The ripple effects of large-scale transport infrastructure investment

We analyze the general equilibrium effects of an asymmetric decrease in transport costs, combining a large-scale spatial dynamic general equilibrium model for 267 European NUTS-2 regions with a detailed transport model at the level of individual road segments. As a case study, we consider the impact of the road infrastructure investments in Central and Eastern Europe of the European Cohesion Policy. Our analysis suggests that the decrease in transportation costs benefits the targeted regions via substantial increases in gross domestic product (GDP) and welfare compared to the baseline, and a small increase in population. The geographic information embedded in the transport model leads to relatively large predicted benefits in peripheral countries such as Greece and Finland, which hardly receive funds, but whose trade links cross Central and Eastern Europe, generating profit from the investments there. The richer, Western European nontargeted regions also enjoy a higher GDP after the investment in the East, but these effects are smaller. Thus, the policy reduces interregional disparities. There are rippled patterns in the predicted policy spillovers. In nontargeted countries, regions trading more intensely with regions where the investment is taking place on average benefit more compared to other regions within the same country, but also compared to neighboring regions across an international border. We uncover that regions importing goods from Central and Eastern Europe enjoy the largest spillovers. These regions become more competitive and expand exports, to the detriment of other regions in the same country.     

Structural Funds and European Regional Growth: Comparison of Effects among Different Programming Periods

Strengthening social, economic and territorial cohesion is a central objective of the European Union (EU) and the Structural Funds reflect the main financial effort of the EU to pursue this goal. So far we have gone through four programming periods; to what extent the EU Funds have become more effective in promoting growth and reducing the disparities between EU Member countries is a matter of concern. We investigate the existence (or not) of learning effects and efficiency improvements following the reforms of Regional Policy. The study is applied to data from EU regions (EU12) in the most recent programming periods where data are available. The results suggest an improvement of the Funds efficiency in growth in 2000–2006 when compared to the previous programming period. Moreover, the returns from investments of Funds tend to be higher in richer, higher-educated and more innovative regions. Finally, the Cohesion group has not been able to transform the large transfers received into additional growth.     

Regional Inequality in the EU: How to Finance Greater Cohesion

After outlining the overall scale and evolution of European Union (EU) public expenditure, this paper examines the mechanisms driving the allocation of Cohesion Policy resources. The analysis reveals the extent to which the outcome of the policy's principle- and formula-driven allocation mechanisms is modified by precedent and politico-economic considerations. In particular it shows that the consequent per capita final financial allocations (the intensity of aid) are greatest not for the poorest areas: up to 84% of EU GDP per head, aid increases as income increases. The analysis also emphasizes the on–off nature of the EU policy. In the light of these results a series of simulations are carried out. Attention is given first to a more economically sensitive treatment of transition regions, whose relative growth results in shifts from one category to another and to a mechanism capable of providing differentiated support to all disadvantaged regional economies. Attention is then given to ways of ensuring that final allocations are inversely proportional to income, and that most aid is concentrated on the most disadvantaged areas (Section 5). In the conclusions attention is paid to guidelines which might apply to the reform of the EU Cohesion Policy.     

Assessing Territorial Impacts of the EU Cohesion Policy: The Portuguese Case

This article examines the territorial impacts of the EU Cohesion Policy in Portugal, between 1990 and 2010, at the national level. To reach some conclusions, after a brief overview of the existing literature on territorial impact assessment (TIA) procedures, we present the main features of a proposed TIA technique, which we called TARGET_TIA, and applied to our study case. This analysis permitted us to go beyond the general scope of the EU Cohesion Policy evaluations, which concentrate mainly on the socioeconomic and environmental dimensions, by placing on evidence other key-territorial dimensions, such as Territorial Governance/Cooperation and Polycentricity. Findings indicate that, in general, the EU Cohesion Policy had positive territorial impacts in Portugal, namely by supporting the construction of absent and necessary physical infrastructures. However, the lack of spatial planning and strategic vision limited a more effective and efficient use of Cohesion Funds in Portugal.     

Territorial cohesion storylines in 2014–2020 Cohesion Policy

The purpose of this paper is to elaborate the concept of territorial cohesion in the context of 2014–2020 Cohesion Policy. The main goal is to investigate how European Union (EU) Member States (MSs) are coping with territoriality in their policies and to assess whether they are only fulfilling the minimum standards of a place-based approach or whether they are moving towards a new paradigm of policy-making characterized by a more territorially sensitive approach. This paper analyses Partnership Agreements which were signed between the European Commission and EU MSs and identifies the perception of territorial cohesion in the Cohesion Policy in the programming period 2014–2020. The analysis shows that different MSs choose different ways of addressing territoriality of their policies. It is thus possible to categorize countries into several groups sharing similar features and to discuss underlying ideas and approaches, which could shed some light on the still rather fuzzy concept of territorial cohesion.     

Smart specialization and institutional context: the role of institutional discovery,change and leapfrogging

ABSTRACT

Recent years have witnessed much experimentation with smart specialization strategies (RIS3) and entrepreneurial discovery processes (EDPs) in European regions. The EDP can be seen as an opportunity to address institutional questions. Because institutional patterns can explain why some policies are eventually successful while others are not, looking at the institutional context of regional economies can increase the effectiveness of regional policy. This article argues that the EDP functions as a framework to discover institutional patterns specific to a regional economy, and to define policies either consistent with existing institutions or aiming at institutional change. The article proposes a conceptual framework to understand and analyze the two institution-related roles of the EDP, first as an institutional discovery process and second as an institutional change process. The article builds on empirical case studies in two regions (Lower Austria, Austria and South Tyrol, Italy) and two small countries (Slovenia and Croatia). The case studies focus on how these regions or countries organized the EDP that eventually led to the formulation of their RIS3, and on the institutional dynamics of the EDP in discovering and changing institutions. The article concludes with policy implications that contribute to the debate on post-2020 EU Cohesion Policy.     

Does EU cohesion policy work? Theory and evidence

This paper evaluates the effectiveness of European Cohesion Policy in the regions of 12 EU countries in the period 1991–2008, on the basis of a spatial growth model, which allows for the identification of both direct and indirect effects of EU funds on GDP per worker growth. We find that “Objective 1” funds are characterized by strong spatial externalities and a positive and concave effect on the growth of GDP per worker, which reaches a peak at the ratio funds/GDP of approximately 3 percent and becomes non‐significant after 4 percent. “Objective 2” and “Cohesion” funds have nonsignificant effects, while all the other funds exert a positive and significant effect, but their size is very limited. EU Cohesion Policy, moreover, appears to have increased its effectiveness over time. In the period 2000–2006 Objective 1 funds are estimated to have a median multiplier equal to 1.52, and to have added 0.37 percent to the GDP per worker growth. Overall, in the period 1991–2008, funds are estimated to have added 1.4 percent to the median annual growth, and to have reduced regional disparities of 8 basis points in terms of the Gini index.     

The Effect of Business Support on Employment in Manufacturing: Evidence from the European Union Structural Funds in Germany,Italy and Spain

This study investigates employment growth in the business activities supported by the European Cohesion Policy. We examine cross-industry, cross-regional variations in a sample of fourteen manufacturing industries and seventy European regions (in Germany, Italy and Spain) and take advantage of detailed European Union Structural Funds data at the regional level for the period 2000–2006. We show that business support is positively associated with higher employment growth in industries that are initially smaller and in those with higher growth opportunities. The results suggest that direct support to businesses by the European Cohesion Policy contributes to the growth process of employment in different industries. Because previous estimated effects at the aggregate level may in fact conceal large differences across industries, we conclude that our empirical analysis contributes to the understanding of how Structural Funds can affect industrial and regional development as well as adjustment paths.     

Russia's Energy Policy: A Framing Comment

A prominent specialist on the Russian economy provides a framing comment on two preceding papers entitled "Russia's Energy Policy" (by Vladimir Milov, Leonard Coburn, and Igor Danchenko) and "Russia's Energy Policy: A Divergent View" (by Matthew J. Sagers). The author argues that Russia's current energy policy should be viewed as an outcome of competition between three overlapping programs. In this context, he identifies three policy models—the old Soviet, the liberal or oligarchic, and the most recent state capitalist. The latter is currently supported by President Putin, who prioritizes diversification of the country's economy at the expense of diminished investments in the oil and gas sector. Journal of Economic Literature, Classification Numbers: L71, O13, Q40, Q48. 2 tables, 2 figures, 22 references.     

Overseas Chinese Investments in Transition: The Case of Dongguan

An economic geographer based in Hong Kong presents a study of overseas Chinese investment coming from Hong Kong and Taiwan to Dongguan, a rapidly developing manufacturing metropolis in China's Pearl River Delta, attempting to compare the transformation of these two major sources of investment during the past quarter century. Based on systematic field work and interviews at ca. 60 firms through mid-2006, the paper argues that Hong Kong and Taiwan investments have followed different transformation paths with regard to sectoral composition, investment motivations, market orientation, entry modes, and strategies in response to institutional changes. Most of the substantive differences are related to the distinctive comparative advantages of the two source regions and the specific character of their interactions with the host region. Journal of Economic Literature, Classification Numbers: F21, O16, R11. 4 figures, 4 tables, 60 references.     

The impact of EU Objective 1 funds on regional development: Evidence from the U.K. and the prospect of Brexit

Brexit means that regions of the United Kingdom will lose access to the EU Cohesion Policy. Have EU funds been effective, and what might be the consequences of an interruption of EU financial support? This paper studies the impact of “Objective 1” funding—the highest form of EU aid—in Cornwall and South Yorkshire, two of the U.K.’s most subsidized regions. Counterfactual methodologies assessing their labor market and economic performance provide evidence of a positive effect of EU Objective 1 funds. When in 2006 South Yorkshire lost Objective 1 eligibility, this massively reduced its share of EU funds and the region was unable to sustain the gains obtained in previous years. This suggests that while Structural Funds may be effectively improving socio‐economic conditions of poorer regions, the performance of subsidized areas could be deeply affected by a reduction (or worse, an interruption) of EU aid.     

The New Museum Folkwang in Essen. A Contribution to the Cultural and Economic Regeneration of the Ruhr Area?

Abstract

The “Bilbao effect” shows that major cultural investments can contribute to the regeneration of old industrial cities and regions. Four different contributions can be distinguished: the (1) direct economic effects of such an investment; (2) social functions of a cultural institution which often serves as a point of contact for local and regional elites; (3) symbolic functions as an expression of a new regional identity and (4) cognitive functions, for example, the contribution to regional diversity and the cross-fertilization of ideas. Taking the example of a major cultural investment in Germany, namely the renovation of Museum Folkwang prior to the European Capital of Culture RUHR.2010, this article discusses the economic, social, symbolic and cognitive contributions of this investment to the economic transformation of the town and the Ruhr area, which is now one of the largest urban agglomerations in Europe. A Bilbao effect was not intended and did not take place. The museum, however, contributed to the incremental transformation of the town by creating a different image of the town, its role as a meeting place and point of identification for local elites and companies and its contribution to the emergence of an integrated cultural district.     

The Istanbul Modern Art Museum: An Urban Regeneration Project?

Abstract

In the 2000s, contemporary art institutions have flourished in Istanbul. New museums (mostly private) and art galleries have been created; biennials and fairs of contemporary art have attracted a growing number of visitors. To what extent could this fostering of culture be linked with the “Bilbao effect”? To what extent are the promoters of these cultural investments betting on economic development and urban regeneration through these projects? Focusing on the Istanbul Modern Art Museum (IM), this article analyses the process of its creation and its potential impact on its environment. It argues that the development of culture investments in modern arts in Turkey is mainly due to the private initiatives of large industrial groups and the wealthiest families, most of the time with political support. More than the expected economic impact of cultural investments, the main reason for these public–private collaborations is the symbolic dimension that contemporary art provides to a country which strives to be perceived as modern, developed and European. From the IM to Istanbul European Capital of Culture 2010, cultural investments are a means of strengthening an international image in the context of the “membership” negotiations between “Turkey and the European Union”.     

The Role of Future Discounting in Subsistence Decisions: The Case of Hohokam Agave Bajada Cultivation

This article demonstrates the relevance of future discounting behavior to studies of prehistoric subsistence strategies. The case study of Agave spp. bajada cultivation among the Classic Period, a.d. 1150–1450, Hohokam of southern Arizona illustrates how slight discounting of future rewards can significantly alter agriculture investment strategies. Despite a higher kcal/hour return than maize agriculture, agave cultivation lessened or ceased in several communities during a time in which intensification would be predicted due to inferred subsistence stress. We surmise the decade-long maturation of agave made it unattractive relative to more immediate return resources in any context that presented risks to land tenure. The cessation of agave cultivation can be understood on two levels of explanation. The long-term investments required by agave and tendency to discount future rewards are the ultimate causes. Political and social instability during the tumultuous Classic period, causing increased insecurity in land tenure, are the proximal causes.     

SPATIAL DISCONTINUITY FOR THE IMPACT ASSESSMENT OF THE EU REGIONAL POLICY: THE CASE OF ITALIAN OBJECTIVE 1 REGIONS*

The economic impact of the Regional Policy of the European Union is still controversial. This paper exploits administrative boundaries as spatial discontinuity to estimate the causal effect of this policy on the Italian Objective 1 regions’ employment. The analysis, developed both in a border strategy framework (municipalities contiguous to the policy‐change boundary) and with more traditional RDD models balanced by spatial forcing variables (centroids’ distance and coordinates), shows that the EU Regional Policy produced a positive impact on employment levels, without any displacement of economic activities away from nontreated regions and a concentration of the impact in key economic sectors.     

Promoting Investment in Russia's Regions

The paper, based on extensive field interviews in 2009, examines regional investment policies in Russia, focusing on the Novgorod and Kaluga regions. The author, a Finland-based geographer specializing in Russia's economy, argues that some Russian regions (including the ones not well endowed with natural resources) can succeed in promoting investments despite the generally unfavorable economic environment. He also questions the ability of so-called regional "growth machines" to be sustained over the long term, by contrasting the cases of Novgorod and Kaluga, whereby Novgorod represents a region transformed from a leader in promoting investment into a corrupted autarchic regime. Kaluga, on the other hand, is presented as a successful region on the basis of an innovative but somewhat risky investment promotion strategy.     

地缘战略视角下“一带一路”倡议对中国对外直接投资的影响研究

“一带一路”倡议的提出兼具改善地缘环境和拉动对外投资的目的。然而，现有研究较少采取地缘战略视角分析“一带一路”倡议对于中国向“一带一路”沿线国家投资的影响。本文基于中国对外投资数据，通过整合政治地理学和经济地理学的相关研究成果，运用双重差分的面板回归模型考察“一带一路”倡议对中国在“一带一路”沿线国家投资的政策效应。研究发现，“一带一路”倡议提出后中国向中亚和西亚地区的投资比“一带一路”沿线其他国家增长更快，说明地缘战略对中国海外投资有重要影响；此外，中国对“一带一路”沿线国家的投资受中国与东道国经贸联系和东道国市场规模的影响，但是地理邻近性、东道国的制度环境和东道国自然资源等因素的影响不显著。本研究对于加强政治地理和经济地理的结合和制定中国对“一带一路”沿线国家投资政策等有参考意义。     

Power in Australian foreign policy

The 2017 Foreign Policy White Paper emphasises the importance of ‘maximising’ Australia’s power and influence. However, the White Paper and much of the commentary on Australian foreign policy do not clearly conceptualise ‘power’ or indicate how it ought to be increased. The Lowy Institute’s recent Asia Power Index implies one possible strategy via its resource-based approach to measuring power. We outline a different approach and argue that power should be conceptualised and evaluated as a specific relationship causing behavioural change, rather than as a general attribute of its wielder. To complement the Lowy Institute’s carefully catalogued database, and facilitate a more focused conversation about maximising power and influence in Australian foreign policy, we offer a typology identifying five pathways through which states can translate their material and non-material resources into outcomes that serve the national interest.     

Migration and the location of MNE activities: Evidence from Italian provinces

We investigate the migration-inward foreign direct investment (FDI) nexus in narrow geographies. A novel two-stage empirical strategy allows us to investigate the role of migration as a determinant of multinational enterprises (MNEs) location choices and unpick heterogeneity in foreign investors' preferences towards the presence of migrants in the host location. This allows us to shed light on the relative importance of the underlying mechanisms linking migration and inward FDI. Relying on 1113 greenfield investments by 895 MNEs in Italian NUTS3 regions over 2003–2015, we find that immigrants from the country of origin of the investor exert a positive but highly heterogeneous effect on MNE location choices. Investors are more sensitive to the presence of migrants from their country of origin when they lack experience in the destination country (first-time investors) and when their investments concern market-access or business-services (downstream) activities. This is consistent with the view that migrants act as information brokers that bridge the fixed costs of international business activities.