The SEM and uneven development: Automotive production and the ‘older’ peripheral regions of the UK

This paper examines the impact of the creation of the Single European Market (SEM) by exploring the restructuring of the automotive production sector in Europe and its effect upon the older industrial regions of the UK. The paper is divided into four sections. Firstly, the importance of automotive production as a key sector in understanding the true impact of restructuring for the SEM is outlined. Secondly, the directions and outcomes of restructuring in the sector are detailed. Thirdly, the specific impact of these changes on automotive production and the older peripheral regions of the UK is considered. Finally, some conclusions and future directions for policy are discussed in relation to the true shape and form of ‘the new Europe’. The paper argues that the SEM will reinforce and deepen the pervasive and divergent effects of industrial restructuring within its boundaries due to economic relations from without.     

An Innovation-based industrial strategy for the new German Lander

This paper argues that firms in the new German Lander must rapidly adopt an industrial innovation strategy if they are to complete in the Single European Market and regain lost markets in Central and Eastern Europe. The new Lander have experienced a major de-industrialization and relatively slow new firm formation. As most existing firms lack innovative potential, progress calls for public support. This paper outlines the necessary elements of a development strategy aimed at boosting innovation in former East Germany.     

The European policy of the Jospin government: A new twist to old French games

This article presents a constructivist-inspired analysis of the Jospin government's European policy, understanding most policy developments during this period as variations on well-established French preferences—rooted in a modified Gaullist paradigm—embedded in French state identity. The variations reflect external political and economic pressures. By June 1997, the potential contradiction between perceptions of European integration as an extension of French state identity and the actual constraints imposed by integration was never greater, due to the reinforced constraints imposed by the operation of the Single European Market (SEM) and Economic and Monetary Union (EMU), in additional to the rise of German unilateralism and the need for European Union (EU) institutional and policy reforms made necessary by the approaching enlargement of the EU eastwards and the increased pressure on the Jospin government to reconceptualise an end-goal to European integration.     

OLIGOPOLISTIC COMPETITION AND ECONOMIC GEOGRAPHY*

ABSTRACT This paper studies a general equilibrium model of economic geography in which firms engage in oligopolistic competition. This framework is conducive to analytic results. With increasing returns, oligopolistic competition leads to interindustry trade between regions rather than intraindustry trade. The choice of appropriate technology is a channel of concentration of industries.     

Modeling Interaction in a System of Markets

This paper develops a nested family of market interaction models for the general case of spatial or aspatial goods. Market structure effects are identified in the form of intraregional and extraregional competition. The competing destinations and competing central place models are shown to be special cases of the general modeling framework. An empirical example, using survey data collected from Chicago-area Management and Public Relations (SIC 874) firms, illustrates how the family of models may be used to identify market structure.     

Firm Performance,Innovation Modes and Territorial Embeddedness

This paper seeks to identify different innovation modes and their territorial embeddedness, relating them to firms’ innovative and economic performance. We also analyse the relationship between the different innovation modes and the economic impact of the crisis on firms’ performance. These relationships are tested by regression and latent class models for the Portuguese population of firms, using a sample of 397 firms classified according to technological intensity, size and region. Our results show three different innovation modes: a DUI (Doing, Using and Interacting) mode, an STI (Science, Technology and Innovation) mode and a TEI (Territorial Embeddedness Innovation) mode in which territory plays a key role. These innovative modes are related in different ways to firms’ economic and innovative performance and also have marked distinctions in terms of resilience to the economic crisis. These findings lead to a reflection on regional innovation policy in the European context.     

Regulating for creativity and cultural diversity: the case of collective management organisations and the music industry

This paper explores the role of intermediary institutions in promoting creativity and cultural diversity in the music industry, and the impact of cultural policy on the performance of those intermediaries. It reviews some of the existing literature on the relationship between economic conditions and innovation in music, and argues that too little attention has been paid to intermediaries. Focusing on collective management organisations (CMOs) as one example of overlooked intermediaries, we illustrate, by way of comparison, the different priorities and incentives that drive CMO practice. These variations, we suggest, are important to appreciating how CMOs operate as intermediaries in different territories. We then turn our attention to recent attempts by the EU to reform CMO practice as part of its Digital Single Market project. The fact that the CMO has been an object of reform is indicative of its importance. However, there is more at stake here: the reforms themselves, in seeking to change the role and behaviour of CMOs will, we suggest, have profound consequences for the market in music in Europe, and for creativity and cultural diversity within that market.     

Agglomeration,foreign firms and firm exit in regions under transition: the increasing importance of related variety in Hungary

ABSTRACT

Related variety of economic activities is widely recognized to induce regional development; however, it is not clear how this mechanism takes place in regions that go through major structural and institutional transformation. Furthermore, foreign direct investment (FDI) is typically a major source of structural change in these areas; and we still need a better understanding on how foreign-owned (foreign) firms affect the dynamics of domestic-owned (domestic) companies. For these reasons we analyse firm-level exit in Hungarian city regions between 1996 and 2011, over the late post-socialist transition in manufacturing industries, focusing on the difference between foreign and domestic firms. Introducing ownership into the related variety calculation, we estimate the probability of firm exit with the region-level related variety calculated separately for foreign and domestic firms. Our results suggest that related variety of foreign firms decreases the probability of domestic firm exit earlier during the economic transition compared to the related variety of domestic firms. This finding supports the idea that FDI plays a formative role in regions under transition, and shows that domestic firms benefit from being in agglomerations where foreign firms are technologically related to each other.     

NEW FRONTIERS OF IMMIGRATION RESEARCH: CITIES AND FIRMS*

ABSTRACT The increase in international migration to rich countries during the last two decades has spurred research and policy questions. The economic determinants of national and international migrations and the impact of immigrants on labor markets have been investigated by economists, geographers, and regional scientists for a long time. Recently, however, the availability of new and detailed individual data on migrants across regions and localities in several countries has made it possible to analyze the impact of immigration on a richer set of socio‐economic outcomes. Two avenues of research have emerged as particularly interesting and are the focus of this special issue. First, international migrants are particularly concentrated in urban areas but their impact on some outcomes that are particularly relevant in cities (such as crime and housing markets) are not well understood yet. Second, immigrants not only increase labor supply but also affect firms’ productivity, survival and growth through their impact on localized externalities. These two themes link all the contributions of this special issue and show new directions for future research on the impact of immigration.     

Freedom of Establishment Versus Retail Planning: The European Case

Studies on retail planning in European Union (EU) Member States tend to be nationally oriented and, at best, compare national retail planning systems. They also appear to be based on an implicit assumption that retail planning should not be designed to fit the Single European Market (SEM). This paper analyses a series of judgments by the European Court of Justice and activities undertaken by the European Commission and concludes that this assumption is misguided and incorrect. The bottom line is that retail planning can interfere with freedom of establishment—one of the fundamental EU freedoms laid down in the Treaty of Rome—by limiting the realization of new shopping outlets and by redirecting retail to preselected locations. Such restrictions may be allowable if the Member State in question is able to demonstrate that they are non-discriminatory, appropriate and proportional on the basis of the interpretations of these fundamental principles in European Law. There is a European Retail Action Plan which aims to organize national retail planning systems in such a way that they are compatible with the principles of the SEM.     

区域、竞争力与区域发展

竞争力概念本身具有抽象性和模糊性,尤其被用于地点的属性时,对其界定颇多争议。这导致在区域竞争政策应用中不可避免的出现某种程度的混乱。通过追踪竞争力的缘起,在对两种主要的区域竞争力概念来源进行理论述评的基础上,从竞争的一般概念角度阐述了区域竞争力存在的客观性及其本质涵义,并从企业和地点两个角度比较分析了竞争在区域发展中的作用及影响。     

The Global Economic Crisis and Foreign Investment in Russia from the EU: Empirical Evidence from Firm-Level Data

This paper empirically examines the impact of the recent global economic crisis on foreign investment from EU countries in Russia by estimating a location choice model for foreign firms' entry in Russian regions for the period 1997-2011. It also examines the relative importance of various determinants of location choice on the redistribution of foreign-owned firms among Russian regions before and after the crisis. Strong evidence during the post-crisis period (2008-2011) of a decrease in market-seeking foreign investment in manufacturing and resource-seeking foreign investment in trade is examined not only in light of the crisis but also (in the latter case) within the context of the new Russian law for foreign investment in strategic industries, which went into effect in 2008.     

Persistence of innovative activities in times of crisis: the case of the Basque Country

By drawing on a large sample of Spanish manufacturing and service sector firms, the changes in firms’ innovation expenditures that have taken place since the onset of the 2008 economic crisis are analysed, as is the relationship between such changes and the location of the company. Special focus is placed on firms in the Basque Country. Compared to other Spanish regions, the Basque Country differs in terms of its fiscal status, its earlier experience of crises, its innovation performance and its greater focus on innovation-related policies. Our results show that the impact of the crisis on firms’ innovation expenditures in the Basque Country has indeed differed from that in comparable Spanish regions. Even after controlling for sectoral differences and for detailed characteristics at the firm level, firms with R&D employment in the Basque Country showed a significantly lower probability of abandoning innovation activities and even a somewhat higher probability of increasing their innovation efforts. This regional effect is especially significant for small and medium-sized enterprises.     

Changing partnerships: Firms and the French state

Lindblom's hypothesis that in market‐oriented systems businessmen predominate over statesmen is tested in relation to the way French firms have switched partners since the 1980s. Instead of a dirigiste—style special relationship with government, they have formed multinational partnerships. The implications of the new competitive context, under the pressure of delocalisation panic, are considered, prior to the examination of the effects of nationalisation and privatisation on the national identity of firms. The virtual bankruptcy of Crédit Lyonnais is examined as an example of state‐dependent capitalism, and the impact of EC competition policy is considered. The partial industrial disengagement by the French government in favour of market competition reinforces the applicability of Lindblom's hypothesis to the relations between firms and state in France.     

SPATIAL DISPERSION OF TECHNOLOGICAL INNOVATION: A CASE STUDY FOR THE NETHERLANDS BY MEANS OF PARTIAL LEAST SQUARES*

ABSTRACT. In this paper the impact of spatial and nonspatial variables on the innovation potential and innovativeness of (small) industrial firms in The Netherlands will be analyzed. Innovation potential and innovativeness will be conceived as latent variables which will be measured by a partial least squares approach. The variables reflecting innovation potential are notably input variables such as internal and external R&D, while innovativeness will be based on output indicators such as the number of product and process innovations. The regional dimension enters our analysis essentially at two levels. First, we will investigate whether more innovative firms are to some extent spatially biased (i.e., on the basis of intrafirm characteristics). Secondly, we will analyze the relevance of an indigenous regional impact, per se. In other words, we will examine whether firms with an equal innovation capacity will differ in actual (i.e., realized) innovativeness as a consequence of different regional conditions. For the first issue, our results indicate that not all regions are equally well-endowed with potentially innovative (small) firms. Our analysis even demonstrates that these firms are underrepresented in regions which are generally considered to offer the most favorable production environment. After compensating for these differences in the composition of the regional set of firms, we demonstrate that an indigenous regional impact per se cannot be identified in The Netherlands.     

Regional Innovation Support Systems: Recent Trends in Germany and East Asia

Since the beginning of the 1990s, one can observe a clear shift in the aims of regional policy in industrialized countries from reducing regional inequalities to developing endogenous small and medium-sized enterprises (SMEs) and innovation in regions through regional innovation support systems. Innovation support systems are defined as a group of actively cooperating organizations that support the innovativeness of SMEs. An innovation support system consists of all agencies found in three support stages, namely the provision of general information, technological advice and joint R&D projects, between firms (of which technology-following SMEs are the main group), higher education institutes (HEIs) and public research establishments (PREs). Agencies found in these stages try to help to solve innovation problems mainly of technology-following SMEs by either giving them advice themselves or by referring them to other agencies in a further stage of support. The agencies can be mainly supra-nationally, nationally or regionally initiated. This paper aims at comparing these regional innovation support systems in Germany and East Asia, that is Japan and South Korea, both concerning the instruments used, their impact on regional economic development, their level of organizational embeddedness in regions and the ability of regions to coordinate innovation support policies. The main conclusions of the paper are that there are similarities between the regional innovation support systems found in the countries when it comes to policy instruments, but that the countries differ concerning their level of regional embeddedness and the abilities of regions to coordinate innovation support policies. The paper also tentatively concludes that in countries where regions have the ability to coordinate policies into integrative innovation support systems, the impact on regional economic development tend to be larger than in countries where these abilities are lacking, that is where dirigiste and grassroots support systems prevail. One important explanation for the different coordinating abilities lies in the different political-administrative systems found in the studied countries (centralized in South Korea versus federal in Germany). Other factors explaining differences are: a time lag of development policies between countries, differences between the history of supporting SMEs in regions, supra-national support frameworks, the commitment of the political leaders in regions, collective trust and the size of countries.     

LOCATION AND ENTREPRENEURSHIP: INSIGHTS FROM A SPATIALLY‐EXPLICIT OCCUPATIONAL CHOICE MODEL WITH AN APPLICATION TO CHILE

Occupational choice and heterogeneous managerial ability enter a spatial Dixit‐Stiglitz setting, linking location, wages and regional entrepreneurship rates. Market potential has a positive partial effect and wages a negative partial effect on the regional supply of entrepreneurs, both balancing in equilibrium with endogenous wages. Market potential increases profits, but also the opportunity cost of entrepreneurship. In the long‐run equilibrium with perfect mobility, the cut‐off level of ability determining selection into entrepreneurship will be the same across regions; moreover, regional differences in entrepreneurship rates depend only in differences in average fixed costs of firms. An empirical application is provided for Chile.     

The Net Effects of Large Plant Locations and Expansions on County Employment*

This paper argues that the net economic impact of new firm locations or expansions is determined by a multitude of opposing forces. Using a unique database, I set out to evaluate the net effects of these opposing forces by looking at the net change in local employment and population arising from large (greater than 300 new jobs) firm locations or expansions in the State of Georgia. The analysis suggests that the employment multipliers associated with new firm locations are much less than one; that is, the net employment effect of a large firm opening is smaller than the gross employment impact. This result is consistent with other empirical economic impact studies, which find multipliers much smaller than those of typical input–output models, often less than unity, and a previous study showing little net effect of large plant openings. Expansions of existing establishments are shown to have substantial multiplicative effects, however, with an average employment multiplier of 2.0. I discuss possible reasons for differential impacts across new and expanding firms, focusing on the nature of the firms. Differences in net impact across industries and high‐tech versus low‐tech firms also is evaluated. I find that the impact of large firm locations or expansions on population in the resident county generally is negative, but positive for the broader region encompassing the county of location and its contiguous neighbors.     

Uniform Pricing Versus Mill Pricing

This paper analyzes the coexistence of different pricing strategies. The purpose is to discuss how firms that are limited to uniform pricing affect the outcome of price competition among mill–price–setting firms. Price competition among (three) firms that are restricted to mill pricing is analyzed within the classic Hotelling framework and uniform–price–setting firms are considered as first movers. If uniform–price–setting firms deliver any good, they effectively separate mill–price–setting firms from each other. Finally, it is shown that price competition among first movers strengthens the effects of cross–type price competition.     

FDI and Local Economic Development: The Case of Taiwanese Investment in Kunshan

The extent to which foreign direct investment (FDI) can foster the long-term economic development of lagging regions remains a highly debated issue in the literature, even in the current era of intense territorial competition for mobile investment and resources. The emergence of new industrial spaces in China that have flourished through FDI offers a good opportunity to revisit the topic. Kunshan in Suzhou, China has evolved from an impoverished area into a world-class information technology (IT) centre within 25 years. FDI, mainly from Taiwan, has enabled Kunshan to gradually upgrade its economy, following a development path that has been largely based on the transplant of entire production chains from Taiwan. Local innovative strategies for attracting and increasing the embeddedness of Taiwanese FDI are also an important element of Kunshan's success. This paper discusses the positive aspects, as well as the potential costs and negative facets, of FDI in Kunshan, with the view to draw some policy lessons regarding the impact of FDI on the economic development of lagging regions.