European integration, FDI and the internal geography of trade : evidence from Western European border regions

In this paper we use a gravity model to study the trade performance of French and Spanish border regions relatively to non-border regions, over the past two decades. We find that, controlling for their size, proximity and location characteristics, border regions trade on average between 62% and 193% more with their neighbouring country than other regions, and twice as much if they are endowed with good cross border transport infrastructures. Despite European integration, however, this trade outperformance has fallen for the most peripheral regions within the EU. We show that this trend was linked in part to a shift in the propensity of foreign investors to move their affiliates from the regions near their home market to the regions bordering the EU core.- En aquest article analitzem el rendiment comercial relatiu de les regions frontereres a França i Espanya, mitjançant un model de gravetat. Els nostres resultats mostren que, controlant per la dimensió, la proximitat i les característiques de les localitzacions, les regions frontereres comercien en mitjana entre un 62% i un 193% més que les altres regions amb els estats veïns, i més del doble si estan dotades amb bones infrastructures transfrontereres de transport. Ara bé, malgrat el procés d'integració europeu, aquest rendiment superior ha disminuït per les regions més perifèriques de la UE. Mostrem que aquesta tendència està lligada en part a un canvi en la propensió dels inversors estrangers a localitzar les seves filials des de les regions més properes al seu mercat d'origen cap a les regions properes al centre de la UE

Concentration, agglomeration and the size of plants

This paper investigates whether the geographic distribution of manufacturing activities depends on the size of plants. Using Italian data we find, as in Kim (1995) and Holmes and Stevens (2002, 2004), that large plants are more concentrated than small plants. However, considering distance-based patterns via spatial auto-correlation, we find that small establishments actually exhibit a greater tendency to be located in adjacent areas. These apparently contradictory findings raise a measurement issue regarding co-location externalities, and suggest that large plants are more likely to cluster within narrow geographical units (concentration), while small establishments would rather co-locate within wider distance-based clusters (agglomeration). This picture is consistent with different size plants engaging in different transport-intensive activities.concentration ; spatial auto-correlation ; plant size

European Integration, FDI and the Internal Geography of Trade: Evidence from Western European Border Regions

In this paper we use a gravity model to study the trade performance of French and Spanish border regions relatively to non-border regions, over the past two decades. We find that, controlling for their size, proximity and location characteristics, border regions trade on average between 62% and 193% more with their neighbouring country than other regions, and twice as much if they are endowed with good cross border transport infrastructures. Despite European integration, however, this trade outperformance has fallen for the most peripheral regions within the EU. We show that this trend was linked in part to a shift in the propensity of foreign investors to move their affiliates from the regions near their home market to the regions bordering the EU core.direct investment, border regions, gravity, trade, european integration, foreign

Concentration, agglomeration and the size of plants

This paper investigates whether the geographic distribution of manufacturing activities depends on the size of plants. Using Italian data we find, as in Kim (1995) and Holmes and Stevens (2002, 2004), that large plants are more concentrated than small plants. However, considering distance-based patterns via spatial auto-correlation, we find that small establishments actually exhibit a greater tendency to be located in adjacent areas. These apparently contradictory findings raise a measurement issue regarding co-location externalities, and suggest that large plants are more likely to cluster within narrow geographical units (concentration), while small establishments would rather co-locate within wider distance-based clusters (agglomeration). This picture is consistent with different size plants engaging in different transport-intensive activities.Cet article s'intéresse au rôle joué par la taille des établissements dans la distribution géographique des activités manufacturières. A la suite de Kim (1995) ou Holmes et Stevens (2002, 2004), l'étude menée sur données italiennes corrobore le résultat selon lequel la propension à la co-localisation, lorsqu'elle est mesurée à l'aide d'un indicateur standard, est plus forte chez les grands établissements que chez les petits. Paradoxalement, l'utilisation d'un indice d'auto-corrélation spatiale fait apparaître une propension à la co-localisation plus forte chez les petits établissements que chez les grands. Ces résultats contradictoires font apparaître les difficultés liées à une mesure discrète des phénomènes de co-localisation. La densité extrême mise en évidence pour les grands établissements, dont les co-localisations s'effectuent en priorité dans la limite des zones d'emploi ("concentration"), suggère que ces unités de production bénéficient relativement plus des externalités locales que leurs homologues, et/ou que leur production est orientée prioritairement vers les marchés internationaux. La distribution plus étalée des petits établissements, dont les co-localisations impliquent majoritairement des zones adjacentes ("agglomération"), suggère au contraire que ces unités de production minimisent les coûts de transport associés à une demande principalement domestique

2023/01: Place-based policies: Opportunity for deprived schools or zone-and-shame effect?

ABSTRACT: Even though place-based policies involve large transfers toward low-income neighborhoods, they may also produce territorial stigmatization. This paper appeals to the quasi-experimental discontinuity in a French reform that redrew the zoning map of subsidized neighborhoods on the basis of a sharp poverty cut-off to assess the effect of place-based policies on school enrollment into lower secondary education. Using a difference-in-differences approach, we find strong evidence of stigma from policy designation, as public middle schools in neighbourhoods below the policy cut-off, which qualified for place-based subsidies, saw a significant 3.5pp post-reform drop in pupil enrollment, compared to their counterfactual analogues in unlabeled areas lying just above the poverty threshold. This "zone-and-shame" effect is immediate but does not persist, as it is only found for the first pupil-entry cohort in middle schools immediately after the reform. We show that it was triggered by the behavioral reactions of parents from all socioeconomic backgrounds, who avoided public schools in policy areas and shifted to those in other areas or, only for richer parents, to private schools. We uncover, on the contrary, only weak evidence of stigma reversion after an area loses its designation, suggesting hysteresis in bad reputation

European integration, FDI and the geography of French trade

This paper uses an augmented gravity model to investigate whether the 1978-2000 process of European integration has changed the geography of trade within France, with a particular focus on the trends experienced by border regions. We support the conclusion that, once controlled for bilateral distance, origin- and destination-specific characteristics, French border regions trade on average 72% more with nearby countries than predicted by the gravity norm. They perform even better (114%) if they have good cross-border transport connections to the neighboring country. However, this outperformance eroded drastically for the French border regions located at the periphery of Europe throughout integration. We show that this trend is partly due to a decreasing propensity of foreign affliates to trade with their home country. This trade reorientation is less pronounced for the Belgian-Luxembourgian and German firms located in the regions which have better access to the EU core.Cet article analyse les performances commerciales des départements et leurs principales évolutions sur la période 1978-2000, en fonction de leur position relative au sein de l'espace français. Il se trouve qu'en moyenne sur la période, les départements frontaliers d'un pays commerce 1.7 fois plus avec ce pays que les non frontaliers, toutes choses égales par ailleurs, en particulier l'accès au marché externe. Les départements dotés d'infrastructures de transport transfrontalières vont même jusqu'à commercer 2 fois plus que leurs homologues non frontaliers. Cet avantage s'est cependant érodé au cours du temps, en particulier pour les départements frontaliers de la périphérie européenne (Espagne et Italie notamment). Nous montrons que cette chute s'explique notamment par une propension décroissante des firmes étrangères à commercer avec leur pays d'origine

Can Business and Social Networks Explain the Border Effect Puzzle?

McCallum (1995) shows in an influential contribution that, even when controlling for the impact of bilateral distance and region size, borders sharply reduce trade volumes between countries. We use in this paper data on bilateral trade flows between 94 French regions, for 10 industries and 2 years (1978 and 1993) to study the magnitude and variations over time of trade impediments, both distance-related and (administrative) border-related. We focus on assessing the role that business and social networks can play in shaping trade patterns and explaining the border effect puzzle. Using a structural econometric approach, we show that intra-national administrative borders significantly affect trade patterns inside France. The impact is of the same order of magnitude as in Wolf (2000) for trade inside the United States. We show that more than 60\% of these (puzzling) intra-national border effects can be explained by the composition of local labour force in terms of birth place (social networks) and by inter-plants connections (business networks). In addition, controlling for these network effects reduces the impact of transport cost on trade flows by a comparable factor. Thus, business and social networks that help to reduce informational trade barriers are shown to be strong determinants of trade patterns and to explain a large part of the border puzzle.gravity, border effects, networks

Product complexity, quality of institutions and the pro-trade effect of immigrants

The paper assesses the trade-creating impact of foreign-born residents on the international imports and exports of the French regions where they are settled. The pro-trade effect of immigrants is investigated along two intertwined dimensions: the complexity of traded goods and the quality of institutions in partner countries. The trade-enhancing impact of immigrants is, on average, more salient when they come from a country with weak institutions. However, this positive impact is especially large on the imports of simple products. When we turn to complex goods, for which the information channel conveyed by immigrants is the most valuable, immigration enhances imports regardless of the quality of institutions in the partner country. Regarding exports, immigrants substitute for weak institutions on both simple and complex goods.trade ; immigration ; quality of institutions ; product complexity ; gravity