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Showing papers in "Economics of Governance in 2003"


Journal ArticleDOI
TL;DR: The theoretical framework of urban and regional economics is built on transportation costs for manufactured goods, and there is little reason to doubt that this decline will continue as discussed by the authors. But over the twentieth century, the costs of moving these goods have declined by over 90% in real terms.
Abstract: The theoretical framework of urban and regional economics is built on transportation costs for manufactured goods. But over the twentieth century, the costs of moving these goods have declined by over 90% in real terms, and there is little reason to doubt that this decline will continue. Moreover, technological change has eliminated the importance of fixed infrastructure transport (rail and water) that played a critical role in creating natural urban centres. In this article, we document this decline and explore several simple implications of a world where it is essentially free to move goods, but expensive to move people. We find empirical support for these implications.

473 citations


Journal ArticleDOI
TL;DR: In this article, the authors present a summary of their conversation on the past, present and future of the new economic geography, which took place with the help of an interlocutor in San Juan, Puerto Rico in November 2002.
Abstract: This article presents a summary of our conversation on the past, present and future of the new economic geography, which took place with the help of an interlocutor in San Juan, Puerto Rico in November 2002. Following the introduction, we explain what the new economic geography is, and we describe some basic models. The discussion of its various critical aspects is presented subsequently, and the article concludes with the discussion of future issues and challenges facing the field.

467 citations


Journal ArticleDOI
TL;DR: In this article, the authors show that the relationship between corruption and trade intensity disappears, using newer corruption indicators with substantially increased country coverage, and also demonstrate that empirical links between corruption, or country size, strongly related to trade intensity are sensitive to sample selection bias.
Abstract: . Several authors claim to provide evidence that governmental corruption is less severe in countries where trade intensity is higher or populations are smaller. We argue that theory is highly ambiguous on these questions, and demonstrate that empirical links between corruption and trade intensity – or country size, strongly related to trade intensity – are sensitive to sample selection bias. Most available corruption indicators provide ratings only for those countries in which multinational investors have the greatest interest: these tend to include almost all large nations, but among small nations only those that are well-governed. We find that the relationship between corruption and trade intensity disappears, using newer corruption indicators with substantially increased country coverage. Similarly, the relationship between corruption and country size weakens or disappears using samples less subject to selection bias.

230 citations


Journal ArticleDOI
TL;DR: In this article, the authors report on an experiment of corruption that was conducted in two treatments: one with the possibility of detection and one without, and they show that the salary level has an influence on corruption through increased opportunity costs of corruption, but fail to find evidence for a payment satisfaction effect.
Abstract: This paper reports on an experiment of corruption that was conducted in two treatments: one with the possibility of detection and one without. It turns out that monitoring reduces corruption through deterrence; at the same time, it destroys the intrinsic motivation for honesty. Thus the net effect on overall corruption is a priori undetermined. We show that the salary level has an influence on corruption through increased opportunity costs of corruption, but fail to find evidence for a ‘payment satisfaction’ effect. Interesting policy conclusions emerge.

227 citations


Journal ArticleDOI
TL;DR: In this article, an increase in Colombia's level of integrity to that of the United Kingdom was found to increase net annual capital inflows by 3 percent of GDP, and the impact of corruption on investment was analyzed.
Abstract: Corruption is known to reduce the ratio of investment to GDP. This study breaks down investment into domestic savings and net capital inflows. A significant impact of corruption exists only for the latter variable because the first variable is distorted by general equilibrium repercussions. An increase in Colombia’s level of integrity to that of the United Kingdom is found to increase net annual capital inflows by 3 percent of GDP. Decomposing this impact reveals that bureaucratic quality, civil liberty and government stability are irrelevant, but that a country’s law and order tradition is a crucial sub-component for attracting capital.

214 citations


Journal ArticleDOI
TL;DR: Spatial interaction (SI) is the process whereby entities at different points in physical space make contacts, demand/supply decisions or locational choices as mentioned in this paper, and the choices can include housing, jobs, production quantities, exports, imports, face-to-face contacts, schools, retail centres and activity centres.
Abstract: Spatial interaction (SI) is the process whereby entities at different points in physical space make contacts, demand/supply decisions or locational choices. The entities can be individuals or firms and the choices can include housing, jobs, production quantities, exports, imports, face-to-face contacts, schools, retail centres and activity centres. The first SI models can be grouped under the generic heading gravity models. Their main characteristic is that they model the behaviour of demand or supply segments, rather than that of individuals and firms. This article traces the development of these models from their inception in the early part of the twentieth century to the present. The key advances include the replacement of the gravity analogy by the more general concepts of entropy or information theory, a statistical framework commonly used in physics. With the arrival of the regional science paradigm over 50 years ago, a key challenge has been to broaden these models compared to those arising in spatial economics, thus arriving at a more inclusive probabilistic framework. These efforts are discussed here, as well as inclusion of geographical advances, embracing activities as generators of travel, time-geography, recognition of spatial interdependencies, and use of neuro-computing principles.

200 citations


Journal ArticleDOI
TL;DR: In this article, the authors identify some of the important developments in GIS and spatial data analysis since the early 1950s, and comment on the potential for convergence of developments under the rubric of geographic information science (GIScience).
Abstract: This article identifies some of the important developments in GIS and spatial data analysis since the early 1950s. Although GIS and spatial data analysis started out as two more or less separate areas of research and application, they have grown closer together over time. We argue that the two areas meet in the field of geographic information science, with each supporting and adding value to the other. The article starts off providing a critical retrospective of developments over the past 50 years. Subsequently, we reflect on current challenges and speculate about the future. Finally, we comment on the potential for convergence of developments in GIS and spatial data analysis under the rubric of geographic information science (GIScience).

173 citations


Journal ArticleDOI
TL;DR: This article examined the effect of municipal fragmentation on metropolitan spatial structure through a series of econometric models designed to test the following hypothesis: that fragmentation promotes sprawl by increasing the proportion of growth that occurs at the unincorporated urban fringe.
Abstract: Urban sprawl has evolved into an exceptionally complex public policy problem in the United States over the course of recent decades. One factor that has made it particularly difficult to deal with is its relationship to the fragmented structure of the American system of land use governance. Acting on behalf of their residents, local governments enact land use regulations to secure lifestyle preferences for low density, suburban living environments while at the same time ensuring a high quality of public service provision. This article examines the effect of this process on metropolitan spatial structure through a series of econometric models designed to test the following hypothesis: that fragmentation promotes sprawl by increasing the proportion of growth that occurs at the unincorporated urban fringe. The estimation results reveal substantive evidence that municipal fragmentation and several related factors - including special districts, infrastructure investments, and white flight processes - have a significant and enduring effect on the growth of outlying areas.

170 citations


Journal ArticleDOI
TL;DR: In this article, the authors survey common themes in recent migration research and comment on the actual and potential contribution of regional science to this literature, and make a marked shift in research from internal to international migration.
Abstract: In this article we survey common themes in recent migration research and comment on the actual and potential contribution of regional science to this literature. There has been a marked shift in research from internal to international migration. The two research programmes would benefit from a unified framework. Spatial and systemic features of migration systems remain underdeveloped. Moreover, the perspectives from the different disciplines that intersect in regional science can still be integrated better. Communication of the research findings in terms understood by policymakers and practitioners is also desirable. Finally, many new and interesting research topics will emerge when greater effort is made to link migration research with other current research topics in regional science.

162 citations


Journal ArticleDOI
TL;DR: In this paper, the authors discuss the relationships between transportation infrastructure, firm location, agglomeration and regional development, and argue that the spatial transaction costs faced by modern firms have changed over recent decades, and that this has changed the ways in which transportation infrastructure contributes to form location behavior and regional economic development.
Abstract: In this article we discuss the relationships between transportation infrastructure, firm location, agglomeration and regional development. We will argue that the spatial transaction costs faced by modern firms have changed over recent decades, and that this has changed the ways in which transportation infrastructure contributes to form location behaviour and regional economic development. Therefore, in order to analyse these issues, it is necessary to consider the spatial transaction costs faced by modern firms and to investigate the conditions under which reductions in these costs due to infrastructure improvements will allow firms to move. These complex relationships are seen to be mediated via different geography-firm-organisation structures and consideration of these is essential for any realistic evaluation of the role of transportation infrastructure.

157 citations


Journal ArticleDOI
TL;DR: In this article, the complementarities between the productivity benefits of agglomeration and those of network linkages are explored, and it is argued that networks of actors dispersed over space may substitute for aggregates of actors at a single point.
Abstract: We consider the parallel developments in the economics of agglomeration and the economics of networks. We explore the complementarities between the productivity benefits of agglomeration and those of network linkages, arguing that networks of actors dispersed over space may substitute for agglomerations of actors at a single point.

Journal ArticleDOI
Canfei He1
TL;DR: This article found that agglomeration economies derived from the clustering of manufacturing and foreign investment activities, combined with better access to markets, influence the location of foreign manufacturers in China.
Abstract: Using data from China, this article finds that agglomeration economies derived from the clustering of manufacturing and foreign investment activities, combined with better access to markets, influence the location of foreign manufacturers. Foreign enterprises are attracted to cities with investment incentives, but they avoid high labour cost locations. The locational patterns also suggest country of origin effects. American, Hong Kong and Taiwanese manufacturers tend to value access to domestic markets, while Japanese investors favour port cities. Further analysis indicates the presence of origin of country effects at the sectoral level.

Journal ArticleDOI
TL;DR: In this article, the authors reviewed where we have come from and where we are going in research on regional growth and development, focusing on the region, an imprecise term that has been taken to mean areas as large as small countries or as small as urban regions.
Abstract: This article reviews where we have come from and where we are going in research on regional growth and development. Our object of study is the region, an imprecise term that has been taken to mean areas as large as small countries or as small as urban regions, although how regions are defined does itself have implications for both theories and the empirics of regional growth. How growth occurs remains a poorly understood process. Clearly the basic ingredients of the neo-classical cookbook are important — growth in capital and labour stocks with technological change — but they are neither enough nor revealing enough. Why does the stock of capital grow at different rates? Why does the labour supply increase? What drives technical progress? What are the roots of spatial dependence? We are fairly certain that the answers to these questions embrace agglomeration economies but they also embrace much more. Innovation is associated with research and development and has an identifiable spatial pattern in relation to highly skilled labour and institutions such as universities. But innovation is not just the result of R&D but also entrepreneurship applied to investment. Labour supply responds to real wage differentials but also to environmental and other amenities. Labour is far more geographically mobile in the New World, however, than it is in the Old.

Journal ArticleDOI
TL;DR: In this article, the authors discuss long run trends in transport costs and the potential spatial consequences and conclude that although in terms of money and time, the performance of transport has improved enormously, many economic activities have not become footloose to the extent expressed by the death of distance.
Abstract: Transport costs have always been an important dimension in regional science. It is therefore remarkable that regional science and transport economics have developed in a rather unconnected way. Although being distinct, the routes of the two were parallel, and there are signs that the two fields will get closer to each other. This paper further discusses long run trends in transport costs and the potential spatial consequences. The main conclusion is that although in terms of money and time, the performance of transport has improved enormously, many economic activities have not become footloose to the extent as expressed by the notion of ‘death of distance’. One of the reasons discussed is the role of transaction costs, some being clearly related with distance.

Journal ArticleDOI
TL;DR: In this article, the authors examined the export propensity among Indonesian manufacturers and examined three types of foreign networks: foreign ownership, import, and the regional presence of Foreign Direct Investment (FDI).
Abstract: This article examines export propensities among Indonesian manufacturers. The pattern of trade between nations is well understood, but much less is known about firm level determinants to export: why do some Indonesian firms start to export while others continue to produce for the domestic market? One reason for different export propensities could be that the sunk costs for exports differ between firms. This article examines if foreign networks decrease export-costs and thereby have a positive impact on the export propensity in Indonesian manufacturing establishments. Three different types of foreign networks are examined: foreign ownership, import, and the regional presence of Foreign Direct Investment (FDI).

Book ChapterDOI
TL;DR: This paper developed a theory of the transition from despotic to rule-of-law regimes, relying on the notion that rulers and subjects are interested in maximizing wealth, and keeping subjects in check enhances despots' internal security, but at the cost of lower output, and of less wealth for the despots.
Abstract: Using property-rights tools, this paper develops a theory of the transition from despotic to rule-of-law regimes, relying on the notion that rulers and subjects are interested in maximizing wealth. Keeping subjects in check enhances despots’ internal security, but at the cost of lower output, and of less wealth for the despots. Enhanced wealth is especially valuable for protection against outside threat. Subjects will increase output only if provided with rights to, for example, ownership, movement, and voting. Despots can guarantee them these rights by relinquishing some of their own power.

Journal ArticleDOI
TL;DR: In this article, the authors considered a Tullock contest where each opponent can use two instruments and explored the probabilities of winning and the relative rent dissipation in both cases where the players had the option to use only one instrument and where the opponents had two instruments in the contest.
Abstract: This is a model of a contest where, in order to win, each opponent can use two instruments. The probabilities of winning are explored, as well as the expenditures of the interest groups, and the relative rent-dissipation in both cases where the players have the option to use only one instrument (the standard Tullock contest) and where the players have the option to use two instruments in the contest. We show that the use of two instruments strengthens the player with the higher stake, decreases the relative rent dissipation and it decreases total expenditure if the parties are sufficiently asymmetric.

Journal ArticleDOI
TL;DR: The Regional Science Association was founded 50 years ago in December 1954; however, the institutional origins of the field were much earlier, perhaps when Walter Isard began his graduate studies in economics at Harvard University as discussed by the authors.
Abstract: The Regional Science Association was founded 50 years ago in December 1954; however, the institutional origins of the field were much earlier, perhaps when Walter Isard began his graduate studies in economics at Harvard University. This article briefly traces the history of the field of regional science and its association from those beginnings to the present. The focus of the article is the evolution of the association as an institution, and some of its major contributors, and to a much lesser extent, on the scope and scholarly content of the field.

Journal ArticleDOI
TL;DR: In this article, it is argued that the solution concept of an evolutionary stable strategy (ESS) is an adequate analysis tool for contest theory, and it is shown that in a contest ESS always differs from Nash equilibrium, the hitherto dominant solution concept in contest theory.
Abstract: It is argued in this paper that the solution concept of an evolutionary stable strategy (ESS) is an adequate analysis tool for contest theory. Moreover, it is shown that in a contest ESS always differs from Nash equilibrium, the hitherto dominant solution concept in contest theory. Finally, an interpretation of finite population ESS contest behavior in terms of Nash behavior is supplied.

Journal ArticleDOI
TL;DR: In this article, the authors investigated whether labour market competitiveness affects the inflows of foreign direct investment (FDI) into the ASEAN economies Malaysia, Thailand and the Philippines.
Abstract: This article investigates whether labour market competitiveness affects the inflows of foreign direct investment (FDI) into the ASEAN economies Malaysia, Thailand and the Philippines. The analysis is based on a regression model using time series data on FDI, wages, the labour force, skills, R&D expenditure, the interest rate and several variables critical for economic development. The study shows that the labour market determinants differ between countries in terms of their role in FDI inflows. Thus analysis results suggest that, with regard to labour market competitiveness, different countries may require different policy recommendations in order to attract FDI inflows into their countries.

Journal ArticleDOI
TL;DR: A method to find the core of a productive structure by employing the qualitative approach and avoiding exogenous criteria is presented and results are presented in a graph of relationships that characterise the productive structure as a whole.
Abstract: Structural analysis deals with economic systems as defined by the set of industries and the relationships between them. However, multi-sectoral models are often limited: when studying economic systems empirically it is difficult to distinguish a priori the subset of basic or important relationships between industries. This research note presents a method to find the core of a productive structure by employing the qualitative approach and avoiding exogenous criteria. Results are presented in a graph of relationships that characterise the productive structure as a whole. In effect, the figure provides information concerning the main paths of influence between sectors in the structure, as well as information regarding the complexity of the economic system.

Journal ArticleDOI
TL;DR: In this article, the effects of changes in a federal government's inter-regional transfers within the context of a CGE model of a federal system in which regional governments act to maximise the welfare of the residents of their region subject to their decision on regional economic outcomes are modeled as players in a non-cooperative game.
Abstract: We model the effects of changes in a federal government’s inter-regional transfers within the context of a CGE model of a federal system in which regional governments act to maximise the welfare of the residents of their region subject to the effects of their decision on regional economic outcomes. Regional governments are modelled as players in a non-cooperative game. Simulations are conducted with six versions of a small two-region model, each calibrated for a particular Australian state and the rest of the nation. We show that a change in the level of transfers has little influence on per-capita private consumption, government consumption and welfare, and that its main effect is to induce migration from the donor region to the recipient region.

Journal ArticleDOI
TL;DR: In contrast to most of the literature on a circular market in which firms choose to disperse equally from each other in equilibrium, this article showed that the equal distance dispersion in a circular markets results from the substitutability of products produced by two single-plant duopoly firms.
Abstract: In contrast to most of the literature on a circular market in which firms choose to disperse equally from each other in equilibrium, this research note shows that the equal-distance dispersion in a circular market results from the substitutability of products produced by two single-plant duopoly firms. Meanwhile, agglomeration at one point results from complementarity. In the multi-plant duopoly case, we find - in contrast to Chamorro-Rivas (2000) - that when firms sell complements, the equilibrium locations tend to exhibit both inter-firm agglomeration and intra-firm dispersion. In other words, the location layout in equilibrium exhibits spatial agglomeration (by pairs) finitely at many points.

Journal ArticleDOI
TL;DR: In this paper, the social value of knowledge transparency concerning real shocks is shown to be negative since the disclosure of the central bank's private information eliminates the possibility of insuring the public against those shocks.
Abstract: We examine to what extent central banks should release their internal assessments concerning the links between money growth and future inflation, and between employment and inflation. We show that the social value of knowledge transparency concerning real shocks is negative since the disclosure of the central bank's private information eliminates the possibility of insuring the public against those shocks. Finally, we discuss a number of further arguments which have to be taken into account before policy conclusions can be drawn.

Journal ArticleDOI
TL;DR: On the basis of citations to articles in regional science journals, this paper identified the most influential scholars in the field during various periods of its first-half century and distinguished among the pioneering generation who wrote its formative pieces, the generations who expanded its boundaries, and the current generation whose work is shaping the field and giving it direction.
Abstract: On the basis of citations to articles in regional science journals, this study identifies the most influential scholars in the field during various periods of its first-half century. It distinguishes among the pioneering generation who wrote its formative pieces, the generations who expanded its boundaries, and the current generation whose work is shaping the field and giving it direction. Useful insights into the nature of regional science flow from key facts about its intellectual leaders, including their disciplinary affiliations, periods of active research, and cited work outside the regional science journals. The article also discusses problems with the citation data and limitations of citation studies.

Journal ArticleDOI
TL;DR: The Brightest of Dawns: 50 Years of Regional Science as discussed by the authors was published on the occasion of the fiftieth anniversary of the founding of the Regional Science Association International (RSAI).
Abstract: This Golden Anniversary Issue, The Brightest of Dawns: 50 Years of Regional Science has been written on the occasion of the fiftieth anniversary of the founding of the Regional Science Association International (RSAI). The title represents our belief that the multiregional field of regional science has now been firmly established. A sound scholarly foundation, grounded in social science theory, has been laid. The toolkit of powerful techniques for applied regional analysis is an ever-expanding one. And the institutional basis is now solidly established, with a plethora of active regional science associations, domestic and international conferences galore, a host of well-established regional science journals, a number of interdisciplinary academic programmes, and numerous prestigious regional research institutes. Today, regional scientists carry out their craft not just within the academic departments of the world’s leading universities, but also in government agencies and the business sector.

Journal ArticleDOI
TL;DR: A collection of regional science books that longstanding members of the Regional Science Association International (RSAI) identified as path-breaking books is presented in this article, with reviews of these books written by leading scholars from different continents.
Abstract: This article presents a collection of regional science books that longstanding members of the Regional Science Association International (RSAI) identified as path-breaking books. The most frequently nominated books include the “classics” by Isard, the seminal books in urban economics by Alonso, Muth and Mills, methods books by Miernyk, Wilson, Anselin, and Cliff and Ord, textbooks by Beckmann and Richardson, as well as the recent contribution by Fujita, Krugman and Venables. Reviews of these books, written by leading scholars from different continents, make up the major contribution of this article and are a testimony to the far-reaching influence of regional science in the academic literature.

Journal ArticleDOI
TL;DR: In this paper, the welfare effect of trade and environmental technology transfer from a developed country to a developing country is analyzed using a two-country, two-sector and two-factor Ricardian general equilibrium model.
Abstract: We analyse in this article the welfare effect of trade and environmental technology transfer from a developed country to a developing country. We use a two-country, two-sector and two-factor Ricardian general equilibrium model. The two industries are manufacturing and agriculture, and the pollution emitted from the manufacturing industry decreases the natural environment useful to agricultural production. We consider two cases. In the first case pollution in each country is local. In filethe second case pollution in one of the two countries is global. We analyse each case separately and obtain the following results. In the first case the developed country may be worse off if technology is transferred to the developing country. In the second case such a paradox never occurs.

Journal ArticleDOI
TL;DR: A comprehensive survey of the literature on the environment in regional science can be found in this paper, where the authors discuss five key issues in the literature: regional economic development, environmental regulation, natural resources, international affairs, and geographic information systems.
Abstract: The environment, broadly construed, is increasingly a salient topic in regional science research. Theoretical and empirical inquiries by regional scientists have progressively begun to address the manifold environmental ramifications of regional science questions. As such, there now exists a sizeable literature on what we may call the environment in regional science. Given this state of affairs, the purpose of this article is to survey this extensive literature. To provide sufficient focus, we do this by discussing five key issues in the extant literature on the environment in regional science. These issues are: (i) regional economic development, (ii) environmental regulation, (iii) natural resources, (iv) international affairs, and (v) geographic information systems. Our survey is both retrospective and prospective in nature. We are interested not only in what has been accomplished thus far but also in where research on the environment in regional science is headed in the future.

Journal ArticleDOI
TL;DR: In this article, the authors examined the influence of political culture on MNC investment location decisions with regard to different regions within a single country and found that political culture as represented by the pattern of support for political parties at different points on the political spectrum has a significant impact on the MNC's investment location decision.
Abstract: Does the political culture of an area have any impact on the foreign direct investment (FDI) decisions of multinational corporations (MNCs)? This question is difficult to address empirically, as locations differ in many dimensions. We therefore address this question by examining MNC investment location decisions with regard to different regions within a single country. The country we examine is Italy, which exhibits one of the highest levels of variation with regard to the political culture of its geographical regions. We find that political culture as represented by the pattern of support for political parties at different points on the political spectrum has a significant impact on the MNC investment location decision. Thus, in choosing between locations on a short list, where economic and financial location factors are roughly similar, political culture can have a determining influence. In the case of Italy, a Center-right orientation is conducive to MNC FDI, while a Center-left orientation is not. A Far-left orientation is found to have a very negative effect on FDI.