Issue 45 – Winter 2019


European Regional Policy

Martin Christensen, Georg Weiers, Marcin Wolski

The 2019 assessment of the macroeconomic effects of the European Fund for Strategic Investments with the RHOMOLO-EIB model

The European Fund for Strategic Investments (EFSI) is the financial pillar of the Investment Plan for
Europe. It tackles the post-crisis investment gap in the European Union (EU) and aims to revive
investment in key areas in all the EU Member States. EFSI was launched in 2015 jointly by the European
Investment Bank (EIB) Group and the European Commission. Every year, macroeconomic impact
assessments are carried out using the spatial dynamic RHOMOLO-EIB model in order to gauge jobs and
growth impact of the EFSI-supported operations in the EU. This article illustrates the methodology used
for the assessment and reports the result of the latest set of simulations, corresponding to the portfolio of
all approved EFSI-supported operations as of the June 13th EIB Board of Directors meeting, 2019.
According to the results, EFSI is contributing significantly to job creation and growth. The estimates
suggest that, by 2019, more than 1 million jobs are expected to be created thanks to the approved
operations (1.7 million by 2022), with a positive contribution to GDP of 0.9% (1.8% expected by 2022)
over the baseline.

Keywords: Spatial general equilibrium; fiscal policy; investment

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Jesús Peiró-Palomino

Government quality and regional growth in the enlarged European Union: Components, evolution and spatial spillovers

This paper investigates the relationship between government quality and regional economic growth in 206 EU-28 regions during the period 2010-2017. We use the European Quality of Government Index (EQI), based on the pillars of quality, impartiality and corruption and provide results for both the aggregated index and its three components. We find a negative evolution of government quality across regions over the studied period. Overall, the econometric results, obtained via Ordinary Least Squares and Spatial Lag models suggest that improvements in the quality of government positively contribute to economic growth, although larger impacts are found for EU-15 regions in comparison with regions from countries that joined the European Union after 2004. Finally, we find that spatial spillovers matter, as a great proportion of the effect of government quality on growth is indirect. In that regard, when analyzing different components of government quality in the spatial models, a clear influence is found for corruption and impartiality, whereas results are weaker for the quality of public services.

Keywords: Government quality; Regional growth; Spatial spillovers.

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Helen Castellón-Orozco, Natalia Jaría-Chacón, Laura Guitart-Tarrés

The adoption of the servitization strategy in Spanish manufacturing companies: a spatial analysis by autonomous communities

The servitization represents a very attractive market strategy for the manufacturing industry. In fact, the
evolution of the capacity of manufacturers to offer services as complements or substitutes for the products
they manufacture offering optimal solutions to the demands has also demonstrated a rapid increase since
the 1980s. An extensive literature has described these strategies and has demonstrated that this
phenomenon is widespread and is increasing in most developed economies. However, there is no empirical
evidence of the scope or results of servitization on all manufacturing companies.

Considering that servitization is a growth strategy and increasingly used by companies, but, not analyzed
in detail from a spatial perspective. Thus, this work aims to focus on the spatial relationship. Particularly,
the main aim of this paper is to analyze if the servitization strategy presents a similar pattern of behavior
in the Spanish territory through the application of the spatial analysis technique. To achieve this goal, the
study is carried out by autonomous communities in order to identify the presence of significant
relationships between servitization and some economic variables such as the profitability of sales, the size
of the company and total revenues. Finally, derived from the results obtained by the present study, it is
shown that there is variability of behavior in terms of servitization in all autonomous communities that
make up the Spanish territory.

Keywords: Servitization; manufacturing firms; strategy; Spain.

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Donata Favaro, Eniel Ninka

Inventors’ working relationships and knowledge creation: a study on patented innovation

This study explores the knowledge-creation process that arises from inventors’ working relationships and
its impact on company innovation. Innovation is measured by a company’s patenting activities. Our
analysis is based on an original database built using OECD micro data obtained from patent applications
at the European Patent Office (EPO). An empirical analysis was carried out on a body of firms located in
the Italian region of Veneto. Our results reveal that the inventors’ working relationships have a significant
impact on a company’s innovation – innovation which is also dependent upon both geography and
timescales. Inventors’ working relationships thus produce productivity effects, in terms of patenting
activity, both in the short and long term and these impacts are also dependent upon geographical distance.

Keywords: working relationships; knowledge creation; patenting activity; inventor productivity

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Ángel Herrero Crespo, Héctor San Martín Gutiérrez, María del Mar García de los Salmones Sánchez

Smart services and equity of smart tourism destinations: analysis from the perspective of the residents

Tourist destinations are increasingly considered as brands that need to be managed to increase not only the arrivals of tourists, but also the quality-of-life of residents. Thus, brand equity plays an important role in the achievement of those objectives. Simultaneously, the integration of ICT has leaded to the concept of “smart tourist destinations”. With this in mind, the main goal of our paper is to develop a model of smart destination equity from the point of view of residents (i.e. a key stakeholder of tourist destinations since they project the image of their places and influence the tourist experience). In particular, our model includes smart services linked to safety, health, heritage, mobility, and environment. Our results confirm that smart destination equity is formed by awareness, image, perceived quality, and loyalty. In addition, smart services related to safety, the environment and mobility are the main factors influencing smart destination equity.

Keywords: smart; services; equity; destination; residents

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Julio Pozueta Echavarri, Patxi J. Lamíquiz Daudén , Ester Higueras Garcia, Manuel Benito Moreno

The spatial dynamics of land use surrounding the Spanish property bubble (1990-2012)

Although the recent housing boom & bust in Spain has triggered significant transformations in its urban fabric, the geographical dimensions of this economic phenomenon and its spatial impacts on the local urban structure have not yet been described in depth. Following the latest published data from CORINE Land cover (2012), this study undertakes a dynamic multi-scale spatial analysis of data representing urban land cover over a 22-year span, contributing to the understanding of four main issues: (i) the total amount of change, (ii) its proportion in comparison with the initial stage of geographical distribution, and the (iv) the implications for the metropolitan and regional urban layout.
This quantification describes the outlying regional structure of Spain’s urbanization process during the last decades in Europe, showing great acceleration and a significant transformation in land use patterns, as well as major differences in rates and components on smaller scales, using an integrated growth index.

Keywords: Real estate bubble; CORINE Land Cover; land use; Spanish urban structure; regional studies; spatial dynamics

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Elías Melchor-Ferrer

The influence of educational attainment on convergence in Spanish and Portuguese regions

This article empirically analyses regional convergence between Spanish and Portuguese NUTS-3 regions during the period 2000-2015, considering the spatial dependence between these units and the role of educational attainment in this process. After some considerations regarding the model to be estimated, exploratory spatial data analysis (ESDA) is applied to detect two regional clusters grouped by regional product per inhabitant: high-income regions (located in the north-eastern third of the Iberian Peninsula) and low-income regions. For both clusters, various models of educational attainment are examined. These models reveal the presence of regional convergence, and enable us to detect the spatial spillovers that drive this process, which differ between the two clusters. In particular, we observe the influence of tertiary education on the reinforcement of income convergence within the high-income cluster, while for the low-income cluster this role is largely played by secondary education, but in the opposite direction.

Keywords: regional convergence; educational attainment level; spatial spillovers; Iberian regions; Spatial Durbin Model.

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Rolando I. Valdez

Spatial diffusion of economic growth and externalities in Mexico

Economic growth and externalities are rooted in spatial dynamics, however, their spread over space is not unlimited. In this document it is estimated the strength spatial externalities from capital on output and the spatial spillover of the economic growth for Mexican municipalities at different distances. The estimation is carried out implementing a Spatial Durbin Model with distance-based spatial weight matrices in a panel data structure from 1988 to 2013. The results show evidence of weak spatial externalities from capital on output at short distances, say 20 or 60 km. Additionally, it is found that the diffusion of economic growth is directly related to distance, moreover, there is evidence in favor about the convergence hypotheses, finding out that distance between stationary states is insufficient to explain differences among municipalities’ growth rates, but geographical distance matters as well.

Keywords: Economic growth; Externalities; Spatial Convergence.

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María Teresa Nevado Gil , Dolores Gallardo Vázquez

Local government social responsibility: empirical evidence in the region of Extremadura

This paper serves as a double purpose in the context of local administrations’ information on line disclosure of Social Responsibility (SR). First, this study examines how levels of information dissemination of SR are evolving. Second, some fiscal, political, population, and socioeconomic factors were investigated as determinants of this information disclosed. A content analysis of the websites of the local government in a region of Spain was carried out. This region is the first which has a Corporate Social Responsibility Lay. Later, according to literature review, the authors propose a multiple linear regression model based on disclosure index scores calculated previously. On the one hand, the results show an increase in the amount of SR information disclosed between 2013 and 2016. On the other hand, the study concludes that larger municipalities with more resources, progressive party governments, and intense political competition present higher levels of information disclosure of social responsibility.

Keywords: Social Responsibility; Disclosure; Websites; Determinant factors

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Beatriz Corchuelo Martínez-Azúa, Francisco J. Ferreiro Seoane

Agri-food industry in Extremadura: obstacles to innovation, willingness to innovate, and demanded public actions

The purpose of this paper is to analyse the barriers perceived by agribusiness companies in Extremadura; how these barriers influence their disposition to innovate and the type of public actions demanded by these companies in order to boost innovation. Data comes from an ad hoc survey conducted in 2013. The methodology used combines descriptive analysis with factor analysis and econometric analysis. Main results show that high costs and risks, lack of human resources and difficulties of appropriability are the barriers that reduce the probability to innovate, and that there are important differences among the perceived factors of obstacles and demands of public actions. This can be a reference to develop government policies specifically geared towards boosting innovation in this kind of industry.

Keywords: Agribusiness, innovation, barriers, innovation policies

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Olga de Cos Guerra , Pedro Reques Velasco

Territorial and demographic vulnerability in Spain. The opportunities of the multicriteria method in the definition of spatial patterns.

This paper is focused on the relations between the spatial patterns of territorial and demographic vulnerabilities in Spain. To aim this goal, the study is based on a GIS model of fuzzy logic and multicriteria evaluation, which highlights the spatial gradation of vulnerabilities. The article shows a strategic geodemographic approach, which is addressed at the importance of studying the population, because of the transcendence and implications of the changes experienced by the demo-spatial component at any scale. Furthermore, the study aims a research contribution in the concern that exists in Spain related to the sustainability of certain territories. On the other hand, the article proposes a methodological alternative to analyze the issue of territorial imbalances based not only on the population, but also on the geographical area.

Keywords: Geographic Information Systems, Multicriteria evaluation, Fuzzy logic, Vulnerability

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Jesús Clemente López, Pedro García Castrillo, María A. González-Álvarez

Mortality and socioeconomic status in early 21st century Spain

This paper analyzes socioeconomic inequalities in mortality in Spain considering geographical and labor market effects on the mortality rate. From the geographical analysis, a distribution obtained that groups provinces into five groups according to their mortality rate and population characteristics. The map presents a concentric model with lower mortality rates in the center of the peninsula, increasing as we move away from it. On the other hand, the results show an inverse relationship between the probability of death and the socioeconomic variables, educational level and occupation, confirming that they reflect two different aspects of human capital. These results indicate the importance of geographical, economic and labor disparities in the mortality rate and the need to consider them when preparing policies, such as policies related to retirement age.

Keywords: Regional Economy; Demography; Health and Mortality; Human Capital and Employment

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Arturo Melián González, José Andrés Dorta Velázquez

Effects of the alternatives for the participation of the regional financing system taxes in the horizontal equalization

The need for modifying the current system of regional finance has been argued in numerous academic works and by the different autonomous governments. One of the parameters for which a change has been proposed is how the different taxes integrated in the regional financing system should participate in horizontal equalisation. This paper analyzes the implications of the main alternatives that exist in this regard, both in the degree of variability of funding and in the results for the different autonomous communities.

Keywords: regional finance, tax revenue, horizontal and vertical transfers

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Methodological and research notes

Alfredo J. Mainar-Causapé

Analysis of the Bioeconomy sectors using specific Social Accounting Matrices (BioSAMs): the case of Spain

The biobased economy (Bioeconomy) will be key to achieve sustainable development, and it is essential to analyse the links between the sectors of the bioeconomy and the rest of activities, determining their impact on economic growth. An interesting tool for this analysis is the BioSAMs dataset, social accounting matrices with high disaggregation of bio-economic sectors, for the European Union (EU) 28 Member States. Using these matrices, a linear analysis has been carried out to quantify the capacity of bio-based sectors to contribute to the promotion of economic development, both in Spain and in comparison with the EU.

Keywords: Bioeconomy; Social Accounting Matrices; Spanish Economy, European Union; Multisectoral models

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Francisco J. Delgado, Maria J. Presno, Francisco A. Blanco

Local taxation in the EU: A convergence study

In this note we study the convergence of local taxation in the EU-15 for 1975-2015 and two sub-periods, 1975-1994 and 1995-2015. Through a sigma convergence analysis, we find evidence of convergence for 1975-2015 and 1995-2015 but divergence for 1975-1994. In a club convergence approach, the countries are clustered into two clubs in the overall sample, while in the sub-periods we identify two and three clubs and divergent countries.

Keywords: local taxation; European Union; sigma convergence; club convergence

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Books reviews