European market integration and the determinants of firm localization: the case of Poland

Abstract Poland carries an exemplar experience of a formerly planned economy that successfully managed the passage towards a market economy within a relatively short period of time. The establishment of a common European market, with the aim to eliminate internal barriers of different nature, implies an environment where the standard localization determinants might operate differently than usual or where new localization forces assume importance. This paper uses a panel data set comprising the sixteen Polish administrative regions over the period 2003 to 2010 to examine which role agglomeration forces and other factors played in explaining the choice to operate in a certain location. We address methodological issues concerning the choice of unconditional fixed effects estimators within a negative binomial estimation framework and spatial autocorrelation. Our analysis differentiates the effects between the domestic and the foreign firms, and between all firms and only the entrepreneurial firms in the economy. The results suggest that agglomeration economies stemming from the industrial, services and R&D sector, as well as human capital and the infrastructure positively influence the localization of firms. A strong influence particularly emerges from the presence of services sectors agglomeration economies. In contrast to the previous literature, we can demonstrate the importance of human capital and market demand for the localization decision of multinational enterprises in the Polish economy. Moreover, Poland's accession to the European Union had a positive impact for the location decision of new firms

The case of European integration

and capital accumulation

Pecuniary Knowledge Externalities in a New Taxonomy: Knowledge Interactions in a Vertically Integrated System

The paper presents a new sectoral taxonomy that focuses on the existence of non negligible external effects, deriving from user-producer knowledge interactions, the latter in turn coupled with intermediate goods transactions, in a system of vertically integrated manufacturing and services sectors. These externalities, the so called pecuniary knowledge externalities, are the main source of changing technological conditions experienced by downstream producers. A distinguishing feature of the taxonomy consists, thus, in being derived from a particularly dynamic contexts of changing production functions. The taxonomy is obtained from an empirical exercise, examining effects generated by idiosyncratic knowledge in a system of input-output intermediate transactions between sectors in the European economy. The results permit to classify sectors in five groups, confirming the previous evidence of relevant differences in technological characteristics among sectors.Pecuniary knowledge externalities, Sectoral patterns, Vertical linkages