The Role of Economic Sectors in the Formation of Regional Production Complexes

A variety of approaches used in Soviet economic geography to define and measure the productive specialization of an economic region are reviewed. In the author's view, a regional activity qualifies as regional specialization if it helps shape the basic character of the regional economy. It is not sufficient for a regional activity merely to represent a major portion of a particular national sector of the economy. For example, the asbestos industry in the Urals represents the major portion of Soviet asbestos output, but asbestos does not shape the basic character of the Urals economy and is therefore not a principal specialization sector. Regional specialization derives from relationships among the various sectors of the regional economy, not from the significance of any particular commodity. A classification of economic sectors is proposed as an aid in analyzing the functioning of a regional economy: (1) the principal specialization sectors; (2) basic raw-material sectors; (3) associated sectors using the wastes and by-products of the principal sectors; (4) complementary specialization sectors, such as asbestos in the Urals; (5) auxiliary sectors, such as metallurgical fluxes for the iron and steel industry; (6) service sectors, including utilities, transportation, construction, trade; (7) local sectors, working for local consumption.     

ON THE INTERPRETATION OF FIXED INPUT COEFFICIENTS UNDER AGGREGATION*

ABSTRACT A fixed input coefficient is traditionally interpreted as the additional input from one sector that is required for an additional unit of output in another sector. It is shown that this ratio of increments is, in general, not fixed under aggregation. A tight upper and lower bound for its variation are derived. A necessary and sufficient condition for the ratio to be fixed is obtained. As a consequence, adopting the common assumption of fixed input coefficients implies that additional assumptions at any subaggregate level are required. Similar results are given for the Leontief inverse, whose typical element is usually interpreted as the additional output in one sector that is required for an additional unit of final demand in another sector.     

Accounting for Air Pollution Emissions in Measures of State Manufacturing Productivity Growth

A Malmquist-Luenberger productivity index is employed to account for both marketed output and the output of pollution abatement activities of U.S. state manufacturing sectors for –1986. The index allows us to decompose the change in productivity into measures of change in efficiency and technical change. By accounting for the change in emissions, average annual productivity growth is 3.6 percent, whereas it is 1.7 percent when emissions are ignored. We also find adjusted productivity growth improved after 1977, and "Frost Belt" states with rapidly growing manufacturing sectors have significantly higher rates of productivity growth than "Sun Belt" states with slow growing manufacturing sectors.     

INDUSTRIAL CENTERS AND REGIONAL GROWTH IN THE PRESENCE OF LOCAL INPUTS*

ABSTRACT. A large proportion of regional production takes place in nontraded goods and services. In addition, significant productivity increases can be observed in some segments of this sector. Starting from these two empirical observations we construct a model of growth in a two-region setting with factor mobility. The growth process is based on endogenous technological change in the nontraded input sector, whose output serves as an input in the production of one of the two final goods, the so-called industrial good. We consider two extreme cases, one with locally limited, the other with interregional knowledge spillovers. Conditions are established under which interior solutions with production of local inputs and steady-state growth in both regions result, and others under which we find a core-periphery pattern with growth concentrated in one region only. The stability of the equilibria is discussed by considering the transition processes. Finally, it is shown that catching-up as well as leapfrogging may occur, if new technologies become available.     

A Reexamination of Output Convergence in the U.S. States: Toward Which Level(s) are they Converging?

Abstract.  This paper reexamines the issue of output convergence among the 48 states in the continental United States. Implementing multiple panel data techniques to state per capita output during the period 1929–2001 reveals little evidence of stochastic convergence in all 48 states, but some evidence among collections of states at the regional level. This observation may suggest that output convergence in the United States has proceeded among geographically neighboring states rather than among distant states, notwithstanding the nearly complete integration of product and factor markets. Our findings appear to be robust to a subsample analysis, although the intensity of convergence varies with the choice of output measure and deflator. Industrial structures and geographic proximity are considered as potential explanations for the regional pattern of output growth dynamics.     

Stocking Up: The Role of Temporal and Spatial R&D Stocks

Endogenous growth models are built around the concept of a knowledge stock. This knowledge stock can also be interpreted as a localized stock that operates at the regional level, as is common in the regional innovation systems literature. We use data from the second, third and fourth Community Innovation Surveys (covering 1994–1996, 1998–2000 and 2002–2004) to measure the build-up of knowledge at a very low regional aggregation level (“across streets and hallways”) in the Netherlands. In doing so, we account for regional agglomeration effects. We find that such local knowledge stocks have a small influence on innovation and are far outweighed by firm-specific characteristics.     

The Effect of Public Infrastructure on the Private Productive Sector of Spanish Regions

In this paper we analyze the effect of infrastructure on the cost and productivity performance of the private productive sector of Spanish regions over the period 1980–1993. We use a dual approach based on cost functions that allows us to recover the usual parameters estimated with production functions. In addition, we obtain rates of return and cost elasticities of production factors at the regional level. Our framework explicitly considers that some factors are quasi-fixed and their volume can differ from their optimal endowment levels. Our results indicate that the public sector has contributed significantly to enhance productivity and reduce costs in the private sector of almost every Spanish region. Nevertheless, there is still scope for the government to continue its investment efforts, given that there remains an appreciable gap between observed and optimal public capital, and we find that in the long run, public capital promotes private investment.     

THE IMPACT OF SPECIFIC-SECTOR CHANGES IN EMPLOYMENT ON ECONOMIC GROWTH, LABOR MARKET PERFORMANCE AND MIGRATION

ABSTRACT.  It is common in empirical regional economics to use total employment as an explanatory variable while investigating issues such as the level and distribution of income and migration. This paper argues that sector-specific changes in employment and labor market performance can have different effects on economic growth, the collection of tax revenue, migration, and the level and distribution of household income. As such, it is important to model sectors separately. We find that expansions in employment opportunities for a high-wage sector such as computer manufacturing or bioengineering, a medium-wage sector manufacturing, and the lower-wage sector of retailing have differing economic consequences for a small city. We use a data intensive computable general equilibrium model to obtain these results.     

The Impact of Neutral and Nonneutral Productivity Growth on Creative Capital in a Trading Regional Economy. 区域经济贸易中中性和非中性生产力增长对创新资本的影响

We analyze a two‐sector model of a trading creative regional economy (TCRE) of the sort studied by Florida. Our analysis focuses on two cases. The first case concerns the impact of faster neutral, whereas the second case concerns the impact of faster nonneutral, productivity growth in the tradable sector on the employment of creative people in each of a TCRE's two sectors. In both cases, the sign of the percentage change in the steady‐state use of creative capital in the nontradable sector is ambiguous. In other words, the potential departure of creative people from the tradable to the nontradable sector does not depend upon whether the faster productivity growth being studied is neutral or nonneutral. In addition, because the effects of faster productivity growth in the tradable sector are not necessarily innocuous, a potential role exists for activist policy designed to countermand the possibly negative effects of faster productivity growth on either the tradable or the nontradable sector. This finding of possible “uneven development” is consistent with Florida's view that TCREs can give rise to externalities such as uneven regional development.     

A Flexible Mathematical Programming Model to Estimate Interregional Input–Output Accounts*

Abstract. This study implements and tests a mathematical programming model to estimate interregional, interindustry transaction flows in a national system of economic regions based on an interregional accounting framework and initial information of interregional shipments. A national input–output (IO) table, regional data on gross output, value‐added, exports, imports, and final demand at sector level are used as inputs to generate an interregional IO account that reconciles regional economic statistics and interregional transaction data. The model is tested using data from a multiregional global IO database and shows remarkable capacity to discover true interregional trade patterns from highly distorted initial estimates.     

The Role of Personal Factors in the Location Decision of Software Services Start-up Firms

This paper explores the factors which influence the business location decisions of start-ups, focusing in particular on the role of personal factors. Established explanations of industry location emphasize proximity to firms in the same or related industries and proximity to a wider set of business services, though recent research suggests that personal factors may play an important role in explanations of industry location—particularly in technology-enabled sectors. A survey of 97 new firms, founded between 2008 and 2012, in the Irish software services sector, shows that the business location decision is influenced by the personal motivation of entrepreneurs to attain a desired quality of life, and that this outweighs economic factors such as proximity to firms within the same or related industries, proximity to a broader set of supporting business services, infrastructure or the availability of government support schemes. Personal factors are particularly important to firms located outside the Dublin metropolitan area and to home-based businesses. This has important policy implications for national and regional governments seeking to encourage entrepreneurship in technology-enabled service sectors.     

IDENTIFYING OPTIMAL SECTOR GROUPINGS WITH THE HYPOTHETICAL EXTRACTION METHOD*

ABSTRACT We formulate the problems of finding a key sector and a key group of sectors in the economy by the hypothetical extraction method (HEM), and derive their analytic solutions that are termed industries’ factor worths. It is shown that the key group of k ≥ 2 sectors is, in general, different from the set of top k industries selected on the basis of the key sector problem, the issue which is totally ignored in the input–output (IO) linkage literature. Further, the related problems of finding a key region and a key group of regions in an interregional IO setting are discussed. We also examine how a change in an input coefficient affects the factor worth of an industry. The key group problem is applied to the Australian economy for factors of water use, CO₂ emissions, and generation of profits and wages.     

Taking risks in regions: the geographical anatomy of Europe's emerging venture capital market

Over the past 25 years, the USA has pioneered a new technologicalrevolution, based on large numbers of new small enterprises,financed by a dynamic venture (risk) capital market. The EuropeanUnion, meanwhile, has lagged behind in this sector of economicactivity, and compared to the US innovative small and mediumenterprises appear to find it more difficult to get startedand grow. At a time when regional and local banking systems– traditionally major sources of capital for small andmedium sized enterprises across Europe – are undergoingintense reorganisation and restructuring, the European Commissionconsiders the development of a substantial risk capital marketto be a key condition for closing the ‘enterprise gap’with the US. While the venture capital industry is much lessdeveloped in Europe than it is in the US, nevertheless it hasrecently experienced a marked increase in activity. But whereasthe European Commission argues that venture capital activityneeds to be much more regionally clustered if it is to emulatethe US experience, the OECD and some EU member states have arguedfor a more even regional distribution. The aim of the paperis to chart the growth and geographical anatomy of the emergingEuropean venture capital market, and to examine its spatialdevelopment and regional implications in the context of thesesomewhat opposing views.     

珠江三角洲镇域乡镇工业发展及其地方经济影响研究——以顺德市北窑镇为例

本文以珠江三洲为研究区域,以顺德市北窑镇为实例,就乡镇工业发展对一个镇域地方经济产生的影响进行了研究。认为在一些乡镇工业部门的发展过程中,可以作为一个"增长极",通过前后项生产联系有效地带动地方农业和第三产业的增长,从而形成地方的多种经济活动空间集聚体。因此,地方政府在选择其经济增长极时需对其与其它经济部门的前后项生产联系作周密的考察。     

The role of path-dependence in the resilience of EU regions

The paper studies the role of path-dependence in the resilience of EU regions. Particularly, employing a nonparametric analysis, the paper demonstrates that historical adjustments of EU regions materialized by productivity improvements, primarily in the manufacturing sector and incidentally in the sectors of construction, financial and non-market services, during the period 1995–2008 secured high(er) levels of regional resilience during the economic crisis period 2008–2013. Such a finding provides implications not only for theory but also for policy. Policies aiming at boosting regional productivity and competitiveness, which through a positive regional performance of high growth rates is concealed, a well-structured and robust production restructuring, might affect regional resilience in a way that shields regional economies not only from current imbalances but also from any future downturns.     

EUROPEAN UNION REGIONAL PRODUCTIVITY DYNAMICS: A “DISTRIBUTIONAL” APPROACH*

ABSTRACT Working within the “distributional approach,” this research offers evidence of past and future polarization in aggregate regional labor productivity in EU‐15. This finding is robust to alternative definitions of the spatial units used and does not appear to be the result of regional structural change. Spatial effects are found but are of rather localized nature. Turning to separate sectoral analyses suggests that past and future polarization in labor productivity across European regions may be associated with regional productivity differences in the services sectors.     

Twenty‐first Century Industrial Policy in a Small Developing Country: The Challenges of Reviving Manufacturing in Rwanda

The Rwandan government — widely lauded for its political commitment to development — has refocused its efforts on reviving growth in the manufacturing sector. This article examines how pressures from different levels — international, regional and domestic — have shaped the evolving political economy of two priority sectors (apparel and cement). To achieve its goals of manufacturing sector growth, the Rwandan government aims to access foreign markets (on preferential terms) and larger regional markets while developing effective state–business relationships with locally based firms. Despite the government's political commitment to reviving its manufacturing sector, its strategy has been both shaped and impeded by shifting pressures at the international level (through Rwanda's recent suspension from the African Growth and Opportunity Act), the regional level (through competition from regional firms) and the domestic level (through over‐reliance on single firms). Within the current industrial policy literature, there is limited reflection on how developing countries are dealing with the multi‐scalar challenges of enacting industrial policy in a much‐changed global trading environment. This article contributes to the industrial policy literature by addressing this lacuna.     

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.     

An empirical examination of shift-share instruments

Bartik's (1991, 1993) approach to identifying shocks in demand to regional economies has been used extensively for nearly 30 years. We chronicle the development of Bartik-type shift-share instruments and examine the empirical performance of alternative versions that use different combinations of national shift and local share variables in their construction. We offer three main findings. First, instruments constructed from shares that omit employment in nontraded sectors empirically dominate versions that include total employment. Second, industrial sectors with high average shares and low variation across areas are more likely to be nontraded and endogenous. This suggests placing large weights on nontraded sector shares worsens both relevance and potential endogeneity. Finally, we demonstrate national shifters other than employment, such as prices and wages, can be used to construct instruments with unique and relevant explanatory power.     

The changing geography of the Canadian manufacturing sector in metropolitan and rural regions, 1976–1997

This paper documents the changing geography of the Canadian manufacturing sector over a 22‐year period (1976–1997). It does so by looking at the shifts in employment and differences in production worker wages across different levels of the rural/urban hierarchy—central cities, adjacent suburbs, medium and small cities and rural areas. The analysis demonstrates that the most dramatic shifts in manufacturing employment were from the central cities of large metropolitan regions to their suburbs. Paralleling trends in the United States, rural regions of Canada have increased their share of manufacturing employment. Rising rural employment shares were due to declining employment shares of small cities and, to a lesser degree, large urban regions. Increasing rural employment was particularly prominent in Quebec, where employment shifted away from the Montreal region. The changing fortunes of rural and urban areas were not the result of across‐the‐board shifts in manufacturing employment, but were the net outcome of differing locational patterns across industries. In contrast to the situation in the United States, wages in Canada do not consistently decline, moving down the rural/urban hierarchy from the largest cities to the most rural parts of the country. Only after controlling for the types of manufacturing industries found in rural and urban regions is it apparent that wages decline with the size of place .