INTERREGIONAL KNOWLEDGE SPILLOVERS AND OCCUPATIONAL CHOICE IN A MODEL OF FREE TRADE AND ENDOGENOUS GROWTH*

ABSTRACT A two region model of horizontal innovation with free trade and occupational choice is used to examine the spatial patterns of innovation and manufacturing industry in interior and core‐periphery long‐run equilibria. The inclusion of skill heterogeneity among workers creates a tension between stabilizing productivity effects that coincide with reallocations of workers across industries, and destabilizing productivity effects that arise with localized stocks of knowledge capital. We find that while core‐periphery equilibria are always saddlepath stable, interior equilibria are saddlepath stable when knowledge spillovers exceed a threshold level but are unstable otherwise. In addition, incorporating skill heterogeneity into the model allows for interior equilibria with asymmetric shares for innovation and industry.     

IS PRODUCTIVITY HIGHER IN BRITISH CITIES?*

ABSTRACT This paper examines the determinants of total factor productivity (TFP) using a GB plant‐level data set. The main findings relate to whether spatial spillovers and “place” effects are important: plants located in cities generally perform better than plants in the same region outside of these cities; but with the exception of Bristol, no city has significantly higher TFP levels than the South East. This suggests that spatial externalities associated with city location are not as important as the benefits of being situated in the South East region.     

FACTOR ACCUMULATION,EXTERNALITIES, AND ABSORPTIVE CAPACITY IN REGIONAL GROWTH: EVIDENCE FROM EUROPE

This paper proposes a model that incorporates capital accumulation and spatial spillovers across economies, while allowing for regional differences in absorptive capacity. This model is estimated using a sample of EU regions, over a period including the enlargement of the single‐market area in the middle of the first decade of the 21st century. Results confirm the relevance of local absorptive capacity that is directly linked with the process of making the most of externalities. Capital deepening reduced the role of capital in explaining the regional productivity gap, but was not enough to help lagging regions to equal the return to human capital investments reached by most advanced regions.     

VERTICAL INDUSTRY RELATIONS,SPILLOVERS, AND PRODUCTIVITY: EVIDENCE FROM CHILEAN PLANTS*

ABSTRACT We use disaggregated data on Chilean plants, and the Chilean input–output table to examine the impact of agglomeration spillovers on total factor productivity (TFP). In common with previous studies, we find evidence for intraindustry spillovers, but none for general cross‐industry spillovers. This picture changes when we take vertical industry relations into account. There are important productivity spillovers from plants in upstream industries. Interestingly, a similar effect cannot be found from plants in downstream industries. The number of plants in these sectors has no effect on plant‐level TFP, just as the number of plants in other industries that are neither important upstream suppliers nor downstream customers also has no effect.     

Bayesian Analysis of Knowledge Spillovers in European Regions*

Abstract. This paper estimates the effects of knowledge spillovers on patent growth rates across 335 European regions over the 1989–1999 period. We propose a dynamic model based on an innovation production function. A Bayesian approach is used to take into account area‐specific innovation and spatial spillovers. The estimation of the model proceeds via Markov Chain Monte Carlo simulation. The results show significant positive and negative spatial effects on innovative activity. The model allows for a rich spatial specification, which we illustrate by incorporating transport proximity measured by transportation time between regions to augment the typical spatial proximity measure of connectivity between regions. Doing this produces more pronounced spatial spillovers that exhibit a more polarized spatial pattern than a model relying on spatial proximity alone.     

PRODUCTIVITY AND THE DENSITY OF HUMAN CAPITAL*

ABSTRACT We estimate a model of urban productivity in which the agglomeration effect of density is enhanced by a metropolitan area's stock of human capital. Estimation accounts for potential biases due to the endogeneity of density and industrial composition effects. Using new information on output per worker for U.S. metropolitan areas along with a measure of density that accounts for the spatial distribution of population, we find that a doubling of density increases productivity by 2–4 percent. Consistent with theories of learning and knowledge spillovers in cities, we demonstrate that the elasticity of average labor productivity with respect to density increases with human capital. Metropolitan areas with a human capital stock one standard deviation below the mean realize no productivity gain, while doubling density in metropolitan areas with a human capital stock one standard deviation above the mean yields productivity benefits that are about twice the average. These patterns are particularly pronounced in industries where the exchange of information and sharing of ideas are important parts of the production process.     

COMPLEMENTARITY BETWEEN LOCAL KNOWLEDGE AND INTERNATIONALIZATION IN REGIONAL TECHNOLOGICAL PROGRESS*

ABSTRACT Trade, foreign direct investment, and inter‐regional R&D spillovers facilitate competition, the spread of knowledge, and the adoption of more advanced technologies, which in turn hastens total factor productivity (TFP) growth. The spread of these efficiency gains from internationalization requires a sufficient local knowledge to enable them to be adapted to the domestic productive environment. Thus, higher local knowledge and internationalization will lead to TFP growth, and the greater the complementarity between variables the higher the TFP growth. We test the complementarity hypothesis using Spanish regional data over the period 1980–1995 in which both regional local knowledge and internationalization experienced a notable increase.     

Infrastructure and Growth in a Spatial Framework: Evidence from the EU regions

This paper examines the return to infrastructure in the European Union regions in a spatial framework. It innovates on the earlier literature on infrastructure and growth by a combination of regional focus, disaggregation of infrastructure types and consideration of spatial dependence. Different types of infrastructure capital are considered as determinants of economic performance at the Nomenclature des Unités Territoriales Statistiques level. To account for growth spillovers among regions, a spatial Durbin model is estimated. The results confirm the important role of infrastructure and identify the highest rates of return as associated with telecommunication, quality and accessibility of transportation networks, with a positive impact of roads and railways.     

The Geography of Knowledge Spillovers Between High-Technology Firms in Europe: Evidence from a Spatial Interaction Modeling Perspective

The focus in this article is on knowledge spillovers between high-technology firms in Europe, as captured by patent citations. The European coverage is given by patent applications at the European Patent Office that are assigned to high-technology firms located in the EU-25 member states (except Cyprus and Malta), the two accession countries Bulgaria and Romania, and Norway and Switzerland. By following the paper trail left by citations between these high-technology patents we adopt a Poisson spatial interaction modeling perspective to identify and measure spatial separation effects to interregional knowledge spillovers. In doing so we control for technological proximity between the regions, as geographical distance could be just proxying for technological proximity. The study produces prima facie evidence that geography matters. First, geographical distance has a significant impact on knowledge spillovers, and this effect is substantial. Second, national border effects are important and dominate geographical distance effects. Knowledge flows within European countries more easily than across. Not only geography, but also technological proximity matters. Interregional knowledge flows are industry specific and occur most often between regions located close to each other in technological space.     

The Impact of Public Capital Stock on Regional Convergence in Turkey

The effect of public capital on regional output and private sector productivity has been the subject of considerable research in the field of regional development literature. However, there have been only a few studies that develop linkages between public capital and regional economic convergence. This study examines the dynamic effects of public capital and transportation capital stocks on output per capita in terms of regional convergence in Turkey at NUTS 2 level. A conditional convergence model based on per capita gross domestic product and per capita public capital and transportation capital stocks is estimated using the panel data set for the Turkish regions for the time period of 1980–2001. The results reveal that public capital has a positive and significant effect on output per capita and thus on regional convergence in some of the models in the Turkish regions,. However, the transportation component of public capital stock has a negative effect on regional convergence in all models employed in the study. This implies that transportation capital stock leads to larger regional disparities between the Turkish regions.     

ABSORPTIVE CAPACITY,KNOWLEDGE FLOWS,AND INNOVATION IN U.S. METROPOLITAN AREAS

High growth and progressive regions possess a culture that promotes innovation. Innovation depends on a region's ability to use its own existing knowledge and knowledge generated elsewhere. This paper demonstrates the importance of the ability to absorb external knowledge in explaining innovation productivity for 106 U.S. metropolitan areas. Using a spatial interaction model of patent citation flows with origin and destination dependence, the destination fixed‐effects coefficients provides a measure of a region's absorptive capacity. We identify local conditions that shape a region's absorptive capacity and demonstrate it has a positive and significant impact on innovation productivity.     

Human capital accumulation and long‐term income growth projections for European regions

We propose an econometric framework to construct projections for per capita income growth and human capital for European regions. Using Bayesian methods, our approach accounts for model uncertainty in terms of the choice of explanatory variables, the nature of spatial spillovers, as well as the potential endogeneity between output growth and human capital accumulation. This method allows us to assess the potential contribution of future educational attainment to economic growth and income convergence among European regions over the next decades. Our findings suggest that income convergence dynamics and human capital act as important drivers of income growth for the decades to come.     

UNDERSTANDING THE UNIQUE IMPACTS OF ECONOMIC GROWTH VARIABLES*

ABSTRACT The paper uses a computable general equilibrium (CGE) model for a small city to examine how expansions in export and local sectors, changes in total factor productivity (TFP), and growth in population impact an economy. We examine the effects of each source of growth and find that the level and distribution of economic activity vary considerably. We also evaluate each source of growth in the context of a variety of policy metrics, which provide guidelines to policy makers, including the types of firms to be recruited in specific regions.     

GLOBALIZING KNOWLEDGE: HOW TECHNOLOGICAL OPENNESS AFFECTS OUTPUT,SPATIAL INEQUALITY,AND WELFARE LEVELS

Using an analytically solvable model, we study how the spatial distribution of economic activities and the ensuing welfare levels are affected by pecuniary externalities, depending on transportation costs, and localized technological externalities, due to the cost saving effect of intra‐ and interregional knowledge spillovers. Under the assumption of capital mobility and labor immobility, we show that increasing interregional knowledge spillovers, i.e., promoting technological openness, favors a smoother transition between different levels of firms concentration, makes trade globalization less likely to generate catastrophic and irreversible agglomeration, and ultimately leads to a less uneven distribution of welfare.     

中国省区间的外资R&D知识溢出及其空间差异研究——基于随机前沿生产模型(SFA)的实证

基于随机前沿生产函数构建的区域知识溢出模型,实证分析了中国省区层面的外资R&D空间溢出效应及其差异。结果显示,我国外资R&D活动不仅对本省存在溢出影响,对邻省亦有重要贡献;东部省区同时受益于其东、中部邻省的外资R&D溢出效应,但中西部省区均只从同一区域且邻近省份的外资R&D活动获益。研究还发现,我国三大区域内部均已结成紧密的省际空间联系,外资R&D双向溢出显著;但东部与中部省区的空间关联度不强,外资R&D呈单向溢出格局;而中部与西部之间目前仍存在明显的空间分割特征,造成彼此之间互无溢出。     

REGIONAL LABOR PRODUCTIVITY IN THE NETHERLANDS: EVIDENCE OF AGGLOMERATION AND CONGESTION EFFECTS*

ABSTRACT This paper studies the impact of localization, urbanization, and diversification on regional labor productivity levels and growth. We find substantial effects, accounting for roughly half of the explained variation in the labor productivity differences within the Netherlands in the 1990s. Diversification, urbanization, and localization effects are significant and positive for productivity levels. These levels appear cointegrated. The error correction specification of productivity growth surprisingly reflects negative agglomeration effects. From the theoretical model it follows that congestion effects must have taken precedence over agglomeration effects during this period. Both agglomeration and congestion effects are dampened by job density in neighboring regions. Finally, policy simulations with the estimated model show that spatial concentration is more harmful to national productivity growth than spatial dispersion.     

DETERMINANTS OF KNOWLEDGE PRODUCTION AND THEIR EFFECTS ON REGIONAL ECONOMIC GROWTH

ABSTRACT We provide a Bayesian spatial Markov Chain Monte Carlo model composition (MC³) analysis of growth rates in European regional patenting activity. Based on theoretical models on innovation and growth, we identify a large set of candidate explanatory variables that characterize regional stocks of knowledge, including: human resources devoted to innovative activity, scientific and technical capabilities, public and private investments, government policies, as well as regional industry structure, and indicators of regional technology gaps that reflect distance from the technological frontier. Our analysis shows that accommodating spatial dependence and heterogeneity leads to different conclusions regarding factors important for technological transfer and knowledge spillovers.     

Modeling the Impact of Technological Innovation on Environmental Efficiency: A Spatial Panel Data Approach

Technological progress has widely been acknowledged as a key driver in the achievement of environmental sustainability, and a new concern has recently arisen for assessing the role of differences in regional innovation performances with respect to the pursuit of pollution targets. We investigate the impact of innovative activities on environmental efficiency at the regional level, adopting a spatial panel data approach to account for dependence between geographical observations and to get deeper insights into spatial knowledge spillovers arising from agglomeration economies. The spatial panel analysis covers 103 Italian provinces (equivalent to NUTS3 regions) on four major air pollutants (i.e., CO₂, CH₄, NMVOC, CO) over the 1995–2010 period. Our findings show that the state of local technology development, proxied by patents, has a positive impact on GDP emission efficiency and that its magnitude is higher for more localized pollutants as a result of larger spillover effects. Finally, to analyze the Italian North-South dualism of emission levels of pollutants, we offer a spillover effect study to emphasize the remarkable difference among effects in the territory. This calls for closer attention to the local relevance of the pollution damage when environmental impact of innovation strategies is to be evaluated.     

TOTAL FACTOR PRODUCTIVITY GROWTH IN MANUFACTURING FURTHER EVIDENCE FROM THE STATES*

In this paper, we first develop a measure of total factor productivity (TFP) growth and summarize a source-of-growth analysis for the manufacturing sector of 48 states. As have others, we find little association between TFP growth differentials and output growth differentials for census regions. At the staterather than the regional level, however, we find a positive association between TFP growth and output growth. We use cross-sectional data to estimate the determinants of the variation in TFP growth. Two results emerge that are important for regional policy and for understanding national productivity trends. First, state investments in education and in transportation infrastructure may affect TFP growth. Second, energy price increases in the early 1970s had no differential effects on productivity growth across states. We also explore the determinants of manufacturing output growth and find that TFP growth, demand growth, wage growth, wage levels, and state corporate income tax rates are significant.     

Growth and Convergence Profiles in the Spanish Provinces (1965–1997)*

Abstract. Economic performance in Spanish provinces has led to a considerable improvement in standard of living of their populations. Intense capital accumulation since the 1950s played a key roll in this process. Provincial inequalities may increase or decrease as a result of this growth pattern. This study analyzes the evolution of the disparities by means of distribution dynamics techniques. It explicitly considers economic size of each province and whether spatial spillovers exist. Results indicate that the convergence process has been especially intense for labor productivity, total factor productivity, and capital intensity, while for per capita income the patterns of convergence are less marked. When we weight our analysis according to economic size of each province, our conclusions do not hold. However, when we take geographic location into account, we find support for our conclusions.