Abstract
This article introduces the papers for the special edition entitled “Modeling Regional Growth and Innovation.” It first provides an overview of the special edition and then presents short summaries of the papers.
This special edition deals with the analysis of some of the most persistent problems in regional economic growth and innovation. Most of these are related to spatial factors, their identification, and measurement. These topics and factors include the measurement of interregional spillovers or spatial externalities, endogenous growth, proximity, culture, creativity and efficiency, and equity in spatial structure. For example, measuring interregional spillover effects (i.e., spatial externalities) from investment and policy changes at the system level and at the individual region level as well have long been concerns of regional science researchers (Marshall, 1920; Isard, 1972). The subfield of spatial econometrics has evolved in part in an effort to sharpen the methods used to measure these spillover effects and thus improve the understanding of regional growth and innovation processes. Each of the papers in this special edition involves advanced methodologies and analyses used to test existing and new hypotheses about the cross-sector and cross-regional impact of investment and policy changes.
The concept of neoclassical economic growth has been augmented with the emergence of endogenous economic growth theory (Romer 1986, 1994) and its expression at the regional level resulting in a conclusion that while economic growth is influenced by policies and investments at the national or global level, much of capturing and producing growth at the local level comes from local (i.e., endogenous) effort. Endogenous forces are today viewed as critical drivers of economic growth and change, and this thinking is well represented in several of the contributions to this special edition.
Proximity has been a core issue in the field and is sometimes comingled with the idea of interregional spillovers. However, proximity is the reason that there are interregional spillover effects. Considerable research finds that spillover effects decrease with distance; however, direct distance decay spillovers are often more complicated in multinodal or central place systems (Christaller [1933]1966). The first paper in this edition by Capello and Caragliu argues that proximity is at least a three-dimensional concept. Proximity in their view may exist in terms of social and psychological perceptions and technology. The proximity spillover effect would be limited, for example, in a region with a strong technology producing infrastructure located next to a region with limited knowledge or technology absorptive capacity. This article shows that all three forms of proximity have different effects on technologically induced regional economic growth.
Efficiency and equity differences between rural and urban places in an interregional system are the concern of the paper by Nakamura. His theoretical deductive analysis of regional spatial organization argues for restructuring that produces a more equitable and efficient regional production system and that would satisfy Paraeto optimum conditions. On another topic, Brunow and Nijkamp examine the role of cultural diversity in plant and regional systems. Their study confirms the literature in that it finds that greater cultural diversity leads to greater productivity and returns. Cultural diversity and economic performance have recently been found to be associated as well with creativity (Florida 2002). The paper by Kourtit and Nijkamp examines the distribution of creativity in the Netherlands at the Dutch regional system. This correlational study finds that three types of creative people (Bohemian, core creative, and creative professionals) exhibit differential location patterns. The Bohemian creative types are found to be overrepresented in places with strong cultural and natural amenities and high levels of ethnic diversity. At the same time, creative professionals which are on the other end of the creativity spectrum tend to be located near strong labor markets but with limited ethnic diversity. These findings are of significance and important in that they help to inform spatial economic relationships and related policy and planning in terms of the proximal effects of concentrations of creative people.
These brief introductions to some of the topics considered in this special edition are provided to offer a crude road map of the various subtopics of concern related to regional economic growth and innovation. More specific discussions of the papers are now introduced before going directly to the contributions.
The Contributions
The first paper is by Roberto Capello and Andrea Caragliu and is entitled “Proximities and the Intensity of Scientific Relations: Synergies and Non-Linearities.” The paper observes that multiple forms of proximity including social, cognitive and technological proximity differentially are likely impacting the flow of ideas and spillovers in the level of scientific cooperation and learning across regional boundaries. It is assumed that each of these proximity dimensions has not only differential but also nonlinear effects which in the paper are measured for couples of the EU27 NUTS2 regions. The results of the analysis show differential effects for each of the proximal dimensions. This paper relates to the theme of this edition in that it shows the influence of spatial relations on knowledge flow across regions and thus influencing the level of technologically induced regional growth.
Next is a paper by Stephen Brunow and Peter Nijkamp entitled “The Impact of a Culturally Diverse Workforce on Firms Revenues and Productivity: An Empirical Investigation of Germany.” The authors suggest that the literature argues that firms enjoy high productivity levels when the labor force is more culturally diverse. They hypothesize that the higher productivity serves to increase supply that in turn lowers prices, thus producing higher demand and increased revenues. Their analysis and results use German single plant data while controlling for industry specific effects and find support for this hypothesis. In short, they conclude that the greater the cultural diversity, the greater the productivity resulting in higher plant level returns. Cultural diversity is thus viewed as an important variable that contributes to regional productivity and increased economic returns.
The third paper is by Daisuke Nakamura and is entitled “Alternative Spatial Structure for Sustainable Rural Economy: A Note on Socially Optimal Firm Location.” This paper begins with an observation that developed economies with declining populations and strong agglomeration forces make urban locations more attractive. At the same time, sustainable rural economic growth is, as a consequence, difficult to achieve and is thus a growing problem that is also exacerbated by severe international cost-saving competition. A deductive analytical approach is used to model this problem and test a hypothesis that wel-organized spatial and economic systems can be achieved by spatial reorganization that produces agglomeration economies in less congested rural areas. The analysis shows that a spatial structure organized around a local central place with highly advanced transportation and spatial reclustering of firms can be created and maintained that produces greater efficiency and equity for economic agents in rural areas and thus a more socially optimal outcome. The thesis and analysis in this paper suggest that greater economic growth and productivity can be achieved through interregional spatial organization of economic activity.
The fourth paper, entitled “Neoclassical Growth Theory, Regions and Spatial Externalities: Evidence from European Regions,” is contributed by Manfred Fischer. This paper uses a Durban model erected on top of a reduced form of the standard neoclassical growth model after Mankiw–Romer–Weil with spatial externalities across all regions assumed. Using data for a system of 1989 regions across twenty-two European countries between 1995 and 2004, model predictions are tested in terms of hypothetical nonlinear direct and indirect effects regarding regional outputs or contributions to physical and human capital endowments. The results support a conclusion that technological interdependence among regions works through physical capital externalities that spill across regional borders. With respect to the theme of this special edition, this paper supports a conclusion that region-specific economic growth is amplified (or decreased) by spillover (or lack of spillover) effects of physical capital (and not human capital) investments in surrounding and other regions.
A paper entitled “Creative Professionals and Cultural Ambiance in Urban Agglomerations” by Karima Kourtit and Peter Nijkamp is the fifth paper in this special edition. This contribution examines the geographic location of creative people in the Netherlands. Recently, creative industries have been viewed as influencing technological innovation and knowledge spillover levels in regional contexts. Creative people are classified as Bohemians, creative core, and creative professionals who define a spectrum from most conventional to most artistic categories as exemplified in the paper by the industries that are associated with these classes. The study finds that creative professionals tend to be located in or very near high productivity labor market areas and not in places with high levels of ethnic diversity. Bohemians and the creative core types are overrepresented in places with an abundance of cultural and natural amenities and high levels of ethnic diversity yet in places that satisfy these attributes but at the same time located near centers with larger labor markets. The paper concludes with a discussion of related urban policy issues. This paper contributes to the theme of this special edition in that it adds new information about the location of creative people who are believed to contribute to knowledge and innovation driven regional economic development.