Search

It has long been an article of faith amongst regional economists that increasing returns to scale are necessary to explain the punctiform location of economic activity and population. However, there is no consensus in the empirical literature over whether returns to scale are constant or increasing. A notable example of this lack of agreement is provided by the static-dynamic Verdoorn law paradox. While the dynamic Verdoorn law (specified using growth rates) yields estimates of substantial increasing returns to scale, the static Verdoorn law (specified using log-levels) indicates only the presence of constant returns to scale. In this paper, we explain the static-dynamic Verdoorn law paradox by showing that estimates of returns to scale obtained using the static law are subject to a spatial aggregation bias, which biases the estimates towards constant returns to scale. We illustrate our arguments by means of simulation exercises. The results obtained hold general lessons for applied economic analysis using spatial data. [ABSTRACT FROM AUTHOR]

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. [ABSTRACT FROM AUTHOR]

The paper analyzes the role of central cities as engines of economic growth in their metropolitan area. We wonder if there are increasing returns to central city growth at the metropolitan level arising from the positive externalities associated with the unique features of central cities. To answer this question we analyze the causality between the economic growth of Spanish central cities and the growth of the other jurisdictions belonging to their metropolitan area (i.e., the suburbs). The analysis uses population and economic activity data for a sample of 28 Spanish metropolitan areas during 35 years. We use a Vector Error Correction Model (VECM) framework to estimate long-run equilibrium relationships between the growth of central cities and their suburbs. The combination of panel data and a VECM is an innovative approach that is still being developed in econometrics. The results suggest that central city growth has a long-run positive effect on the growth of the suburbs. We also inquire as to whether or not this positive effect depends on the size of the central city. The results suggest that the effect is much higher in the case of the largest cities, but that it is also important in the case of the smaller ones. [ABSTRACT FROM AUTHOR]

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. [ABSTRACT FROM AUTHOR]

Despite strong national economic growth and significant poverty reduction during the late 1990s, high poverty persisted in remote rural areas. This study uses a geographical information system county database to examine the nexus between rural U.S. poverty and remoteness. We find that poverty rates increase with greater rural distances from successively larger metropolitan areas (MAs). We explain this outcome as arising from the attenuation of urban agglomeration effects at greater distances and incomplete commuting and migration responses to lower labor demand in rural areas. One implication is that remote areas may particularly experience greater reductions in poverty from place-based economic development policies. [ABSTRACT FROM AUTHOR]

It has long been surmised that firms controlled by different countries may have unequal effects on the host economies in which they locate. By looking at the seven major source countries of foreign direct investment (FDI) in the United States, we provide empirical evidence that the state growth effects of FDI differ by source country. We attribute these differential growth effects to the relative differences in factor endowments between the source country and the state. The implication of this result is that technology transfer, believed to be the engine of economic growth, becomes more costly the more dissimilar the endowments. [ABSTRACT FROM AUTHOR]