Diversity, stability and regional growth in the U.S. (1975-2002)

This paper summarizes the theoretical arguments from evolutionary theory and ecological economics to put the trade-off between regional economic diversity and regional economic growth on stronger theoretical foundations. Hypotheses are tested using an empirical model that links regional economic diversity to stability and growth using data on 177 BEA areas of the continental United States during the period (1975-2002).evolutionary economics, ecological economies, diversity, stbility, regional growth

Sources of Regional Resilience in the Danish ICT Sector

In this paper the use of the term “resilience” is discussed and a definition for use in quantitative studies of industrial evolution is suggested. Resilience is the ability of an industry in a region to exploit the possibilities arising from external events and adapt to thrive under new selection environments. An econometric analysis is undertaken to uncover the effects of the change in selection environment that the ICT industry faced from the burst of the ICT bubble in the year 2000. It is shown that some characteristics of regional industry structure are associated with growth over the whole period while other characteristics have varying effects pre and post burst. Special attention is given to the responsiveness of growth to the evolution of sales of ICT goods and services in Denmark and it is found that the industry structures that restrain growth also are the ones, which make the regional industry better able to exploit changes in sales at the national level.Resilience; Business cycle; ICT sector; Regional growth

Boltzmann meets Nash: Energy-efficient routing in optical networks under uncertainty

Motivated by the massive deployment of power-hungry data centers for service provisioning, we examine the problem of routing in optical networks with the aim of minimizing traffic-driven power consumption. To tackle this issue, routing must take into account energy efficiency as well as capacity considerations; moreover, in rapidly-varying network environments, this must be accomplished in a real-time, distributed manner that remains robust in the presence of random disturbances and noise. In view of this, we derive a pricing scheme whose Nash equilibria coincide with the network's socially optimum states, and we propose a distributed learning method based on the Boltzmann distribution of statistical mechanics. Using tools from stochastic calculus, we show that the resulting Boltzmann routing scheme exhibits remarkable convergence properties under uncertainty: specifically, the long-term average of the network's power consumption converges within $\varepsilon$ of its minimum value in time which is at most $\tilde O(1/\varepsilon^2)$, irrespective of the fluctuations' magnitude; additionally, if the network admits a strict, non-mixing optimum state, the algorithm converges to it - again, no matter the noise level. Our analysis is supplemented by extensive numerical simulations which show that Boltzmann routing can lead to a significant decrease in power consumption over basic, shortest-path routing schemes in realistic network conditions.Comment: 24 pages, 4 figure

Indeterminacy, bifurcations and chaos in an overlapping generations model with negative environmental externalities

We analyze an overlapping generations model where agent’s welfare depends on three goods: leisure, environmental quality and consumption of a private good. We assume that the production process of the private good depletes the natural resource and that the consumption of the private good alleviates the damages due to environmental deterioration. In such context, we show that individuals’ reactions to environmental deterioration may lead to complex dynamics, in particular to the rise of periodic orbits and chaos.Defensive environmental expenditures; overlapping generations models; indeterminacy; undesirable economic growth

Long Waves: Conceptual, Empirical and Modelling Issues

The theory of long waves is exceptionally fortunate in that, while there is no general consensus that they exist or, assuming that they do, what an appropriate theory should be, due to the unstinting efforts of several researchers, we have encyclopaedic compendia of the literature (Freeman 1996, Reijnders and Louçã 1999) and a recent valiant attempt to write modern economic history from a long-wave perspective (Freeman and Louçã 2001). The purpose of this entry is to succinctly review the controversy about what long waves might mean as a phenomenon, how they might be measured and modelled, and where they might fit into an overarching theory of economic dynamics and evolution.economics of technology ;

The Dynamics of Economic Performance and Organizational Diversity. An Empirical Study in Zwolle, the Netherlands, 1850-1914

Cities differ dramatically with respect to the extent in which their economic and other activities are diversified. Some cities are specialized, while other cities harbour a myriad of organizations, performing a huge variety of activities. An unanswered question is: Where does such organizational diversity within city communities originate from, and what are its consequences for economic performance and growth? We argue that the extent of organizational diversity goes hand in hand with the fractionalization of the city’s resource environment. Specifically, the more heterogeneous the pool of city inhabitants on salient characteristics such as age, gender and religious background, the more organizational diversity can be expected. This is because human population heterogeneity implies variety and preferences of needs, which spurs entrepreneurship and ultimately sustains organizational diversity. Furthermore, we claim that organizational diversity is beneficial for economic performance and growth, but only up to a certain maximum after which diversity might undermine performance. Cities with an optimal organizational composition have a level of organizational diversity that is high enough to shield it from external exogenous shocks, but not too high to prevent them from reaping externalities resulting from the performance of related activities. In other words, we suggest that cities have to balance technical efficiency and long-run adaptive capacity. In this paper, the above theory will be tested for the city of Zwolle in the Netherlands in the period 1850-1914.

Financial Markets imperfections, heterogeneity and growth

This paper offers a model of growth with heterogeneous agents in which, due to asymmetric information, financial markets do not work properly. In such a world, the Modigliani-Miller theorem fails to hold, a financial hierarchy emerges and ‘how to finance’ the engine of growth – in our case represented by uncertain endeavours in R&D - matters. In turn, heterogeneity means that agents lack sufficient information on the behaviour adopted by the others, forcing them to make use of naive rules in forming expectations and in calculating their probability of bankruptcy. The basic properties of the model are explored via simulations. In particular, it is possible to appreciate how a worsening of financial conditions (e.g. an increase of the contractual interest rate on loans or of the probability of bankruptcy) affects negatively the long-run average rate of growth

XXQ FACTORS FOR SUSTAINABLE URBAN DEVELOPMENT: A SYSTEMS ECONOMICS VIEW

Modern cities turn increasingly into functional areas seeking for a balance between agglomeration forces and urban quality of life. This paper will address the issue of sustainable urban development from a quality (performance) perspective. It aims to identify the critical access factors for the highest possible quality (XXQ) of the urban economy. A plea is made for a coherent methodological approach based on a systems economic view. In addition to a sketch of recent dynamic trends in urban systems in OECD countries, it pays attention to theories on urban growth and performance. Next, five critical success conditions for a high performance of cities will be presented in a coherent urban systems economics framework. The policy lessons of the analysis will form the last part of the paper.urban development, sustainability, critical access factors, systems economics

Inter-industry linkages in local economies

We investigate the extent to which a local industry is affected by an overrepresentation of related industries in the local economy. We focus on two types of inter-industry relatedness, namely, the degree to which two industries can employ a similarly skilled labor force and the degree to which two industries are connected in the value chain. We decompose changes in the employment of a local industry into the employment generated or destroyed in incumbent plants and the employment changes due to plant entry and exit. Furthermore, we classify new plants by the type and geographical origins of the plants’ founders. We find that entrepreneurs have a stronger tendency than existing firms to set up plants in local industries that can draw on a strong local presence of labor market and value chain linked industries. The same holds for local founders compared to founders from outside the region. In the second part of the paper, we investigate the relative importance of the two relatedness types and whether the two types reinforce each other. We find that, in general, the growth of old plants and the employment generated in new plants is more strongly associated with the relatedness through the labor market. Moreover, for in new plant formation, the two relatedness types indeed tend to reinforce each other. In fact, local value chain linkages seem to be only important if client and supplier firms can also engage in labor sharing.

Growth with competing technologies and bounded rationality

I develop a model of growth based on three assumptions: first, a variety of technologies characterised by different degrees of labour skill intensity, where technological change is localized; second, agents are boundedly rational, and the aggregate rule of motion of their behaviour follows a replicator dynamics; third, markets do not clear instantaneously, with prices adjusting gradually. For simplicity, I study the case of two technologies and two labour markets, one for skilled and one for unskilled labour. The model is investigated by means of local stability and computer numerical analysis. Two types of steady states obtain, each characterised by the complete specialization of production into one of the two technologies. Convergence towards the low-growth steady state, associated with the unskilled labour intensive technology, occurs under adverse structural conditions, such as marked initial skill shortage and high skill upgrade costs. This result of lock-in to the inferior steady state is interpreted as co-ordination failure, in that market forces do not always provide sufficient incentives to ensure a high-growth path