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The empirics of economic geography: how to draw policy implications?

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Abstract

Using both reduced-form and structural approaches, the spectrum of policy recommendations that can be drawn from empirical economic geography is pretty large. Reduced-form approaches allow the researchers to consider many variables that impact on regional disparities, as long as they are careful about interpretation and endogeneity issues. Structural approaches have the opposite advantages. Less issues can be simultaneously addressed, but one can be more precise in terms of which intuitions are considered and the underlying mechanisms and effects at work. Many regional policy issues remain unanswered, opening some interesting future lines of research.

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Notes

  1. See Rosenthal and Strange (2004) for a review.

  2. Except that Harris uses an inverse instead of an exponential function of distance.

  3. Redding and Venables (2004) deal with primary resources, geography, institutions but not education as Hanson (2005) does.

  4. See Combes et al. (2008) for more details.

  5. See Baldwin et al. (2003, Chap. 11) for one of the first systematic analysis of the efficiency-equity pattern. The literature has then proven that the conclusions reached could depend on the welfare function considered (See for instance Ottaviano and Thisse 2002; Charlot et al. 2006). Moreover, when the agglomeration mechanism entails factor accumulation or input-ouput linkages, immobile factor owners may gain and mobile factors may lose from agglomeration (see Ottaviano and Robert-Nicoud 2006; Gaigné 2006). However, as clear from the rest of this section, the empirical literature is for the moment far from being able to empirically assess which of these sometimes conflicting conclusions are the most relevant for reality.

  6. Four Western Europe areas (Central, North, South, and West), the United States and Canada, Southeast Asia (incl. Japan), China and South Asia, former Soviet countries, Eastern Europe, the rest of the world).

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Authors and Affiliations

  1. GREQAM-University of Aix-Marseille, Marseille, France

    Pierre-Philippe Combes

  2. International Trade and Regional Economics Programme, Centre for Economic Policy Research, London, United Kingdom

    Pierre-Philippe Combes

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  1. Pierre-Philippe Combes
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Correspondence to Pierre-Philippe Combes.

Additional information

Paper prepared for the VII Annual Elsnit Conference hosted by the Kiel Institute for the World Economy, under the sponsorship and co-organisation of the Inter-American Development Bank (IDB), October 2009. Comments from Rolf Langhammer, Harmen Lehment, Elsnit conference participants and a referee were appreciated. The presentation of empirical approaches in economic geography and their limits (Sects. 2.1 and 3.1) borrows some elements from Combes et al. Economic Geography, The Integration of regions and Nations, Princeton University Press, 2008. Financial support from IDB and CNRS is gratefully acknowledged.

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Combes, PP. The empirics of economic geography: how to draw policy implications?. Rev World Econ 147, 567–592 (2011). https://doi.org/10.1007/s10290-011-0092-z

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