Agglomeration Economies and Entrepreneurship in the ICT Industry

In this study indicators of agglomeration economies and their effect on entrepreneurship in the ICT industry are analysed in diverse urban contexts. Agglomeration economies have a stronger impact on new firm formation than on the growth of incumbent firms. Concentration and diversity both have a positive effect on new firm formation as well as on the growth of incumbent firms, while competition only has a positive effect on new firm formation. It is especially the effects of industrial diversity that are revealed to be sensitive to urban contexts: positive effects on new firm formation are attached to the connected cities and to the highly urbanized Randstad, and positive effects on firm growth to the intermediate zone, the connected cities and urban municipalities

Variety, economic growth and knowledge intensity of European regions: a spatial panel analysis

Although the theoretical framework on agglomeration externalities and the channels through which they influence the regional economy appear well established, the empirical evidence on their magnitude and impact has been rather ambiguous and inconclusive. Applying the concepts of related and unrelated variety to an interregional European dataset and using spatial panel analysis, this paper provides critical information on the type and functioning of agglomeration externalities in relation to regional heterogeneity in knowledge intensity and innovation. We demonstrate that modeling this regional heterogeneity in a spatial panel setting is a crucial condition for identifying the positive agglomeration effects of (un)related variety on regional growth. The outcomes hav

On the Economic Foundation of the Urban Network Paradigm: Spatial Integration, Functional Integration and Economic Complementarities within the Dutch Randstad

The current debate on polycentric urban development suggests that inter-firm relations are important for the creation and sustainment of urban networks. Conceptually, the degrees of spatial and functional integration and urban complementarities in economic network relations are hypothesised to be important. However, the theoretical economic rationale has not been convincingly tested. In this paper, we use data on inter-firm relations in the Dutch Randstad to test conditions for integration and the existence of economic complementarities within this region. Contrary to the ‘polycentricity hypothesis’, we observe a clear hierarchy in the different types of spatial interdependencies in the Randstad, in which the central place model prevails. Furthermore, we do not find evidence for the functional integration of municipalities in the Randstad. We conclude that at this moment the Randstad does not function as a spatially and functionally integrated region, and that spatial economic policy can better focus on smaller regions within the Randstad when urban economic complementarities and integration are desired. This also calls into question the applicability of the urban network concept in general, as the Dutch Randstad is usually seen as a prime example of an economically successful polycentric urban system

House Prices, Bubbles and City Size

We build a theoretical model that relates house price, city size and the expected future growth of demand for housing. Our model combines the Alonso-Mills model on urban economics with insights from financial economics on house prices. Estimating the model for cities in the US, we empirically validate the positive effect of city size on urban house prices. Moreover, our estimations confirm that an (unrealistic) increase in the expected growth of demand fuelled by the widespread availability of credit provides a better explanation for the recent bubble than inelastic housing supply that explained earlier bubbles

Agglomeration and New Establishment Survival: A Mixed Hierarchical and Cross-Classified Model

Recent empirical studies in regional science and urban economics show that agglomeration economies may be one source of the uneven distribution of economic activities and economic growth across cities and regions. At the same time, the body of research into the importance of agglomeration economies for the performance of firms is still growing. Such development is necessary, as the theories that underlie agglomeration economies are microeconomic in nature, but still insufficiently understood. In this study, we focus on the determinants of survival among new establishments in the advanced producer services sector in the Netherlands. Employing a mixed hierarchical and cross-classified probit regression, we introduce a model of establishment survival that is specific to characteristics of the internal and external environment of the establishment. Controlling for firm and sector characteristics, we conclude that location accounts for about 4% of the variance in the probability of survival of new establishments. We also find that localization and urbanization economies have a positive effect on the survival of new establishments. However, new establishments with large start-up sizes appear to profit more from agglomeration economies than new establishments with small start-up sizes

Heterogeneous relatedness and firm productivity

In this manuscript, we relate regional structural composition—related and unrelated variety—to firm-level productivity in European regions, applying a Cobb–Douglas production function framework and using firm-, industry- and regional-level mixed hierarchical (multilevel) models. Our analyses indicate that regional-related variety has a positive impact on firm productivity in European regions, especially for firms in high-tech and medium-tech regions. These outcomes have implications for European policies on competitiveness as firms embedded in regions without these technological and institutional circumstances are systematically worse off in terms of productivity, and catching-up is not obvious for such regional economies

Heterogeneous relatedness and firm productivity

In this manuscript, we relate regional structural composition—related and unrelated variety—to frm-level productivity in European regions, applying a Cobb–Douglas production function framework and using frm-, industry- and regional-level mixed hierarchical (multilevel) models. Our analyses indicate that regional-related variety has a positive impact on frm productivity in European regions, especially for frms in high-tech and medium-tech regions. These outcomes have implications for European policies on competitiveness as frms embedded in regions without these technological and institutional circumstances are systematically worse of in terms of productivity, and catching-up is not obvious for such regional economies

A Treatise on the Geographical Scale of Agglomeration Externalities and the Modifiable Areal Unit Problem

The modifiable areal unit problem (MAUP) refers to the sensitivity of statistical research results to the initial spatial nomenclature used. Despite a substantial literature in the related field of geography on the potential influence of the MAUP, the urban economic modeling tradition has not paid much attention to this issue. In this article, we test to what extent the MAUP moderates the effect of agglomeration externalities on areal sectoral employment growth by varying the initial geographical scale of analysis. Using spatial cross-regressive modeling in which we account for spatial spillover effects of agglomeration externalities, we find different effects of agglomeration forces across geographical scales. As the MAUP is a theoretical as well as a methodological problem, research should not only work with proper statistical specifications of spatial agglomeration models incorporating different geographical scales, but also relate this more explicitly to hypotheses concerning the geographical scale at which agglomeration externalities operate

Between spilling over and boiling down: network-mediated spillovers, local knowledge base and productivity in European regions

Abstract Productivity across European regions is related to three types of networks that mediate R&D-related knowledge spillovers: trade, co-patenting and geographical proximity. Both our panel and instrumental variable estimations for European regions suggest that network relations are crucial sources of R&D spillovers, but with potentially different features. Both import and co-patenting relations affect local productivity directly, but spillovers from innovation-leading regions are effective only when they are import-mediated and when recipient regions have a solid knowledge base. From a policy perspective, this may frustrate recent European policy initiatives, such as Smart Specialization, which are designed to benefit all regions in Europe

Multilevel Approaches and the Firm-Agglomeration Ambiguity in Economic Growth Studies

Empirical studies in spatial economics have shown that agglomeration economies may be a source of the uneven distribution of economic activities and economic growth across cities and regions. Both localization and urbanization economies are hypothesized to foster agglomeration and growth, but recent meta-analyses of this burgeoning body of empirical research show that the results are ambiguous. Recent overviews show that this ambiguity is fuelled by measurement issues and heterogeneity in terms of scale of time and space, aggregation, growth definitions, and the functional form of the models applied. Alternatively, in this paper, we argue that ambiguity may be due to a lack of research on firm-level performance in agglomerations. This research is necessary because the theories that underlie agglomeration economies are microeconomic in nature. Hierarchical or multilevel modeling, which allows micro levels and macro levels to be modeled simultaneously, is becoming an increasingly common practice in the social sciences. As illustrated by detailed Dutch data on firm-level productivity, employment growth and firm survival, we argue that these approaches are also suitable for reducing the ambiguity surrounding the agglomeration-firm performance relationship and for addressing spatial, sectoral and cross-level heterogeneity