Evolution of the influence of geography on the location of production in Spain (1930-2005)

Chasco, Coro and López, Ana María (2008): Evolution of the influence of geography on the location of production in Spain (1930-2005).

Abstract

In this paper, we investigate the relative importance of geographic features on the location of production in Spain. Specifically, we want to quantify how much of the spatial pattern of GDP can be attributed to only exoge-nous first nature elements (physical and political geography) and how much can be derived from endogenous second nature factors (man-made agglomeration economies). In order to disentangle both effects empiri-cally, and to learn how they are interrelated, we control for second nature. We use a methodology based on an analysis of variance (ANOVA), which is applied to a panel of 47 Spanish provinces in the period 1930-2005. We demonstrate that results can be biased if spatial autocorrelation and spatial heterogeneity, as well as multicollinearity and endogeneity, are not prop-erly taken into account. In the Spanish case, we detect strong spatial het-erogeneity in the form of two main clusters. As expected, gross second na-ture forces are more important than net natural advantages, though their effects range from about 55% in the hinterland to 80% in the coast.

• Item Type: MPRA Paper
• Language: English
• Keywords: Agglomeration, Geography, Spatial Heterogeneity, Endogeneity, Spanish Regions
• Subjects: R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R1 - General Regional Economics > R12 - Size and Spatial Distributions of Regional Economic Activity; C - Mathematical and Quantitative Methods > C2 - Single Equation Models ; Single Variables > C21 - Cross-Sectional Models ; Spatial Models ; Treatment Effect Models ; Quantile Regressions

References

Ades AK, Glaeser, EL (1995) Trade and circuses: explaining urban giants. Quar-terly Journal of Economics 110: 195–227 Alcaide J (2003) Evolución económica de las regiones y provincias españolas en el siglo XX. Fundación BBVA, Madrid. Alcalde J, Alcalde P (2007) Balance económico regional (autonomías y provin-cias) años 2000 a 2005. FUNCAS, Madrid. Anselin L (1988) Spatial Econometrics: Methods and Models. Kluwer Academic Publishers. Dordrecht, Germany and Boston, MA, USA Anselin L (1990) Spatial dependence and spatial structural instability in applied regression analysis. Journal of Regional Science 30: 185–207 Anselin L (1995) Space Stat Version 1.80: Users’ Guide. Regional Research Insti-tute, West Virginia University, Morgantown, WV, USA Anselin L (1996) The Moran scatterplot as an ESDA tool to assess local instability in spatial association. In: Fischer M, Scholten H, Unwin D (eds) Spatial Ana-lytical Perspectives on GIS. Taylor and Francis, London, UK, pp. 111-126 Anselin L (1999) Spatial Data Analysis with SpaceStatTM and ArcView. Work-book, 3rd edn, Department of Agricultural and Consumer Economics. Univer-sity of Illinois at Urbana-Champaign., Urbana, IL, USA Anselin L (2000) Spatial econometrics. In: Baltagi B (ed) Companion to Theoreti-cal Econometrics. Basil Blackwell, Oxford, UK, pp. 310-330 Ayuda MI, Collantes F, Pinilla V (2005) From locational fundamentals to increas-ing returns: The spatial concentration of population in Spain, 1787-2000. Do-cumento de Trabajo 2005-05, Facultad de Ciencias Económicas y Empresaria-les, Universidad de Zaragoza (Spain) Brunsdon C, Fotheringham AS, Charlton M (1999) Some notes on parametric sig-nificance tests for Geographically Weighted Regression. Journal of Regional Science 39: 497-524 Burridge P (1980) On the Cliff-Ord test for spatial autocorrelation. Journal of the Royal Statistical Society B 42: 107-8 Ciccone A, Hall RE (1996) Productivity and the density of economic activity. American Economic Review 86: 54–70 Cliff AD, Ord JK (1973) Spatial Autocorrelation. Pion, London, UK Cliff AD, Ord JK (1981) Spatial Processes: Models and Applications. Pion, Lon-don, UK Cragg M, Kahn M (1997) New estimates of climate demand: evidence from loca-tion choice. Journal of Urban Economics 42: 261–284 Davidson R, Mckinnon JG (1993) Estimation and Inference in Econometrics. Ox-ford University Press, New York, NY, USA Delgado M, Sánchez J (1998) Las desigualdades territoriales en el Estado Espa-ñol: 1955-1995. Revista de Estudios Regionales 51: 61-89 Dobado R (2004) Un legado peculiar: la geografía. In: Llopis E (ed) El legado económico del Antiguo Régimen en España. Editorial Crítica. Barcelona (Spain) Dobado R (2006) Geografía y desigualdad económica y demográfica de las provincias españolas (siglos XIX y XX). Investigaciones de Historia Económica 5: 133-170 Domínguez R (2003) Retroceso demográfico y convergencia económica aparente. Mímeo Ellison, G., and E. L. Glaeser (1997) Geographic concentration in U.S. manufac-turing industries: a dartboard approach. Journal of Political Economy 105, 5:.889-927. Ellison G, Glaeser EL (1999) The geographic concentration of industry: does natural advantage explain agglomeration? American Economic Review Papers and Proceedings 89: 311–316 Escobal J, Torero M (2005) Adverse geography and differences in welfare in Perú. In Kanbur R, Venables AJ (eds) Spatial Inequality and Development. Oxford University Press, Oxford, UK, pp. 77-122 Freeman DG (2001) Sources of fluctuations in regional growth. Annals of Re-gional Science 35: 249–266 Fujita M, Krugman P, Venables AJ (1999) The Spatial Economy. Cities, regions, and international trade. MIT Press. Cambridge, MA, USA Funck RH (1995) Competition among locations: objectives, instruments, strate-gies, perspectives. In: Giersch H (ed.) Urban agglomeration and economic growth. Springer, New York (USA) and Heidelberg (Germany), 227-255 Gallup JL,Sachs JD (1998) Geography and economic development. Consulting Assistance on Economic Reform II Discussion Paper 39, March. Available for download from http://www2.cid.harvard.edu/cidpapers/caer/paper39.pdf. Gallup JL, Sachs JD, Mellinger AD (1999) Geography and economic develop-ment. International Regional Science Review 22: 179-232 Garrido R (2002) Cambio estructural y desarrollo regional en España. Pirámide, Madrid (Spain) Goerlich F, Mas M, Pérez F (2002) Concentración, convergencia y desigualdad regional en España. Papeles de Economía Española 93: 17-36 Graves PE (1979) A life-cycle empirical analysis of migration and climate, by race. Journal of Urban Economics 6: 135–147 Henderson JV (1988) Urban Development – Theory; Fact, and Illusion. Oxford University Press, Oxford, UK Henderson JV (1999) Overcoming the adverse effects of geography: infrastruc-ture, health and agricultural policies. International Regional Science Review 22:233-237 Jenks GF, Caspall FC (1971) Error on choroplethic maps: definition, measure-ment, reduction. Annals of the Association of American Geographers 61: 217-244 Kanbur R, Venables AJ (2007) Spatial disparities and economic development. In Held D, Kaya A (eds) Global Inequality. Polity Press, London (UK), pp. 204-215 Kim S (1999) Regions, resources, and economic geography: sources of US re-gional comparative advantage, 1880–1987. Regional Science and Urban Eco-nomics 29: 1–32 Knapp T A, White N E, Clark DE (2001) A nested logit approach to household mobility. Journal of Regional Science 41: 1–22 Krugman P (1993) First nature, second nature, and metropolitan location. Journal of Regional Science 33: 129-144 Krugman P (1999) The role of geography in development. International Regional Science Review 22: 142–161 Krugman P, Livas R (1996) Trade policy and third world metropolis. Journal of Development Economics 49: 137-150 Le Gallo L, Chasco C (2008) Spatial analysis of urban growth In Spain, 1900-2001, Empirical Economics (in press) Mathias K (1980) Wirtschaftsgeographie des Saarlandes. Buchverlag Saarbrücker Zeitung McCallum J (1995) National borders matter: Canada–US regional trade patterns. American Economic Review 85: 615–623 Mella JM, Chasco C (2006) Urban growth and territorial dynamics: A spatial-econometric analysis of Spain. In: Reggiani A, Nijkamp P (eds) Spatial dy-namics, networks and modeling. Edward Elgar, New York, NK, USA and Amsterdam (The Netherlands), pp. 219-260 OECD (2000) Small and medium-sized enterprises: local strength, global reach. OECD Observer, June 2000, Organisation for Economic Cooperation and De-velopment, Paris, France Peeters L, Chasco C (2006) Ecological inference and spatial heterogeneity: an en-tropy-based distributionally weighted regression approach. Papers in Regional Science 85: 257-276 Pulido A, López AM (2003) Economía dinámica. Economistas 95: 21-26 Rappaport, J (2000) Is the speed of convergence constant? Federal Reserve Bank of Kansas City Working Paper 99-13 (August) Rappaport J, Sachs J (2003) The United States as a coastal nation. Journal of Eco-nomic Growth 8: 5-46 Ravallion M (2007) Geographic inequity in a decentralized anti-poverty program: a case study of China. Policy Research Working Paper Series 4303, The World Bank Rey S, Montouri B (1999) US regional income convergence: a spatial econometric perspective. Regional Studies 33: 143–56 Roos MWM (2005) How important is geography for agglomeration? Journal of Economic Geography 5: 605-620 Rosenthal S, Strange WC (2001) The determinants of agglomeration. Journal of Urban Economics, 50: 191-229 Rosés JR (2003) Why isn’t the whole of Spain industrialized? New Economic Ge-ography and early industrialization, 1797-1910. Journal of Economic History 64: 995-1022 Sachs J (2000) Tropical underdevelopment. CID Working Paper 57 Sargan JD (1964) Wages and prices in the United Kingdom: A study of economet-ric methodology. In Hart PE, Mill G, Whitaker JK (eds.) Econometric analysis for national economic planning, Butterworths, London, UK Tirado DA, Paluzie E, Pons J (2003) Industrial agglomerations and wage gradi-ents: the Spanish economy in the interwar period. Document de Treball de la Facultat de Ciències Econòmiques i Empresarials de la Universitat de Barce-lona, E03/103 Venables AJ (1999) But why does geography matter, and which geography mat-ters? International Regional Science Review 22: 238-241 Venables AJ (2003) Spatial disparities in developing countries: cities, regions and international trade”. Available for download from: http://www.econ.ox.ac.uk/members/tony.venables/unpub_papers.html#spatrktv. Viladecans E (2004) Agglomeration economies and industrial location: city level evidence. Journal of Economic Geography 4: 565-582