglomeration Processes in Ageing Societies

This article investigates agglomeration processes in ageing societies by introducing anoverlapping generation structure into a New Economic Geography model. Whether highereconomic integration leads to spatial concentration of economic activity crucially hinges onthe economies' demographic properties. While population aging as represented by decliningbirth rates strengthens agglomeration processes, declining mortality rates weaken them. This isdue to the fact that we allow for nonconstant population size. In particular, we show thatpopulation growth acts as an important dispersion force that augments the distributionaleffects on agglomeration processes resulting from the turnover of generations.JEL classification: R12, J10, F15, C61

Consumption Access and the Spatial Concentration of Economic Activity: Evidence from Smartphone Data

Using smartphone data for Japan, we show that non-commuting trips are frequent, more localized than commuting trips, strongly related to the availability of nontraded services, and occur along trip chains. Guided by these empirical findings, we develop a quantitative urban model that incorporates travel to work and travel to consume non-traded services. We use the gravity equation predictions of the model to estimate theoretically-consistent measures of travel access. We show that consumption access makes a substantial contribution to the observed variation in residents and land prices and the observed impact of the opening of a new subway line.

Agglomeration and the Italian North-South Divide

This paper offers novel evidence on agglomeration economies by examining the link between total factor productivity (TFP) and employment density in Italy. TFP is estimated for a large sample of manufacturing firms and then aggregated at the level of Local Labor Market Areas (LLMAs). We tackle the endogeneity issues stemming from the presence of omitted covariates and reverse causation with an instrumental variable (IV) approach that relies on his-torical and geological data. Our estimate of the TFP elasticity with respect to the spatial con-centration of economic activities is about 6%, a magnitude comparable to that measured for other developed countries. We find that the TFP-density nexus contributes to explaining a large share of the substantial productivity gap between the northern and southern regions of Italy. We also show that no significant heterogeneity emerges in the intensity of agglomera-tion economies across the country and that the positive TFP difference in favor of the firms located in the North is not due to the tougher competition taking place in those areas.

Study of Spatial Effects in the Regional Labor Productivity Dynamics

One of the advantages of the spatial concentration of economic activity is an increase in its efficiency, which can also have a positive effect on the dynamics of the economic efficiency of neighboring territories. Nevertheless, geographical proximity does not guarantee the automatic dissemination of positive spatial external effects. However, it is precisely these processes that largely determine the change in the configuration of the economic space and further possibilities for its development. The article reflects the results of a study on the role of spatial external effects in the dynamics of a regional economy efficiency indicator—labor productivity. The main research method is construction of transition probability matrices and analysis of their properties. It is shown that a high degree of inequality of regional economies in labor productivity prevents the manifestation of positive spatial external effects. Significant differences in regional economies in labor productivity worsen the relative dynamics of lagging regions and also adversely affect the relative dynamics of leading regions. Reducing the degree of difference contributes to the spread of positive externalities, accelerates the growth of labor productivity in lagging regions and favors its increase in leading regions. The results obtained indicate that regional policy aimed at containing increasing regional inequality and creating conditions for expanding interregional cooperation is more adequate with respect to the current situation.

Connective Financing - Chinese Infrastructure Projects and the Diffusion of Economic Activity in Developing Countries

This paper studies the causal effect of transport infrastructure on the spatial concentration of economic activity. Leveraging a new global dataset of geo-located Chinese government-financed projects over the period from 2000 to 2014 together with measures of spatial inequality based on remotely-sensed data, we analyze the effects of transport projects on the spatial distribution of economic activity within and between regions in a large number of developing countries. We find that Chinese-financed transportation projects reduce spatial concentration within but not between regions. In line with land use theory, we document a range of results which are consistent with a relocation of activity from city centers to their immediate periphery. Transport projects decentralize economic activity particularly strongly in regions that are more urbanized, located closer to the coast, and less developed.

Les indices de concentration géographique à l’épreuve de l’agrégation des données

Pour caractériser la concentration spatiale des activités économiques, il convient de disposer de mesures statistiques fiables. Ceci permet d’évaluer les disparités existantes et de pouvoir comparer les niveaux de concentration par secteur dans le temps et dans l’espace. L’espace est continu mais sa discrétisation du fait du regroupement spatial d’observations à des échelles géographiques différentes (communes, départements, régions) peut induire une erreur de mesure (Briant et alii , 2010). Comme il n’est pas toujours possible de mobiliser la position exacte des entités, ce travail se propose d’étudier, à partir de données simulées, jusqu’à quel point les indices de concentration géographique des activités peuvent être biaisés par l’agrégation géographique. Nous montrons que les valeurs des indices sont sensibles à l’échelle géographique sur la base desquels ils sont calculés et que certains indices sont plus robustes que d’autres à l’agrégation géographique.

Distance-based measures of spatial concentration: introducing a relative density function

For a decade, distance-based methods have been widely employed and constantly improved in the field of spatial economics. These methods are a very useful tool for accurately evaluating the spatial distribution of plants or retail stores, for example (Duranton and Overman, 2008). In this paper, we introduce a new distance-based statistical measure for evaluating the spatial concentration of economic activities. To our knowledge, the m function is the first relative density function to be proposed in the economics literature. This tool supplements the typology of distance-based methods recently drawn up by Marcon and Puech (2012). By considering several theoretical and empirical examples, we show the advantages and the limits of the m function for detecting spatial structures in economics.

Agglomeration and Economic Growth in the Special Region of Yogyakarta (2005-2016)

The economic growth of the Special Region of Yogyakarta (Daerah Istimewa Yogyakarta or DIY) surrounding areas is naturally originated from agglomeration which was driven by the spatial concentration of economic activities including the aspects of space, community level, city scale, and region. This study aims to determine the development and linkages between production agglomeration and population agglomeration to the economic growth that occurs in DIY. The approach used is the estimation method of fixed effect panel data regression using DIY city/regency administration data in 2005-2016.The results showed that population agglomeration had a significant and positive effect on economic growth, while production agglomeration had no effect on economic growth in model I. Whereas in model II, it is known that production and population agglomeration affected economic growth, labor force negatively affected growth, and unemployment positively and significantly affected economic growth. On the other hand, the poverty level and HDI variables have a negative effect on economic growth. Cities/regencies that have a positive fixed cross effect on economic growth are Sleman, Gunungkidul, and Kulonprogo Regency, while Yogya City and Bantul Regency show a negative sign.

Quantifying economic effects of transportation investment considering spatiotemporal heterogeneity in China: a spatial panel data model perspective

Transportation investment plays a significant role in promoting economic development. However, in what scenario and to what extent transportation investment can stimulate economic growth still remains debatable. For developing countries undergoing rapid urbanization, answering these questions is necessary for evaluating proposals and determining investment plans, especially considering the heterogeneity of spatiotemporal conditions. Current literature lacks systematical research to consider the impacts of panel data and spatial correlation issue in examining the economic effects of transportation investment. To fill this gap, this study collects provincial panel data in China from 1997 to 2015 to evaluate multi-level temporal and spatial effects of transportation investment on economic growth by using spatial panel data analysis. Results show that transportation investment leads to significant and positive effects on growth and spatial concentration of economic activities, but these results vary significantly depending on the temporal and spatial characteristics of each province. The economic impacts of transportation investment are quite positive even considering the time lag effects. This study suggests that both central and local governments should carefully evaluate the multifaceted economic effects of transportation investment, such as a balanced transportation investment and economic development between growing and lagging regions, and considering the spatiotemporal heterogeneity of the economic environment.

Distribuição de qualificações profissionais e disparidade regional de desemprego na Hungria

In this paper we address the empirical question whether the skill distribution of regions has a permanent effect on regional unemployment rates. We argue that if technology and skill are complements and workers with different skills are poor substitutes, the uneven spatial distribution of human capital plays an important role in shaping regional unemployment rate differentials. When the adaption and application of technology need skilled workers, the inflow of technology raises the skill premium and attract skilled workers, which in turn also ameliorate low-skilled unemployment, if skilled and unskilled workers are not perfect substitutes in the production process, or the higher share of skilled workers in the traded sector increase the demand for unskilled labor in the local non-traded sector. Empirical evidence from the Hungarian post-socialist transition confirms the hypothesis that the uneven distribution of skills inherited from the socialist era had a major and permanent influence on the emergence of regional unemployment disparities, which prevailed even after the end of transition through the inward flow of technology through FDI and the spatial concentration of economic activity. Regression estimates show that the share of college educated individuals has a strong negative effect on regional unemployment. However this is not only the result of the initially lower risk of unemployment among college educated individuals but also the complementarity between different skill levels. Separate estimates on skill-specific unemployment rates show that an increase in the percentage share of college graduates abates the unemployment rate of lower skilled workers.

Regional concentration and national economic growth in Brazil and Chile

This paper investigates the hypothesis that the spatial concentration of economic activity might impair national growth, using the experiences of Brazil and Chile. In the first stage we have used regional data to estimate country-specific models in which regional growth is conditioned by a set of controls, considering population density as a measure of concentration. The results of this stage show that population density has a negative effect on the growth of Brazilian and Chilean regions. In the second stage we have simulated the impact of the actual changes in population observed in the regions within these countries between 1980 and 2010. Using the new densities, we have recalculated the growth of the regions, generating a new national growth rate as a weighted average of the estimated growth of the regional economies. The regional deconcentration observed in Brazil produced less negative results in terms of national growth. While the Chilean increasing spatial concentration resulted in negative effects for national growth: the national GDP growth rate was reduced by 0.8% on a yearly basis. These results replicate the findings of Brulhart and Sbergami (J Urb Econ 65:48–63, 2009) for Brazil and Chile in their cross-section of countries. Working with regional data within the countries allowed determine the gains/losses in the national GDP growth rate, and to point out the effects on each region within the countries.

Почему возникают и растут города? Объяснения теоретических и эмпирических исследований

The article presents the results of theoretical and empirical studies devoted to looking into reasons of creation and success of the cities. The foundation of cities’ growth is the mechanisms of supporting spatial concentration of economic activity. The author studies two key elements of these processes in the framework of microeconomic theory: the increasing returns to scale and external agglomeration effects. Returns to scale are defined by technology, tied to the indivisibility and discretion of output, and are an internal factor not connected with external environment. Agglomeration economy looks into benefits of interacting with agents nearby. The advantages of cities and sources of their development are explained mainly by the agglomeration economy and externalities, divided into localization and urbanization effects. Several mechanisms of explaining city agglomeration economy can be highlighted: 1) distribution of risk; 2) shared usage of indivisible goods; 3) shared usage of a large market of various raw materials and production factors; 4) coordination of skills and work; 5) education, experimentation and accumulation of knowledge. Stability and growth of the cities is defined by combination of factors that have technological and institutional nature. The increasing returns to scale and external effects are supported and strengthened by the market mechanism. As a result, the cities have advantages in creation and shared usage of large output, in generation and distribution of innovations; use the benefits of a wide market, diversity and narrow specialization

The impact of spatial concentration on enterprise performance: is localization level optimal in Russia?

This paper empirically analyses the effect of spatial concentration of economic activities on enterprise productivity, using Russian firm-level data from 1999 to 2008. Panel data allows us to control for endogeneity biases associated with estimation of agglomeration economies, using fixed effects method. Our results show that Russian firms benefit from localisation and urbanisation economies, as well as from home market potential, and that these benefits vary across industries and cities. We also find that localisation benefits are not well internalised by firms in their location choice, i.e., there is a difference between the pattern of location that would maximise productivity gains and the observed one. It shows that regional policy could help in approaching optimum level of localisation economies.