The Balassa Index meets the Theil Index - a Decomposition Methodology for Location Studies

This paper focuses on the decomposition of location measures according to a twofold geographical level of analysis. The methodology, based on the use of the Theil dissimilarity index, is potentially applicable to the assessment of the spatial distribution of several economic phenomena when different hierarchical levels of analysis are considered. In the specific case, the entropy index considered is first defined as the weighed average of the log of regional Balassa indices. Thanks to the decomposability typical of the generalised entropy indices, the index constructed allows to disentangle the relative importance of country comparative advantages from regional competitiveness. The decomposition of relative concentration indices provides a rigorous method to quantify the cross-country divergence in localisation from the inner-country agglomeration patterns. Similarly, the construction of specialisation measures is intended to capture the different constituents at the national and sub-national levels. The paper ends with the decomposition of typical entropy obtained condensing relative concentration and relative specialisation into a single index.

Italian FDI integration with Southeast Europe: country and firm-level evidence

Southeast European countries have experienced significant economic integration into the world economy since 2000, through international capital flows and especially foreign direct investment (FDI). The present work sheds light on recent trends in Italy-Western Balkans economic integration through FDI. The methodology is based on a country level analysis and on case studies, designed to ascertain Italian firms’ underlying motives for investment in the area. Evidence suggests that the phenomenon is broader than official statistics would indicate: Italian firms often set up subsidiaries without formal or direct capital control. As integration in the area is a recent phenomenon, it is not surprising that the main determinants of Italian investments are cost reductions and new market opportunities, typical of initial stages of penetration in a foreign country. What is interesting in this context is that local entrepreneurs regard efficiency-seeking investments as profitable only if they are connected to market-seeking goals. We find evidence also of localized industrial development stimulated by the entry of Italian firms which is activating subcontracting relationships with existing firms in the host region.Southeast Europe-Italy integration,case study,foreign direct investment

The Balassa Index meets the Theil Index - a Decomposition Methodology for Location Studies

This paper focuses on the decomposition of location measures according to a twofold geographical level of analysis. The methodology, based on the use of the Theil dissimilarity index, is potentially applicable to the assessment of the spatial distribution of several economic phenomena when different hierarchical levels of analysis are considered. In the specific case, the entropy index considered is first defined as the weighed average of the log of regional Balassa indices. Thanks to the decomposability typical of the generalised entropy indices, the index constructed allows to disentangle the relative importance of country comparative advantages from regional competitiveness. The decomposition of relative concentration indices provides a rigorous method to quantify the cross-country divergence in localisation from the inner-country agglomeration patterns. Similarly, the construction of specialisation measures is intended to capture the different constituents at the national and sub-national levels. The paper ends with the decomposition of typical entropy obtained condensing relative concentration and relative specialisation into a single index

Economic integration, structural change, and uneven development in the European Union

The paper provides an empirical investigation on the evolution of spatial inequalities and structuralchange in Europe. It is found by the approach of Phillips and Sul (2007, 2009) that there is no globalconvergence. Instead, five distinct economic clubs that approach a common steady state are identified.With the consideration of a longer period after the global financial crisis compared to previous studies, itis possible to highlight the growing polarization that characterized the most recent years. A subsequentordered logit regression provides evidence for club membership being explained by different regionaleconomic structures and initial conditions. In particular, the analysis supports the view that a solid man-ufacturing base and specialization in high-productivity service activities are key explanatory variables ofthe differentiated development paths

Specialization and Concentration from a Twofold Geographical Perspective: Evidence from Europe

Cutrini E. Specialization and concentration from a twofold geographical perspective: evidence from Europe, Regional Studies. This paper investigates European location patterns during a period of economic integration, seeking to identify the distinct roles played by the different geographical levels. The evolution of localization in Europe proved much more complicated empirically than the predictions based on Krugman's hypothesis. Using Eurostat regional data for the period 1985-2001, the paper shows that while manufacturing employment trickled down among regions, after the completion of the European Single Market a slight agglomeration occurred, but only across national boundaries. National specialization has emerged particularly in the European Union founding Member States. Moreover, there is evidence of an increasing polarization of the North-South divide closely connected with the growing concentration of high-technology sectors. [image omitted] Cutrini E. La specialisation et la concentration d'un point de vue geographique a deux temps: des preuves europeennes, Regional Studies. Cet article cherche a examiner la distribution europeenne des emplacements pendant une periode d'integration economique et a identifier les roles differents joues par les divers niveaux geographiques. L'evolution des emplacements en Europe s'est averee beaucoup plus compliquee du point de vue empirique par rapport aux previsions fondees sur l'hypothese de Krugman. A partir des donnees regionales Eurostat pour la periode allant de 1985 jusqu'a 2001, cet article cherche a demontrer que, pendant que l'emploi industriel s'infiltrait dans les regions au compte-gouttes, il y a eu une certaine tendance a l'agglomeration suite a l'echeance du marche unique, mais seulement de facon transfrontaliere. Une specialisation nationale a vu le jour, notamment dans les pays fondateurs de l'Ue. Qui plus est, il y a des peuves d'une polarisation croissante du clivage Nord-Sud, ce qui se rapporte etroitement a la concentration croissante des secteurs a la pointe de la technologie. Emplacements Specialisation Concentration Integration economique europeenne Analyse geographique a deux temps Cutrini E. Spezialisierung und Konzentration aus einer zweiteiligen geografischen Perspektive: Belege aus Europa, Regional Studies. In diesem Beitrag untersuche ich die Standortmuster in Europa wahrend einer Periode der wirtschaftlichen Integration, um die charakteristischen Rollen zu identifizieren, die von den verschiedenen geografischen Ebenen wahrgenommen werden. Die Evolution der Lokalisierung in Europa erwies sich in empirischer Hinsicht als weitaus komplizierter als die Prognosen auf der Grundlage der Krugman-Hypothese. Mit Hilfe von Eurostat-Regionaldaten weise ich fur den Zeitraum von 1985 bis 2001 nach, dass das Beschaftigungsniveau der produzierenden Industrie innerhalb der Regionen zwar einem Trickle-Down-Effekt unterlag, aber nach Vollendung des Europaischen Binnenmarkts eine leichte Agglomeration auftrat, allerdings nur uber nationale Grenzen hinweg. Eine nationale Spezialisierung hat sich insbesondere in den Grundungsmitgliedsstaaten der EU herausgebildet. Daruber hinaus liegen Belege fur eine zunehmende Polarisierung des Nord-Sud-Gefalles vor, die eng mit der wachsenden Konzentration von High-Tech-Sektoren verknupft ist. Lokalisierung Spezialisierung Konzentration Europaische Wirtschaftsintegration Zweiteilige geografische Analyse Cutrini E. Especializacion y concentracion desde una perspectiva geografica dual: el ejemplo de Europa, Regional Studies. En este articulo examinamos los modelos de ubicacion europea durante un periodo de integracion economica con el fin de identificar los distintos papeles desempenados por los diferentes niveles geograficos. La evolucion de la localizacion en Europa resulta ser empiricamente mucho mas complicada que las predicciones basadas en la hipotesis de Krugman. Usando datos regionales de Eurostat para el periodo 1985-2001, en este articulo mostramos que mientras el empleo manufacturero sufrio un efecto 'goteo' entre las regiones, tras la creacion del Mercado Unico Europeo ocurrio una ligera aglomeracion, pero solo entre fronteras nacionales. La especializacion nacional ha surgido especialmente en los estados miembros fundadores de la UE. Ademas, hay muestras de una mayor polarizacion de la division norte/sur estrechamente conectada con la creciente concentracion de sectores de alta tecnologia. Localizacion Especializacion Concentracion Integracion economica europea Analisis geografico dualLocalization, Specialization, Concentration, European economic integration, Twofold geographical analysis,

Distance and Beyond. What Drives Financial Flows to Emerging Economies?

We build a model for the analysis of financial flows from advanced to emerging economies and introduce the quality dimension in cross-border asset trade. We reformulate the issue of transaction costs (Martin and Rey, 2004) in terms of a problem of trade in assets with different quality. The focus is on countries’ economic distance, as reflected in characteristics such as their institutional development, regulation of markets, enforceability of laws and political risk, and the impact on the expected inflows from the projects/assets. We further consider the spillover effects from the country of origin to the country of destination building on the idea that quality matters, but not always with the same intensity. We thus model “perceived” quality as depending on investors’ financial stress condition. We show that, besides the typical size effect, higher quality leads to higher asset demand and asset prices and, in particular, changes in “perceived” economic distance impact on the evolution of financial flows. We run econometric estimations for cross-border bank flows from advanced to emerging economies over the period 2005-2014 and analyze the interaction of market segmentation and global spillover effects in determining the changes occurred between the old and the new “normality”, as well as the heterogeneity across groups of countries

Distance and beyond. What drives financial fllows to emerging economies?

A major theme in the empirical literature is whether country-specific ‘pull’ or external ‘push’ factors drive international capital flows. In this paper we show that pull-push interactions matter: the response of international investors to country-specific developments depends on global volatility/liquidity stress conditions. We model asset-trade behaviour of investors: with limited information, strong institutional quality ‘pulls’ asset demand; mounting tensions in global markets amplify portfolio adjustments. We derive an empirically testable equation for cross-border bank flows to emerging economies (EMEs) and focus on pull-push interactions that trigger financial vulnerabilities. We find that global volatility amplifies demand for institutional quality, prior to the recent crisis, implying that EMEs with weak institutional settings are exposed to sharp capital retrenchments. In the aftermath of the crisis, the liquidity easing in advanced economies drives down concerns for EMEs’ developments, boosting flows and challenging EMEs’ ability to use capital controls to mitigate unbridled flows