Transport as a location factor: new start-ups and relocations in Portugal

This paper analyses the spatial pattern of manufacturing plant location and relocation using municipality data in Portugal from 1986 to 1997. Over this period most of the Portuguese motorways have been constructed extending the network from just about 200 kilometres at the beginning of the 1980s to over 1,300 kilometres by 1998. This is an interesting development that offers opportunities to explore the role of road infrastructure and its improvements as a location factor. In addition to location determinants widely used in the literature, fine measures of motorway access and road accessibility calculated with GIS methodology are included in panel data estimations. Because plant birth and plant relocation result from two different spatial decision processes in the firm they are treated separately. The present study puts these two events in a dynamic context of the plant life cycle and finds evidence that fits with notions of business dynamics. Plant start-ups are positively influenced by the existence of a local pool of potential entrepreneurs, lower wage costs and a more diversified economic environment. Relocations, on the other hand, prefer areas with a greater availability of producer services and an already larger industrial share. These findings suggest that plant relocations, which are at a later stage of the plant life cycle, add to concentration and geographic specialisation, whilst first locations are primarily influenced by the availability of general inputs and cheap factors of production. A key finding of this paper is that road infrastructure matters for both, but more so for plant relocations. Relocations show a considerably larger attraction towards the new road transport corridors. This indicates that as firms grow, their spatial requirements change to accommodate a greater need for high-quality transport infrastructure to sell output over, and get inputs from, a wider geographic area.

Transport as a location factor: new start-ups and relocations in Portugal

This paper analyses the spatial pattern of manufacturing plant location and relocation using municipality data in Portugal from 1986 to 1997. Over this period most of the Portuguese motorways have been constructed extending the network from just about 200 kilometres at the beginning of the 1980s to over 1,300 kilometres by 1998. This is an interesting development that offers opportunities to explore the role of road infrastructure and its improvements as a location factor. In addition to location determinants widely used in the literature, fine measures of motorway access and road accessibility calculated with GIS methodology are included in panel data estimations. Because plant birth and plant relocation result from two different spatial decision processes in the firm they are treated separately. The present study puts these two events in a dynamic context of the plant life cycle and finds evidence that fits with notions of business dynamics. Plant start-ups are positively influenced by the existence of a local pool of potential entrepreneurs, lower wage costs and a more diversified economic environment. Relocations, on the other hand, prefer areas with a greater availability of producer services and an already larger industrial share. These findings suggest that plant relocations, which are at a later stage of the plant life cycle, add to concentration and geographic specialisation, whilst first locations are primarily influenced by the availability of general inputs and cheap factors of production. A key finding of this paper is that road infrastructure matters for both, but more so for plant relocations. Relocations show a considerably larger attraction towards the new road transport corridors. This indicates that as firms grow, their spatial requirements change to accommodate a greater need for high-quality transport infrastructure to sell output over, and get inputs from, a wider geographic area

Domestic transport cost reductions and firms’ export behaviour

Transport infrastructure investment reduces the cost of distance and enables firms to establish and maintain contacts over larger distances. Spain has developed an ambitious road building programme over the last decades, which has considerably reduced transport costs to access European markets. In this paper we depart from the traditional aggregate approach in analysing the impacts of transport infrastructure investment. In particular, we examine the export decision of Spanish manufacturing firms and test how domestic transport cost reductions affect firms’ probability of becoming exporters. We estimate models that control for unobserved heterogeneity among firms, endogeneity and initial conditions problems. Our results provide some support for a positive effect of domestic transport improvements on firms’ exporting probability. However, the magnitude of this effects is small, being the strongest effect the one due to previous export experience which suggests high entry costs into export markets

Transport infraestructure, sunk costs and firms' export behaviour

Transport infrastructure investment reduces the cost of distance and enables firms to establish contacts over larger distances. We study the impact of transport-cost reductions on firms’ export behaviour, accounting for the role of entry costs and other firms’ characteristics. Using Spanish data we estimate dynamic probability models controlling for firms’ unobserved heterogeneity and for the simultaneity of firms’ export and location decisions. Our results provide support for a positive effect of domestic transport improvements on firms’ exporting probability for small and medium sized firms. We find a strong effect of previous export experience, suggesting high entry costs into export markets

Spatial patterns of adoption of just-in-time manufacturing

We study the spatial pattern of Just-in-Time (JIT) adoption for a sample of medium-sized and large Spanish manufacturing firms. JIT differs from other advanced manufacturing technologies because it relates directly to the spatial coordination of a firms’ internal production organisation with its external productive environment and depends on the quality of the transport system. Our results confirm the distinctive role of location for JIT adoption even after controlling for industry and plant-specific differences. We find that JIT adoption is greater in smaller cities but with higher transport accessibility indicating that urban congestion in larger urban areas likely reduces the benefits that firms may obtain from JIT implementation.

Transport infraestructure, sunk costs and firms' export behaviour

Transport infrastructure investment reduces the cost of distance and enables firms to establish contacts over larger distances. We study the impact of transport-cost reductions on firms’ export behaviour, accounting for the role of entry costs and other firms’ characteristics. Using Spanish data we estimate dynamic probability models controlling for firms’ unobserved heterogeneity and for the simultaneity of firms’ export and location decisions. Our results provide support for a positive effect of domestic transport improvements on firms’ exporting probability for small and medium sized firms. We find a strong effect of previous export experience, suggesting high entry costs into export markets.Export decision, Transport infrastructure, Accessibility, Dynamic panel data

Economic crisis and innovation: Do regions matter?

There is broad agreement among economists and policy makers that economic growth is nowadays largely driven by the capacity of firms to innovate. The financial and economic crisis that started in late 2007 has had a far reaching impact on countries around the world. Spain has been one of the countries worst affected. As a result, the government has reduced public funding in R&D. At the same time, the continued credit crunch has dramatically worsened the possibilities for financing new ideas and projects. One of the consequences of the economic crisis is that many companies have reduced their innovation-related activities; however, some firms have been more resilient than others and recent studies also show that there are important differences across countries regarding the degree to which the economic crisis has affected firms? innovation investment. It has been argued that national institutional settings and the structural characteristics of national innovation systems have played an important role in shaping how firms have responded to the crisis. However, within a country, regions may also matter. Learning processes underlying innovation are localised and locally embedded, and regional innovation systems (hereafter, RISs) may play a role too. Spain provides an interesting setting for analysing the role of regions, as it is a country with a highly decentralized unitary state with a unique framework of territorial administration. Spanish regions have very diverse economies and also different degrees of fiscal and political autonomy. They vary greatly in terms of their innovation performance as well as regarding their regional innovation and technology policies. Moreover, their responses to the economic crisis in terms of regional policies have not been the same. A focus on regional difference can contribute to a better understanding of the innovation strategies employed by firms during the crisis. To date, we still know very little about regional differences and the degree to which regions have shaped firms' innovation behaviour in response to the economic crisis. Our analysis contributes to this literature by drawing on a large national sample of micro-data for Spanish manufacturing and service sector firms. Our results show that the crisis has discouraged a significant number of firms from engaging in innovation. These have been mainly small firms and occasional R&D performers. Significant regional differences are also found in the degree to which the crisis has affected firms? innovation expenditures, even after controlling for sectoral differences and firms? structural characteristics. The Basque Country stands out in our analysis. Firms with R&D employment in this region show a significantly lower probability of having abandoned innovation activities and a somewhat higher probability of even having increased their innovation effort. This regional effect has been especially important for small and medium sized companies

Differences of Corporate Environmental Responsibility in Small and Medium Enterprises: Spain and Norway

The purpose of this paper is to analyze the factors that are related to Small and Medium Enterprises' (SMEs') environmental attitude. We focus on Spain and Norway - two contrasting countries in this regard. Drawing on evidence from the Flash Eurobarometer 381 Survey: SMEs, Resource Efficiency and Green Markets, the results show that there is a significant difference on environmental commitment in favor of Norway. Our estimation results show that firms' structural characteristics are strong factors influencing attitudes towards environmental responsibility, but even after controlling for such firm-specific differences, Norwegian firms still show a higher probability for a pro-environmental attitude. Moreover, our estimation results also show that the drivers for firms to go beyond environmental legislation are not the same in the two countries. Norwegian firms are more market-driven than Spanish firms in their pro-environmental attitude

An exploratory analysis of networking, R&D and innovativeness in the Spanish electronics sector

Using survey data of electronics firms in the three major electronics clusters in Spain, we examine whether those engaged in networking tend to be more innovative and whether local and extra-regional networking have different effects upon innovativeness. We find a positive relation between different types of network relations and innovativeness. In particular, our findings suggest that subcontracting relationships are a way of exchanging technological know-how and are a potentially important element in the innovation process. With regard to the spatial extent of network relations, we find only weak results for differences between local and extra-regional networking.The authors gratefully acknowledge financial support from the Social and Economic Council of the Community of Madrid, as well as support from grants SEC97-1373 (CICYT) and 06/0092/1997 provided by the Community of Madrid.Peer reviewe

Localización y productividad de la empresa española

Este artículo presenta un análisis exploratorio de la relación que existe entre la localización de una empresa y su productividad. El estudio distingue dos características de localización medidas a nivel municipal: la aglomeración local, medida a través de la densidad de población, y el acceso a mercados, basado en un índice de potencial de mercado. Los resultados muestran una relación positiva y significativa de la productividad de las empresas, y tanto la densidad de población como el potencial de mercado. Además, mientras que la productividad de las empresas es mayor en las áreas urbanas, en municipios fuera de las áreas urbanas la asociación estadística en sección cruzada entre el potencial de mercado y la productividad parece mayor.This paper presents an exploratory analysis of the relation between where a firm is located and its productivity. The analysis distinguishes two location characteristics measured at the municipality level: local agglomeration measured by population density and access to markets captured through market potential. The results show a significant positive relation between both local population density and market potential and firm-level productivity. The results further indicate that while productivity is higher in urban areas, the cross-sectional association between market potential and firm-level productivity appears higher outside urban areas