This monthly selection of articles has been carried out by Philippe Gugler and Damiano Lepori, the Center for Competitiveness, University of Fribourg. The entire selection, carried out since 2013, can be consulted on the academic articles page of our web.

Agglomeration Effect on Regional Unemployment in Europe

By: M. De Castris, and G. Pellegrini. Centro di Ricerca Interdipartimentale di Economia delle Istituzioni, Working Paper No. 7/2015.

Abstract: “The existence of a “size” effect on unemployment, related to the dimension of regional labour market, is often attributed to the presence of agglomeration of people and firms. However, urban and industrial cluster agglomeration effects are theoretically and empirically different. In this paper, we propose to disentangle agglomeration effects due to high concentration of population and those due to firm’s clusters or high presence of employees, by controlling for a wide set of variables, basically related to sectorial and dimensional shocks and human capital, in order to highlight the total “size” effect in the labour market. We estimate the correlation between unemployment and agglomeration in UE27 at disaggregated territorial level (Nuts 2), conditioning for covariates related to demographic, economic and geographical effects. Moreover, regional labour markets are spatial correlated within contiguous areas: we carefully model the presence of spatial correlation by a spatial lag model. We expect that the size effect is lower in Europe than in USA. Nevertheless, effects related to agglomeration of firms could be higher than effects related to agglomeration of people. The results show that urban agglomeration in Europe has a negative effect on employment; the results are opposite for industrial clusters, where the presence of firm’s agglomeration has a positive effect on labour markets. These results suggest some policy implications. First of all, government should increase the circulation of labour market information in order to enhance the matching between job seekers and labour positions even in urban areas. Incentive for reducing the costs of search cannot obviously be limited to the case of contiguity between the supply and demand of skills, but also regards the acquisition of information and knowledge which often occurs through informal chains, less strong in urban centres. Improvements in the quality of the matching require policies able to disseminate information, which can substitute those channels. It is important to reduce the costs of getting information in order to avoid the discouraging effect on job search activities.” [ABSTRACT FROM AUTHORS]

Good Firms, Worker Flows and Local Productivity

By: M. Serafinel. Beiträge zur Jahrestagung des Vereins für Socialpolitik 2015: Ökonomische Entwicklung - Theorie und Politik - Session: Local Labor Markets 2, Paper No. F18-V1.

Abstract: “A consensus has emerged that agglomeration economies are an important factor explaining why firms cluster next to each other. Yet disagreement remains over the sources of these agglomeration effects, given non-trivial measurement challenges. This paper is the first to present direct evidence showing how localized knowledge spillovers arise from workers changing jobs within the same local labor market. Specifically, I as-sess the extent to which firm-to-firm labor mobility enhances the productivity of firms located near highly productive firms, using a unique dataset combining Social Security earnings records and balance sheet information for Veneto, a region of Italy with many successful industrial clusters. I first identify a set of highly productive firms, then show that hiring workers with experience at these firms significantly increases the productivity of other firms. To address identification threats, primarily due to unobservable firm-level productivity shocks correlated with hiring, I use a novel instrumental vari- able strategy, which exploits downsizing events at highly productive firms, in addition to control function methods in the spirit of the productivity literature. My findings from both approaches imply that worker flows can explain around 10 percent of the productivity gains experienced by other firms when new highly productive firms are added to a local labor market.” [ABSTRACT FROM AUTHOR]

Creativity, Clusters and the Competitive Advantage of Cities

By: R. Martin, R. Florida, M. Pogue, and C. Mellander. The Royal Institute of technology Centre of Excellence for Science and Innovation Studies (CESIS), Paper No. 412.

Abstract: “Purpose – The article marries Michael Porter’s industrial cluster theory of traded and local clusters to Richard Florida’s occupational approach of creative and routine workers to gain a better understanding of the process of economic development. By combining these two approaches, four major industrial-occupational categories are identified. The shares of U.S. Employment in each – creative-in-traded, creative-in-local, routine-in-traded and routine-in-local – are calculated and a correlation analysis is used to examine the relationship of each to regional economic development indicators. Our findings show that economic growth and development is positively related to employment in the creative-in-traded category. While metros with a higher share of creative-in-traded employment enjoy higher wages and incomes overall, these benefits are not experienced by all worker categories. The share of creative-in-traded employment is also positively and significantly associated with higher inequality. After accounting for higher median housing costs, routine workers in both traded and local industries are found to be relatively worse off in metros with high shares of creative-in-traded employment, on average. [ABSTRACT FROM AUTHORS]

Industry Clustering and Unemployment in US Regions: An Exploratory Note

By. T. E. Lambert, G. Mattson, and K. Dorriere. Northern Kentucky University, MPRA Paper No. 69584.

Abstract: “Much has been written by various scholars and practitioners over the years about the benefits of industrial clustering, whether the clustering revolves around mature industries or around new and innovative industries (innovation clustering). The benefits of such clustering or local agglomeration economies supposedly include greater regional exports, greater employment growth, greater payroll growth, and greater new business establishment creation, among other impacts. However, the work for this research note has not uncovered much if any literature on how agglomeration affects United States regional unemployment rates. In general, greater clustering is associated with lower US metro area unemployment rates on average, although this depends upon how one defines a cluster. Additionally, most growing industrial and innovation clusters over the last two decades or so require highly educated and skilled workers. Since most of the unemployed at any given time tend to be less educated and less skilled than most workers on average, local and state economic development policies that focus on clustering must be careful in targeting lower unemployment rates as a policy goal or outcome. On the other hand, greater clustering and greater industry concentration do not seem to be associated with greater levels of unemployment during stagnant economic times as some may expect. That is, it does not appear that diversity of industry has an advantage over industry clustering and concentration in bad economic times. Finally, the arguments that decentralized or local economic development planning is better for the macroeconomy than centralized planning at the national level is discussed in light of the results for industrial clustering found in this paper.” [ABSTRACT FROM AUTHORS]

Uncovering Regional Clustering of high technology SMEs: Russian Case

By : S. Zemtsov, V. Barinova, D. Bukov, and V. Eremkin. Russian Academy for National Economy and Public Administration and Gaidar Institute for Economic Policy. 

Abstract : “The Soviet Union predetermined Russia’s economic activity’s location patterns. While the main forms of industry organization were territorial production complexes (TPC) - networks of industrial organizations united by a single technological process, - switch to the market economy in the early 90s destroyed economic ties within the TPC, leading to fragmentation of large enterprises and formation of a number of independent firms. Some scientists believe that this situation over the last 20 years could serve as a necessary foundation for clusters’ formation. Nowadays interest in clusters in Russia is rekindled due to the need to find new support mechanisms for production and innovation in a stagnating economy. The Ministry of Economic Development of the Russian Federation has initiated a project to support pilot territorial innovation clusters with infrastructure formation funding. The aim of this work is to identify clusters as areas of geographical concentration of small and medium enterprises (SMEs) in high technology sector. Authors also try to check, whether existing cluster initiatives comply with the actual concentration of high-tech SMEs and whether there is any potential for new cluster initiatives. The present paper analysis exploits modified methodology, based on localization index. The study provides tables and maps, reflecting small and medium businesses concentration in Russian regions using evidence from high and medium-high technology industries. The authors empirically confirm the existence of traditional and well-known clusters and identify new concentrations of firms in Russia. This useful information can be used for policy advice. [ABSTRACT FROM AUTHORS]

Clusters and collective learning networks: the case of the Competitiveness Cluster ‘Secure Communicating Solutions’ in the French Provence-Alpes-Côte d’Azur Region

By : C. Longhi. Groupe de recherche en Droit, Economie et Gestion, Working Paper No. 2015-28.

Abstract : “Since the development of the knowledge based economies, clusters and clusters policies have been the subject of increased interest, as sources of knowledge, innovation, and competitiveness. The paper focuses on a case study drawn from the French cluster policy, the pole of competitiveness ‘Secure Communicating Solutions’ in the French Provence-Alpes-Côte d’Azur Region, based on two high tech clusters, Rousset – Gémenos and Sophia-Antipolis. The policy aims to provide the firms incentives to build network relations of heterogeneous actors to trigger innovative processes. The analysis of the collaborative R&D projects of the pole provides insights on the nature of the collective learning networks working in the clusters as well as the prevailing organizational forms resulting from the firms strategies. It show that knowledge spillovers are not simply “in the air” but very specific of the learning networks and clusters from which they belong. Clusters thus need to be analyzed jointly with networks in order to understand the processes underlying their innovation capacity.” [ABSTRACT FROM AUTHOR]

Flemish Diamond or ABC-Axis? The spatial structure of the Belgian metropolitan area

By : M. Van Meeteren, K. Boussauw, B. Derudder, and F. Witlox. European Planning Studies, Volume 24, Iss. 5, 2016.

Abstract : “This contribution traces the evolution of the Belgian urban system by adopting a historical taxonomy of agglomeration-economy regimes, and poses the question whether a new centralizing agglomeration-economy regime based on renewed ‘metropolization’ can be observed. Belgium has federalized into three regions during the last decades and different spatial perspectives emerged about how the central metropolitan area crosscuts the regional borders. After placing Belgian metropolization in its historical context, we engage with its contemporary geography. We inquire if the metropolitan area of Belgium is more akin to the ‘Flemish Diamond’, with capital city Brussels as the southernmost node, or whether a spatial pattern reminiscent of the historical ‘Antwerp-Brussels-Charleroi (ABC)-Axis’ is a more adequate description. To answer these questions, we examine the spatial integration of the Belgian labour market utilizing the connectivity field method and a 2010 nationwide travel-to-work data set. Based on this analysis, inferences are drawn about labour market interdependencies between various parts of the urban system. The results indicate that contemporary metropolization in Belgium can be topographically expressed as an area that is more trans-regional than the Flemish Diamond yet more polycentric than an extension of Brussels, thus pointing to renewed economic centralization tendencies at the supra-regional level. “[ABSTRACT FROM AUTHORS]

Innovation Networks and the New Asian Regionalism : A Knowledge Platform on Economic Productivity.

By : H.-P. Brunner. Asian Develppment Bank, Edward Elgar Publishing, 2016, 208 pp.

Summary: “The rise of Asia, as well as the future of regional cooperation and integration (RCI) the world over, will be profoundly influenced by the challenges of slowing productivity growth, increasing economic inequalities and systemic vulnerabilities. Such structural reform issues will require RCI policies that complement domestic policy reform. This unique book explains what drives the regional economic integration of nations and their contribution to national knowledge capital. It also lays out how such beneficial integration can generate broad-based, equitable wealth in Europe and Asia.” [SUMMARY FROM AUTHOR]