Agglomeration economies and the location of foreign direct investment: A meta‐analysis

This paper undertakes a meta‐analysis of the effect of agglomeration economies on foreign direct investment (FDI) location. It finds strong differences in these economies arising from both measurement and study‐specific characteristics. Economies generated from domestic rather than foreign activity have the strongest effects on FDI, with the latter only significant if related to the home country of the investor. Support is also found for studies that identify different sources of agglomeration economies, although this is largely underexplored in the empirical literature. The average agglomeration economies estimate is not influenced by publication bias and indicates genuine effects for agglomeration economies on FDI location choice.     

Locational disadvantage and the spatial distribution of government expenditure on urban infrastructure and services in metropolitan Sydney (1988–2015)

Provision of public services by state governments rather than municipalities is considered an important urban governance factor preventing deeper levels of socio‐spatial inequality in Australian cities. The paper examines the spatial patterns of investment by the New South Wales state government in a wide range of services and infrastructure in metropolitan Sydney over 28 budget years from 1988/89 to 2015/16. We examined the relationship between volume and type of investment in infrastructure and services, and considered a local area's socioeconomic characteristics, distance from the central business district, and designation as a strategic site in metropolitan plans. Despite an overall redistributive approach favouring relatively disadvantaged areas, the most disadvantaged suburbs in metropolitan Sydney had significantly lower levels of investment. When funding was directed to the most disadvantaged suburbs, it was often in the form of new social housing development, reinforcing both the concentration of poverty and disadvantage in resource access. The findings suggest that this is a case of under‐investment by the state government in areas already populated by disadvantaged communities rather than a market‐driven process whereby disadvantaged households move into poorly resourced neighbourhoods.     

GROWTH,FOREIGN DIRECT INVESTMENT,AND THE ENVIRONMENT: EVIDENCE FROM CHINESE CITIES

ABSTRACT In this paper, we investigate the relationship between economic growth and industrial pollution emissions in China using data for 112 major cities between 2001 and 2004. Using disaggregated data, we separate foreign direct investment inflows from Hong Kong, Macao, and Taiwan from those of other foreign economies. We examine two industrial water pollution indicators (wastewater and petroleum‐like matter) and four industrial air pollution indicators (waste gas, sulfur dioxide, soot, and dust). Our results suggest that most air and water emissions rise with increases in economic growth at current income levels. The share of output of domestic‐ and foreign‐owned firms increases several pollutants in a statistically significant manner while output of firms from Hong Kong, Macao, and Taiwan either reduces pollution or is statistically insignificant.     

Transport Infrastructure,Agglomeration Economies,and Firm Birth: Empirical Evidence from Portugal*

Abstract. This paper uses municipality‐level data to study firm birth in Portugal from 1986 to 1997. This is a period of significant improvements to the Portuguese motorway network raising important questions as to its impact on the spatial pattern of firm birth. The paper focuses on the effect of such large‐scale road investment together with the role played by agglomeration economies for firm birth in 13 industry sectors and 9 service sectors. Motorways increase the attractiveness of locations close to the new infrastructure for most sectors. However, marked differences among sectors exist in the way transport improvements affect geographical firm‐birth concentration. The results also indicate that a more diversified local economic environment encourages firm birth, but little evidence is found for agglomeration benefits stemming from sectoral specialization at the local level.     

Multi-Firm City Versus Company Town: A Micro Foundation Model of Localization Economies

When do we have a company town and when do we have a multi‐firm city? In this paper I analyze the impact of public infrastructure investment decisions on types of cities in a decentralized urban system. This is done in a one‐sector spatial general equilibrium model of a closed economy. Investment in public infrastructures reduces the fixed set up cost of all firms within the city resulting in multi‐firm cities. Thus, in this approach localization economies are modelled explicitly instead of assuming that larger industrial size within the city enhances productivity. On the other hand, when the infrastructure is not provided, a company town will be formed by a developer because of the fixed cost required by each firm. The decision of whether to invest in the provision of public infrastructures depends on the type of city that will provide households with the highest utility. This paper characterizes the conditions that lead to each of the two equilibrium configurations.     

Information without frontiers: Financial services,EC regulation and European cities

Using Castells' notion of the informational mode of development, this briefing investigates the changing hierarchy and function of European cities in the light of EC policies. The EC regulatory regime is identified as an integral part of the informational mode of development, setting the parameters within which the corporate sector operates. It is argued that the purpose of information flows is mainly control. A new constellation of European cities is anticipated which depends to a large extent upon the degree to which cities, competing against one another, are able to establish central urban complexes. These are based on the agglomeration economies between corporate headquarters, financial institutions and producer services at the urban level, and information flows at a global level of communications. Among the vast array of EC policies the paper identifies those in support of innovation and telecommunications, the deregulation of financial services, and regional policy as crucial for urban development. Given the requirements of infrastructure, institutions, professional skills and regulatory competence, existing metropolitan centres will capitalize on their comparative advantage and attempt to build on these in the future. These developments are likely to foster further concentration of capital and investment in a few major centres, thus counteracting other EC policies of regional equalization and harmonization. It is argued that these and other contradictions are an amplification of those already afflicting the capitalist state at both national and local levels. The paper also offers an opportunity to reassess aspects of traditional location theory, in particular central place models, in the light of these developments and finds them wanting. The same conclusion is reached regarding the cost‐benefit calculus of the Cecchini Report.     

Multilevel Instruments for Infrastructure Investment: Evaluating State Revolving Funds for Water

In recent decades, the federal government has introduced complex, multilevel state‐operated revolving loan fund programs as an instrument for promoting state and local investment in national infrastructure priorities while limiting direct federal involvement in implementation. A federally funded state revolving fund (SRF) program combines features of a categorical matching grant to states and a subsidized loan program to localities, both of which should lower the effective price of infrastructure investment and therefore promote higher levels of infrastructure investment. However, little evidence exists to date on whether these programs stimulate new subnational spending or instead displace spending that would have occurred otherwise. We evaluate the stimulus effects of SRFs by examining the two largest such programs, the Clean Water and the Drinking Water SRF Programs. Analyzing 17 years of state‐level panel data, we find evidence that the flow of federal funds to states under the SRF programs stimulates new local investment in wastewater infrastructure, but not in drinking water infrastructure. In discussing several possible explanations for these divergent results, we argue for further research that emphasizes the intergovernmental features of this financing tool.     

ECONOMIC FUNDAMENTALS AND URBAN–SUBURBAN DISPARITIES

ABSTRACT This paper develops a spatially explicit model to examine how urban and suburban communities evolve differently with changes in local economic fundamentals such as rising income or falling commuting costs in the metropolitan area. The model highlights the importance of environmental amenities and the economy of scale in the provision of public services as determinants of urban spatial structure. Results suggest that urban sprawl, income segregation, and jurisdictional disparities are driven by the same economic conditions and thus tend to co‐exist. Rising incomes or falling commuting costs for high‐income households in a metropolitan area tend to increase land prices and public services in every community, while rising incomes or falling commuting costs for low‐income households can have the opposite effects.     

LOCAL PUBLIC SERVICE PROVISION AND SPATIAL INEQUALITY IN CHINESE CITIES: THE ROLE OF RESIDENTIAL INCOME SORTING AND LAND‐USE CONDITIONS

Spatial inequality refers to unequal access to local public services between high‐ and low‐income households in relation to their residential locations. We examine two hypotheses regarding the role of income sorting and land‐use conditions in shaping spatial inequality in Chinese cities, where residents have little direct influence on local public service provision. First, in the presence of resource indivisibility, travel cost, and location‐based rationing, scarcity of public‐service resources in a city makes access to public services more uneven across neighborhoods, thus exacerbating income sorting and spatial inequality in the city. Second, the exacerbating effect of resource scarcity is mitigated by land‐use conditions that limit income sorting. Estimates of willingness to pay by households of different income levels for public‐service resources across cities corroborate both the exacerbating effect of resource scarcity and the mitigating effect of inclusive land‐use conditions.     

THE LONG-RUN ECONOMIC IMPACTS OF FEDERAL,STATE, AND LOCAL FISCAL POLICIES IN METROPOLITAN AREAS*

ABSTRACT. This paper uses new estimates of metropolitan factor demand and output supply functions to study how federal, state, and local fiscal policies affect metropolitan economies. We illustrate our work with findings for ten metropolitan areas in five states for changes in state corporate income taxes, local property taxes, the federal corporate income tax, an investment tax credit, interest rates, public capital stocks, output prices, and tax and regulatory policies affecting gross wages. It is clear from these simulations that a policy that is nominally the same everywhere will have repercussions that vary widely across regions and cities.     

The Study of Local Public Economies: Multi‐organizational,Multi‐level Institutional Analysis and Development

One important extension of the IAD framework has been to the study of local public economies. These are multi‐organizational, multi‐level arrangements defined as the set of governmental jurisdictions, public and nonprofit agencies, and private firms that interact in various patterns to provide and produce public goods and services within a specific locality or region. Commonly, the localities or regions studied from this perspective have been U.S. metropolitan areas, often defined as a central city and its surrounding or adjoining county. Localities can be delineated, however, on various terms, and in the IAD framework, it is the geo‐physical nature of a locality that, in substantial part, drives the analysis. One of the strengths of the approach is its capacity to explain local variations in public organization as a function of the geo‐physical diversity of localities, while at the same time developing empirical generalizations and normative principles that apply across diverse regions. What, for example, might the organization and governance of a complex metropolitan area have in common with the organization and governance of a complex protected area, such as the greater Yellowstone eco‐region or the Adirondack Park? Construing both sorts of regions as local public economies can enhance our overall understanding of public organization at the same time that it permits a more nuanced understanding of diverse localities. Such work contributes to the ongoing IAD project of “understanding institutional diversity.”     

Land Privatization and Pastoralist Well‐being in Kenya

East African pastoralists have well‐developed systems of communal land management that have been challenged by recent demands from some pastoralists for land privatization. This article analyses the impact on household well‐being of privatizing land among a community of Samburu pastoralists in northern Kenya. Using longitudinal data from household surveys conducted in 2000 and 2005, trends in wealth, income, stratification and livelihood strategies are analysed comparing the privatized community and a community where land remains communally managed. Results indicate few significant differences in wealth and income between the privatized and communal areas, although cultivation has become an important additional strategy in the privatized community. Significant levels of wealth stratification are present in both communities but are mitigated to some extent by mobility across wealth quintiles over time. Wealthy and poor groups exhibit different livelihood strategies with wealthier groups relying more on livestock trade and home consumption while poorer groups depend on wage labour and trade for their income. Policy implications of this analysis include the need for development strategies specific to different wealth groups, greater investment in education and infrastructure, and more attention to employment creation in pastoral areas.     

China’s services sector: the new engine of economic growth

This paper presents a review of services sector development in China. It is found that China’s services have recently emerged as the dominant contributor to economic growth and job creation. Trade in services has also increased dramatically, although China maintains a huge deficit. In comparison with economies at a similar stage of development, however, China’s services sector is lagging behind. Both GDP and employment shares of the services sector are relatively small. Services trade also accounts for a relatively small share of China’s total trade. In particular, China’s new services are underdeveloped. As per capita income rises and resultant urbanization accelerates, the country’s services sector is expected to expand further and hence play a key role in rebalancing China’s economy away from its over-reliance on manufacturing and exporting. To reach this goal, further reforms and prudent government policies are needed.     

Spatial Agglomeration of Manufacturing in Greece: Sectoral Patterns and Determinants

This article aims to demonstrate how the industry characteristics of manufacturing sectors affect the patterns of their spatial agglomeration. It also addresses several intricate issues concerning the measurement of localization economies and estimation of their main determinants in manufacturing industries. The original empirical analysis employs annual industrial data from the Hellenic Statistical Authority (ELSTAT) during the period 1993–2006 in Greece at the prefecture level, i.e. for 51 prefectures. The data processing reveals three important findings. The first is the temporal persistence of localization economies in the Greek manufacturing. The second refers to the high level of agglomeration associated with the high-technology industries as well as the resource- and scale-intensive industries. Lastly, there are significant effects of industry characteristics related to knowledge externalities, labour skills and productivity, scale economies and own-transport expenditure on spatial agglomeration, as resulted from the use of alternative geographic concentration indices and panel data models. Results obtained have implications for policy-makers, who can enhance the regional manufacturing activity by affecting these industry-specific factors. Amongst others, planning measures and policies which aim at promoting the local development and regional convergence should focus on reducing transport costs for firms or sectors, by improving the infrastructure capacity, interconnectivity and quality of services.     

矿业城市类型及发展现状比较研究

按照本文确定的矿业城市标准,我国现有矿业城市的数量为129个。本文对按照矿业类型划分的八类矿业城市发展现状进行比较。总体上看,矿业城市的发展状况比非矿业城市差,低于全国城市的平均水平;在矿业城市中,不同类型发展情况不同,石油城市在经济效益、财政收入、基础设施建设、在岗职工工资及利用外资能力等方面都是发展最好的,并且许多方面超过了全国城市的平均水平,其余类型的矿业城市发展较差,但不同类型发展状况不同,即使同一类型的矿业城市发展状况也不一样。矿业城市发展状况的不同为制定矿业城市转型政策提供了基础和依据。     

The Impact of Mobile Technology on Low‐Income Communities in Lebanon

This article attempts to study the impact of mobile technology, as represented by mobile phones, on low income communities, as represented by farmers in the Bekaa Valley, the largest farmland of Lebanon. It aims to identify areas where the mobile phone has a positive impact on farmers' lives, family, friends, work, finance, and health; and areas where the mobile phone has a negative impact on farmers' lives, in addition to identifying some important associations among the variables. The results show that more than 38 percent of farmers own a mobile phone. The benefits of having a mobile phone are improved work, better income, improved family and social ties, more freedom and independence, better health, and better finance. High cost and accessibility were the two major drawbacks. Owning a mobile phone is associated with education, better work, better income, better health, and better finance. It is independent of gender and income. The study recommends that telecommunication companies in the area should expand their services to low‐income communities, improve coverage, and reduce cost.     

THE EFFECTS OF COLLATERALIZABLE INCOME AND DEBT OVERHANG ON ENTREPRENEURIAL INVESTMENT IN AN OPEN REGIONAL ECONOMY*

ABSTRACT We use a two‐period model to analyze the contractual relationship between entrepreneurs and venture capitalists in an open regional economy. First, we describe the first best investment contract, we study the second best investment contract in the presence of private information, and then we examine the impact of an exogenous second‐period income endowment (collateralizable income) on investment by entrepreneurs. Next, we analyze the interaction between entrepreneurs and venture capitalists when the regional government (RG) must pay off a per capita debt (debt overhang) which it finances by taxing successful second‐period entrepreneurs. We show that a rise in the per capita debt has an effect on investment that is analogous to a fall in the second‐period income endowment. In addition, the overhang of the RG's debt discourages entrepreneurial investment.     

Cost Efficiency,Urban Patterns and Population Density When Providing Public Infrastructure: A Stochastic Frontier Approach

Relying on stochastic frontier analysis we propose a methodology to study the technological characteristics and cost efficiency levels related to the provision of public infrastructure for basic utilities. The methodology assumes a cost minimizing behaviour on the part of public officials when planning the construction of local infrastructure, which is represented by way of a flexible translog cost function. Introducing relevant definitions of scale economies, associated with larger numbers of inhabitants and dwellings, as well as economies of density, brought about by reductions in urban dispersion, we analytically determine the optimal population densities for which average cost is minimized. We illustrate our model with the water cycle sector, including water distribution, sewage collection and cleansing of wastewater, and considering data at the municipality level for the Spanish region of Castilla y León. The obtained results indicate potential cost savings in the form of decreasing average costs, as relevant scale and density economies are present, along with large inefficiency levels. Relevant policy guidelines favouring larger and denser urban sizes are drawn, as the observed cost excess is the result of a general suboptimal urban size in terms of population density, and the negative effects of dispersed settlement patterns.     

基础设施投资与中国经济增长的地区差异研究

本文应用生产函数法和我国19962000年度混合数据,从全国各地区的层次进行分析,估计基础设施对经济增长的产出弹性,以及不同地域的显著性差异。得到的估计结果是基础设施投资的人均GDP产出弹性为0187;不同地域基础设施对经济增长的影响存在明显差异。本文分三部分。第一部分是引言,介绍了有关的研究文献;第二部分应用生产函数建立模型进行估计;第三部分是结论和政策建议。     

GOVERNMENT QUALITY AND THE ECONOMIC RETURNS OF TRANSPORT INFRASTRUCTURE INVESTMENT IN EUROPEAN REGIONS

Transport infrastructure investment is a cornerstone of growth‐promoting strategies. However, the link between infrastructure investment and economic performance remains unclear. This may be a consequence of overlooking the role of government institutions. This paper assesses the connection between regional quality of government and the returns of different types of road infrastructure in the regions of the European Union. The results unveil the influence of regional quality of government on the economic returns of transport infrastructure. In weak institutional contexts, investment in motorways—the preferred option by governments—yields significantly lower returns than the more humble secondary road. Government institutions also affect the returns of transport maintenance investment.