The Spatial Dimension of Trade‐ and FDI‐driven Productivity Growth in Chinese Provinces: A Global Cointegration Approach

This paper analyses the major determinants of long‐ and short‐run labour productivity evolution for Chinese provinces between 1978 and 2010. The role played by openness to trade and foreign direct investment (FDI) constitutes the main focus of this analysis. From a methodological perspective, our main contribution is the inclusion of spatial effects into a dynamic error correction modelling framework. The results show that, in addition to domestic factors such as investment intensity and infrastructure use, trade openness and inward FDI also exert a direct impact on labour productivity. Furthermore, the geographical environment has a strong indirect influence on productivity: The more a region is surrounded by high‐productive regions with good infrastructure and linkages to the world economy, the higher are its productivity level and growth rate. The magnitude of these impacts varies by spatial regime (coastal, interior provinces) and time period in focus. Especially in the recent past, trade and FDI activity appear to be increasingly important drivers of regional productivity evolution, both for coastal and interior regions. These findings have important policy implications: In order to fully exploit the benefits from such spillovers, coordinated industrial policies which foster regional complementarities and support the free movement of production factors across regional borders are crucial.     

Spatial evaluation of knowledge spillover benefits in China’s free trade zone provinces and cities

China has established several free trade zones (FTZs) in recent years, which are becoming new drivers of growth for regional economic development. As the FTZ reform deepens, protecting intellectual property rights and improving application systems have become important for encouraging innovation in FTZs. To understand the knowledge spillover effects in different FTZs, this paper selects indicators at different levels of knowledge evaluation and uses the 2017 data of the provinces and cities where the first three batches of FTZs set up by China are located as samples to perform empirical analysis on knowledge spillover effects with a corrected spatial knowledge spillover model. According to the evaluation, the spatial knowledge spillover effects vary among FTZs—the spatial knowledge spillover effects of economically developed regions are smaller (0.0421), while their spillover effects on other FTZs are bigger (0.0795). In addition, the knowledge spillover effects of adjacent FTZ provinces and cities are significantly greater; the spatial spillover effects of southeastern coastal FTZ provinces and cities are more than those of central and western regions as well as northeastern provinces and cities (0.0795; 0.0533; 0.0672). This study is helpful for governments and policy makers to develop appropriate incentive policies for knowledge innovation targeting the knowledge spillover characteristics of different FTZs.     

How does industrial agglomeration affect regional innovation? A spatial econometric analysis

This study empirically investigates the direct and indirect (spillover) effects of three types of industrial agglomeration with different cognitive distances, namely, industrial specialization, industrial related variety, and industrial unrelated variety, on regional innovation. Accordingly, we applied the concepts of related and unrelated variety and used spatial econometric analysis. Based on panel data of 283 Chinese cities from 2004 to 2016, the empirical results reveal that both industrial specialization and industrial related variety significantly improve regional innovation and produce positive spatial spillover effects on the surrounding regions. However, industrial unrelated variety has a significant negative impact on regional innovation and produces a negative spatial spillover effect on the surrounding regions. Moreover, the direct and indirect effects of the three types of industrial agglomeration on regional innovation between China's coastal and inland cities. The findings have important theoretical and policy implications.     

Internet development and the spatial optimization of regional productivity: Evidence from China

The rapid development of the Internet had a profound influence on the spatial distribution of economic output activities. On the basis of theoretical analysis, this study takes China's regions as research samples and construct a spatial econometric model to empirically analyze the impact of Internet development on regional productivity. The analysis reveals that the distribution of regional productivity in China had significant spatial correlation; regional productivity had positive spatial externalities; Internet development had significant promotion effects and positive spatial spillover effects to regional productivity, but the effects are heterogeneous in different subregions. The subregion analysis shows that the optimization effect of the Internet on regional productivity exhibits heterogeneity in different subregions. The threshold effect analysis reveals the increasing marginal effect of Internet development on regional productivity, and economic development and human capital supply are important factors restricting this marginal effect. Altogether, this study provides useful references on the positive effects of the Internet on regional productivity in the spatial dimension, and suggests that the policy makers can optimize the spatial distribution of regional productivity by promoting Internet access in various regions and narrowing the digital divide among regions.     

Location matters: A spatial econometric analysis of regional resilience in the European Union

The aim of this study is to empirically examine regional resilience by assessing economic growth patterns in two distinct groups of regions across the European Union in the aftermath of the 2008 economic and financial crisis. In an effort to consider the regions as interconnected economic areas and account for spillover effects, the model incorporates complex spatial effects that consider both spatial heterogeneity and spatial dependence. The analysis follows a step‐wise approach. First, spatial heterogeneity is assessed by employing Exploratory Spatial Data Analysis, which identifies two distinct spatial regimes, a core and a periphery, based on their initial level of economic development. A Spatial Durbin Model is then employed to estimate the determinants of regional resilience and growth in both regimes, including potential spillover effects. Results indicate that while both spatial regimes experience processes of economic convergence, recent determinants of growth, as well as spillover dynamics, differ across the two. In the core regime, better institutions, higher shares of investment, and an economy specialized in higher value‐added sectors significantly spur domestic growth, with investment also inducing positive spillover effects to neighbouring regions. In the peripheral regime, low shares of lower‐secondary educational attainment and high shares of tertiary educational attainment have a significant positive effect on domestic growth, with higher shares of tertiary educational attainment also inducing positive spillover effects. Moreover, technological readiness is also identified as an important factor in the peripheral regime with positive spillover effects. Upon the bedrock of these findings, initial policy proposals are offered.     

Measuring the Containment and Spillover Effects of Urban Growth Boundaries: The Case of the Portland Metropolitan Area

Although urban growth boundaries (UGBs) are increasingly used as a containment policy to promote contiguous and compact urban forms, little is known about how UGBs affect development within the designated area or how development is displaced to other cities. This study analyzes the UGB's containment and spillover effects, focusing on the case of the Portland metropolitan area where UGBs have long been implemented. This is accomplished by employing a spatial market disequilibrium framework in which explicit consideration is given to the containment and spillover processes when under the influences of UGBs. The findings suggest that UGBs can promote development within the boundaries, but that cooperation with neighboring municipalities is necessary to effectively attain the policy goals.     

Ever-transient FDI and ever-polarizing regional development: Revisiting conventional theories of regional development in the context of China,Southeast and South Asia

In this new age of globalization, regions attempt to attract foreign direct investment (FDI) in order to achieve regionally balanced development. We revisit existing theories of regional development and FDI by analyzing recent data sets on FDI, employment, and trade in China, Southeast Asia, and South Asia. Using Chinese provincial data in 2004, 2008, and 2013 and applying panel estimations, our econometric results demonstrate that FDI remarkably influenced the concentration of employment in manufacturing, financial, and business services industries within the three Chinese macro-regions. We also find that FDI is ever transient, always moving away from high-cost to low-cost production bases across different regions. This transient nature of FDI is spatially selective and biased, and not able to generate the trickle-down effects to other neighboring regions. That is why FDI recently moved from China to Southeast and South Asia rather than from its coastal to inland regions. Furthermore, we show that this nature of FDI generally leads to polarization development for regions. As a synthesis or extension of the existing theories, we propose a leapfrog polarization pattern and strategy for vast developing countries in considering their regional development strategies.     

The Local versus Global Dilemma of the Effects of Structural Funds

This paper extends the analysis by Dall'erba and Le Gallo dealing with the impact of structural funds on the growth process of European regions. Like most of the other 18 contributions assessing the efficiency of structural funds, our article was based on a global model of β‐convergence: one coefficient pertaining to the structural funds variable was estimated for the whole sample. In this paper, we extend this approach by performing local estimations, where one coefficient is estimated for each region, so that the impact of structural funds can be regionally differentiated. As in the previous contribution, the presence of spatial spillover effects is taken into account using spatial econometric techniques, but here we apply a Bayesian locally linear spatial estimation method on a conditional β‐convergence model, which allows global and local β‐convergence to be viewed in a continuous fashion. Our results indicate that structural funds have a weak global impact on the European Union regional growth process, but that their local impacts are very diverse, with a positive influence on the growth of British, Greek, and southern Italian regions.     

Regional inflation persistence in Turkey

The purpose of the current study is to investigate the degree of inflation persistence, its geographical variation, sources of cross‐regional variation, and presence of geographical/sectoral aggregation bias in national monetary policy. Our data set covers 26 NUTS‐2 level Turkish regions and monthly CPI inflation over the period 2003–2019. We first estimate the degree of regional inflation persistence by autoregressive regressions, check its robustness against the presence of structural breaks (by Bai–Perron's algorithm) and nonlinearities (by Markovian Regime Switching regressions). Second, we examine the possibility of geographical and sectoral aggregation bias. Third, we investigate the cross‐regional determinants of inflation persistence by panel data analysis, employing hybrid‐effects spatial panel regressions. We analyze the direct and indirect effects of the determinants and test for regional spillover effects. Three main results are obtained. First, estimated persistence degrees are heterogeneous across regions. The geographical pattern is empirically robust against structural breaks and nonlinearities. We find that inflation persistence is distributed in a spatially correlated manner. Second, when sectoral and regional aggregation bias is tested, only sectoral aggregation indicates a considerable level of bias. Third, we find that the presence of large firms in the region and a higher share of agricultural output in GDP leads to lower persistence, while an increased share of industrial output, and increased trade volume leads to higher inflation persistence. Moreover, we find spatial spillovers of price variability evident in regression analysis. From a policy standpoint, it is required that structural policy programs are targeted to maintain flexibility in the regions where persistence is high (i.e., providing market entry/exit, institutional quality, policy credibility, stimulation of SMEs). Moreover, sectors that have high persistence, such as Hotels and Restaurants (persistence degree 0.55) and Health Services (0.39) should be weighted more in CPI calculations.     

Knowledge Networks in an Uncompetitive Region: SME Innovation and Growth

Knowledge networks are now recognised as a crucial element underlying the economic success and competitiveness of geographic locations, in particular regions. The aim of this paper is to assess the types of knowledge networks utilised and formed by knowledge‐based small‐ and medium‐sized enterprises (SMEs) in the relatively uncompetitive regional setting of Yorkshire and Humberside in the UK. It explores the relationship between knowledge networking activity and the levels of innovation and growth achieved by these SMEs. It is found that SMEs tend to utilise and value more knowledge networks with actors outside the region. However, more innovative SMEs possess a balance of inside and outside the region knowledge networks. Knowledge networking activity is sometimes negatively associated with growth, suggesting that networks with certain actors, such as public sector support agencies, may be formed by SMEs when they are facing competitive pressures. In terms of policy implications, the paper recommends a shift from the cluster policies implemented by many regional authorities to a regional innovation systems approach, focusing equally on the regional and more global dimensions of knowledge networks. It is concluded that regional public policy makers need to renew their efforts to support SMEs in creating and sustaining their knowledge networks.     

Revisiting the Roles of the University in Regional Economic Development: A Triangulation of Data

There is a general understanding that university plays a crucial role in regional development under the current age of knowledge economy. At the same time, we have observed a fair number of counter‐evidentiary studies, demonstrating several regions that do not thrive despite strong research universities or other patterns of development in the absence of research universities. However, they are based on case studies of individual universities or regions, and the findings currently cannot be generalized. Another set of studies that have challenged the effect of universities at the nationwide scale and demonstrated its disproportionately small impact of universities, but their scope is limited to spin‐offs, patents, and license activities. In this article, we propose to investigate this subject more systematically by triangulating three methods: 1) national‐scale regression models with Business Dynamics Statistics and National Establishment Time Series data, 2) a regional survey of IT and life science firms in four so‐called “second tier regions,” and 3) a microeconomic firm‐level analysis based on interviews with founders of technology intensive firms. Furthermore, we test the roles of university beyond those explicit, direct measures of spin‐offs and patents by analyzing the firm formation rate and firm growth rate at the regional level, as well as the sources of growth at the company level. All results point in the same direction: The research function of the university has been overstated, and the teaching function of the university has been underappreciated. These findings provide profound implications for the policy of regional development.     

FDI in Space Revisited: The Role of Spillovers on Foreign Direct Investment within the European Union

We estimate a spatial econometric interaction model for bilateral aggregate FDI stock data between 25 European Union member countries in 2010. We find evidence for spatial spillovers of foreign direct investment for three different types of spatial dependence. Our results document FDI spillovers between neighboring countries of FDI origin countries, neighboring countries of FDI destination countries as well as between neighboring countries of both FDI origin and destination countries. Relying on recently developed methods, we provide the first model‐consistent interpretation of marginal effects of market size (measured by GDP) as well as GDP per capita on bilateral FDI activity. Our research highlights the importance of taking into account spatial lags when estimating bilateral FDI gravity models.     

The Direct and Indirect (Spillover) Effects of Productive Government Spending on State Economic Growth

Using data on 48 contiguous U.S. states and a spatial econometric approach, this paper examines short‐ and long‐run effects of productive higher education and highway infrastructure spending financed by different revenue sources on state economic growth. Following the Lagrange Multiplier, Wald, and Likelihood Ratio tests, the data are found to be characterized by both spatial lag and spatial error processes, leading to the estimation of a dynamic spatial Durbin model. By decomposing results of the dynamic spatial Durbin model into short‐ and long‐run direct as well as indirect (spillover) effects, we show that accounting for spillover effects provides a more comprehensive approach to uncovering the effects of productive government spending on growth. We find that, regardless of the financing source, productive higher education and highway spending have statistically significant short‐ and long‐run direct as well as spillover effects on state income growth.     

Spatio-temporal pattern evolution and spatial spillover effect of green development efficiency: Evidence from Shandong Province,China

Improving green development efficiency is urgently required, yet challenging, since it comprehensively reflects the bidirectional evolutionary relationship between regional development and resource and environmental consumption. The issue of regional green development efficiency has become a key topic; however, where the increase in efficiency originates and its spatial spillover effect remains unclear to date. Therefore, the spatial spillover effect of the green development efficiency of Shandong Province was quantified through the slack variable (SBM)-Undesirable and Spatial Durbin model. The green development efficiency showed clear spatial differentiation in Shandong Province. This was more obvious than the polarized development trend of the provincial capital circle that has Jinan at its core and the eastern coastal region with Qingdao at its core. Green development efficiency has a significant spatial spillover effect. The regression coefficient of the direct effect of the economic development level is positive. The regression coefficient of the indirect effect of the marketization level and government financial support level is negative. Science and technology played a positive role in the promotion of the green development efficiency of local and neighboring cities. This study contributes empirical evidence to the green development efficiency associated with regional development and resource and environment consumption of Shandong Province.     

Local Sourcing and Technology Spillovers to Mexican Suppliers: How Important are FDI and Supplier Characteristics?

I present novel direct evidence on the static and dynamic impact of producer firms on local suppliers based on several firm level surveys that I conducted among producer firms and suppliers in Nuevo León, Mexico. I find that the level of use of suppliers does not differ between foreign direct investment (FDI) and Mexican producer firms. Next, I find substantial evidence that FDI firms generate a larger local dynamic impact; foreign‐owned firms apply more pressure on their suppliers to improve and are also significantly more involved in the provision of several types of technological and organisational support. In extension of these findings, I use multivariate analysis to identify characteristics of suppliers and supply linkages that influence the dynamic impact among suppliers. I find that the level of absorptive capacity of suppliers, the size of the technology gap between producer firms and suppliers, and the provision of support by producer firms all enhance the likelihood that suppliers experience a large positive dynamic impact. Importantly, even when I control for the effects of these factors, suppliers of FDI firms are still significantly more likely to experience a large positive impact.     

Innovation efficiency and spatial spillover in urban agglomerations: A case of the Beijing‐Tianjin‐Hebei,the Yangtze River Delta,and the Pearl River Delta

Based on panel data of innovation inputs and outputs in 53 cities of the three major Chinese urban agglomerations (UAs) spanning the 2001–2015 period, this study examines the influence of the spatial spillover effect among cities on innovation efficiency in UAs using the SFA method and a spatial econometric model. Three main conclusions can be draw from the empirical results. First, the innovation efficiency in the three UAs has increased over the research period, but there is enormous potential for improvement. Second, owing to the close socioeconomic linkages and the flow of innovation resources, there is a significantly positive spatial spillover effect between cities on innovation efficiency in the three UAs. In other words, innovation efficiency in a local city was positively influenced by the other cities in the UA. Particularly, the innovation efficiency in a local city is influenced by factors related to not only the city itself but also other cities in the UA. Third, as the geographical distance increases, the spillover effect on innovation efficiency shows nonlinear variations, indicating that the excessive expansion in UAs may not be attributed to innovation development.     

Recasting the City into City‐Regions: Place Promotion,Competitiveness Benchmarking and the Quest for Urban Supremacy

ABSTRACT This essay critically examines twenty‐two studies designed to measure the competitiveness of cities and city‐regions. We suggest that while this research may show statistical correlations between different dimensions of competitiveness, there is little in the way of causation. More fundamentally, our main point is to question the utility of such studies. Regional disparities in terms of wealth and living standards are well known; simply recasting the spatial scale to the city or the city‐region does not change the underlying fundamentals of regional performance.     

Interpersonal trust,invention, and innovation across European regions

Many studies in economics and regional science claim a positive link between interpersonal trust and innovation by demonstrating a positive effect of trust on patenting. This contrasts many findings from organization level studies on trust and innovation, who report a variety of findings including inverted-U type relations. A possible explanation is that trust exhibits different roles in invention and innovation, as the former relies on knowledge commons while the latter directly embeds commercialization and the market context. This study attempts to reconcile the two set of findings by studying indicators of invention and innovation in relation to trust at the same unit of observation, by using the regional variation in Europe. I study the relationship between interpersonal trust and patent applications (a measure of invention), trademark applications (a composite indicator) and the share of innovative sales in turnover by SMEs (a direct indicator of commercialization), across European regions. I show that trust positively affects trademark applications with an effect that is comparable to that on patent applications. However, trust exhibits an inverted-U type relationship with innovative sales. Results collectively point to a strong role of trust in all three creative activities, including a negative effect at the higher end when the indicator is directly contingent on commercialization and sales. I also estimate the extent of spatial spillovers in the effect of trust on all three creative outcomes.     

Regional impact and spillover effect of public infrastructure investment: An empirical study in the Yangtze River Delta,China

Since China's reform and opening up, public infrastructure investments have significantly improved. These investments drive China's long-term economic growth. Based on panel data of 41 cities in the Yangtze River Delta from 2006 to 2017, the simultaneous equation models (SEMs) are constructed to explore the regional impact and spillover effect of infrastructures with resolving endogenous problems. Public infrastructure investment remains to have a systemic effect on household income, urban population, and land prices in certain regions. In certain region, the estimated coefficients of public infrastructure investment are consistent with expectations and significant, which are 0.523, 0.142, and 0.781 with three-stage least squares method. And the endogenous variables also affect public infrastructure investment. But, the coefficient of the spatial term is −0.019, negative and not significant. The cross-regional spillover effect of public infrastructure investment is nonsignificant using the generalized spatial three-stage least squares method.     

Automobile Reliance Among the Elderly: Race and Spatial Context Effects

Abstract Mobility is a necessary condition for the social and emotional well‐being of older people. To meet their mobility needs, the elderly assign pivotal importance to the automobile despite the potential challenge of driving cessation and searching for alternatives to automobile transportation. Older persons’ generally strong reliance on the automobile varies, however, by land use patterns (density) as well as by demographic and socioeconomic characteristics. This paper analyzes the effects of spatial context and personal attributes on automobile reliance among the elderly. Using the 1995 Nationwide Personal Transportation Survey (NPTS) trip data, two models of automobile reliance among elderly (65+) trip makers are estimated. The results show that spatial context effects of automobile reliance vary by demographic characteristics; in particular, they are more pronounced for black than for white elderly. Moreover, race variation in automobile reliance is strongest in urban locations rather than less dense spatial contexts. Finally, the differentiation between being a passenger rather than a driver is salient in order to understand locational and racial variations in automobile reliance among the elderly.