The Impact of Regional Absorptive Capacity on Spatial Knowledge Spillovers

We design a conceptual framework for linking two approaches: the literature on absorptive capacity and the literature on spatial knowledge spillovers. Regions produce new knowledge, but only part of it is efficiently adopted in the economy; the share of efficiently adopted technology depends on territorial capital. Our data set is based on a panel of European regions over the period 1999-2005, combining data from EUROSTAT and the European Values Study (EVS); we test the hypothesis that insufficient levels of territorial capital hamper the capability of regions to grasp and fully exploit new knowledge. Results show that a lower regional absorptive capacity increases knowledge spillovers towards surrounding areas, hampering the regions' capability to understand, decode and efficiently exploit new knowledge, both locally produced and originating from outside

Digital transition in a turbulent world: European regional growth opportunities in 17 years' time

Recently, the digital transition has been highlighted as a strategy fostering economic competitiveness. How the advantages from the digital transition will distribute over time and space is still unclear. This paper builds scenarios comparing the effects of a digital transition. Technological assumptions are consistently related to the assumptions on other structural changes. The internal coherence among assumptions is guaranteed by a larger overarching framework based on how the geopolitical context will evolve. A deeper within-EU integration and global cooperation, or a fragmented Europe torn in a world polarized in two blocs, enhance the digital transition and the main structural changes in different ways.Qualitative assumptions, validated through a Delphi analysis, are translated into quantitative ones and included in our MAcroeconometric, Social, Sectoral, Territorial 5 (MASST5) model, a regional macro-econometric forecasting model, through which simulations of GDP growth rates at regional (NUTS2) level are simulated for the period 2021-2038. Results show that if the digital investment plans stimulate growth, they only partially reverse regional growth divergence trends caused by advantages stemming from an integrated market, even if distributed with the aim of closing the digital gap among European countries

After Crisis Scenarios for CEECs: A simulation through the MASST3 model

Over the last few years, the world economy has gone through a severe period of economic downturn, the worst since the end of WWII. Although the crisis has been widely covered on the media, less common knowledge is the fact that the crisis has engendered responses in the economic systems, in the form of structural adjustments. The aim of the present paper is to build after-crisis scenarios in order to raise awareness on the possible ways out of the present economic downturn. The scenarios that will be presented in the paper are "response to the crisis scenarios", in that built on the basis of alternative trends that structural adjustments can follow. In particular, the paper presents a reference scenario, whereby the first structural changes that have been caused by the crisis, as well as the early structural reactions that can be already observed in the data, are modeled. This scenario represents the benchmark against which the two alternative scenarios, based on assuming radically different trends in the evolution of the responses to the crisis, will be compared. In particular, a first scenario is the so called regional cohesion scenario, a scenario of competitiveness obtained thanks to the exploitation of local excellence and untapped local resources. In this scenario, economic resources, in particular innovation-related and FDI-driven, are assumed to be distributed more evenly with respect to the reference scenario, thus shifting towards areas hosting second-rank cities. The second alternative scenario is a social cohesion scenario, built around the idea of limiting social costs of the crisis. In this second alternative scenario, resources are assumed to be distributed differently with respect to both the reference and the regional cohesion scenario, and in particular to be oriented towards less urbanized areas. Both scenarios have positive and shareable reasons to be developed, and have therefore the same legitimization to be supported by policy-makers. In other words, neither is to be considered ex-ante preferable, and both can be justified on the basis of different policy targets. The results of the simulation exercise, obtained by running the macroeconomic regional growth forecasting model MASST3, are rather interesting. Unexpectedly, the regional cohesion scenario achieves both the highest aggregate growth rates, as well as the lowest increase in regional disparities. Contrary to general beliefs, the social cohesion scenario displays less effectiveness in fostering convergence processes. These results may drive future cohesion policies to reinforce local excellence and tap the untapped resources

Cognitive Capital and Islands of Innovation: The Lucas Growth Model from a Regional Perspective

Knowledge triggers regional growth. Evidence suggests that skilled labour force concentrates in islands of innovation, determining an advantage for innovative regions and a challenge for lagging ones.We address the role of knowledge in shaping effective markets for skilled labour. Estimates are based on the Lucas (1988) model, with EVS and EUROSTAT data. The externality driving growth in the model is cognitive capital. Empirical tests show that a higher endowment of cognitive capital generates increasing returns to knowledge, favouring the emergence of islands of innovation; regions with a high endowment of cognitive capital attract knowledge spillovers from neighbours

Forecasting regional growth: the MASST model

Nowadays, forecasting regional growth is not possible without taking into account the recent economic dynamics at national and supranational level. In fact, the particular focus of the European Union on sovereign debts and deficits imposed by the economic slowdown, the macroeconomic trends that emerged as a result of the crisis and, last but not least, new politically sensible decisions concerning the future of the European Union play a role in explaining the remarkable industrial and geographic heterogeneity in the response to the crisis and the persistence of some of the contraction-induced effects in some countries and regions. All this introduces complexity in the way regional economic growth can be modelled for forecasting purposes. The MASST model is a regional econometric growth model built to simulate regional growth scenarios in the medium and long run (typically, over a 15–20‑year time horizon), taking into consideration also macroeconomic aspects; in its estimation step, in fact, it explains regional growth as the result of national macroeconomic trends and regional growth assets at the same time. This paper aims to present the model and its interpretative power by merging national macroeconomic trends and the long-term regional structure. Particular emphasis will be given to the outcomes of two recent simulations for Polish regions

Firm aggregations and firm performance: Evidence from network contracts

In Europe, the economic contraction starting in 2007–2008 has called for new economic policy tools. This paper analyses one of such policies, i.e. the network contract. Network Contracts are an innovative policy introduced in Italy with Law 9 April 2009, N. 33. This policy fosters the creation of firm aggregations with an ad hoc contract, without resorting on mergers. Network contracts are meant to increase economic efficiency for all firms involved in the contract. The paper employs a unique data base with panel data on companies’ balance sheets for the period 2007–2012 along with data on the characteristics of their network contract. The effect of signing a network contract on the economic performance of the single firms and their aggregations is econometrically analyzed. Empirical results suggest in particular that (i.) firms signing a network contract tend to outperform firms that do not, and (ii.) network contracts whose members agree to commit more effort in the contract tend to outperform network contracts with less formally stated degrees of commitment

Firm cooperation policies: the impact of territorial spillovers

Research on program evaluation, and in particular on firm cooperation policies, has been scant on the impact of space-specific characteristics on program impacts. Few studies have analyzed how spatial features, that are sticky (immobile over time) and non-mobile (immobile over space), may affect the intensity of a program’s effect on the targeted economic outcome. This paper uses a regional program (ERGON1) aimed at fostering the creation of Network Contracts to shed light on the contribution of spatial features to policy effectiveness. Network Contracts have been introduced in Italy with Law 9 April 2009, N. 33 to stimulate the formation of firm aggregations and to increase economic efficiency for network members. Empirical results, using Propensity Score Matching Estimates, suggest a positive and causative relation between membership in a Network Contract and firm productivity. Furthermore, evidence suggests that matching for urban characteristics significantly improves matching quality. Evidence is thus provided on the relevance of spatial features in shaping the returns to policies, thereby suggesting that ignoring such features may provide a biased picture of the true effect of a program

Smart Cities : is It Just a Fad?

This editorial frames the contents of this special issue within the broad context of the smart city literature. In particular, the editorial first argues for the novelty of the smart city concept with respect to previous planning notions. The smart city literature has provided much insight into present-day urban management issues. In this sense, this special issues presents new insights into the following topics: (i) The smart city literature is characterized by remarkable heterogeneity in terms of geographical and disciplinary approaches; (ii) Relevant attention is being paid to the impact of smart city policies; (iii) New findings are presented for the relevance of benchmarking exercises and a first quantitative impact measurement is discussed; (iv) Beyond the new results presented in the Special Issue, ample space is dedicated to the discussion of future challenges for this literature, for both academics and policymaker

Territorial capital and regional growth: Increasing returns in cognitive knowledge use

Knowledge drives the growth of nations and regions in a competitive space-economy. Hence, we would expect a strong correlation between investments in R&D, knowledge and learning processes, on the one hand, and productivity increases, on the other. However, the empirical evidence shows consistent discrepancies between knowledge inputs and economic performance across geographical units. This paper addresses this intriguing issue at the regional level, by highlighting both theoretically and empirically the strategic importance played by cognitive elements as part of “territorial capital” in mediating between knowledge production and regional growth. The main proposition of the paper, subject to empirical testing, is that cognitive elements as part of territorial capital magnify the contribution of knowledge by determining the formation of increasing returns to knowledge exploitation