local development and quality of the institutions in the eu regions 53 nd european congress of the...
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Local Development and Quality of the Institutions in the EU Regions
53nd European Congress of the Regional Science Association
27st – 30th August, 2013 Palermo
Cristina Brasili, Alessandro Lubisco, Lucilla SpinelliDepartment of Statistics, University of Bologna
Outline
Local Development and Quality of the Institutionsin the EU Regions
1. Introduction: the role of the quality of institutions for the local development
2. The economic and social places-based scenario of the EU regions
3. Regions by productive sectors: productive specialization and “districtual regions”
4. A growth model for the districtual regions conditioned to the quality of the institutions
5. Concluding remarks
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1. Introduction:The role of the quality of institutions for the local development
1. A higher productivity not only depends on the economic sector but jointly on ‘local environment’ and on technical and productive characteristics (Becattini, 2012, p.7).
2. The territory has a degree of “productive chorality” not only based on the proximity of business but, also, on the homogeneous cultural characteristics of all the families and the inhabitants of that place, not necessary directly involved in the local production.
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This paper tries to answer the question if there is a relation between economic development and quality of the institutions, integrating the value of the territory, the economic and social scenario and productive specialization, particularly, in the districtual regions.
Starting from the data matrix, regions by productive sectors, we would like to verify the thesis of the role of local quality of institutions in the evolution of the Industrial Districts, being true the Becattini’s hypothesis about the “productive chorality” instead of the merely geographical localization jointed to the productive specialization.
The scarcity of territorial data forces us to adopt the regional level (NUTS 2) for the analysis.
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2. The economic and social places-based scenario of the EU regions
The specific territorial capital and the social characteristics, will be linked to the indicator of quality of the institutions (firstly proposed by Quality of Government Institute of Gothenburg, 2010) and to the economic growth of the UE regions.
This study takes into account the regions of France, Germany, Italy, Portugal, Spain and United Kingdom in the years from 2000 to 2010.
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2. The economic and social places-based scenario of the EU regions
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Purchasing Power Standard per inhabitant in percentage of the EU average (PPS%EU)Years 2000-2010, regional minimum, regional maximum and national values (year 2010)
2. The economic and social places-based scenario of the EU regions
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)
Unemployment rate - Years 2000-2012, regional minimum,regional maximum and national values (2012)
2. The economic and social places-based scenario of the EU regions
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) 2. The economic and social places-based scenario of the EU regions
Percentage of GERD on GDP - Years 1999-2011, regional minimum (2009/2010),regional maximum (2009/2010) and national values (2011)
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) 2. The economic and social places-based scenario of the EU regions
Percentage of aged 30-34 with tertiary education - Years 2000-2012, regional minimum,regional maximum and national values (2012)
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)
Changes in Productivity, GVA and employment in six sectors - Years 2000-2007,Average annual change
3.87
4.74
3.86
6.04
2.17
-1.13
3.79
1.21
-0.54
-1.43
1.73
-1.07
-1.65
1.12
2.63
5.30
5.37
4.23
3.27
0.54
2.63
-4 -2 0 2 4 6 8
O-U
K-N
G-J
F
B-E
A
TOTAL
Productivity Employement GVA
Agriculture, forestry and fishing (A);
Industry, except construction (B-E);
Construction (F);
Wholesale and retail trade, transport, accommodation and food service activities, information and communication (G-J);
Financial and insurance activities, real estate activities, professional, scientific and technical activities, administrative and support service activities (K-N);
Public administration and defence, compulsory social security, education, human health and social work activities, arts, entertainment and recreation, repair of household goods and other services (O-U).
3. Regions by productive sectors: productive specialization and “districtual regions”
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)
1.14
-3.94
-5.15
-7.68
-11.89
-12.71
-5.02
2.07
1.51
-3.33
-7.86
-6.09
-3.71
-1.75
-0.91
-5.37
-1.88
0.19
-6.17
-9.35
-3.32
-15 -10 -5 0 5
O-U
K-N
G-J
F
B-E
A
TOTAL
Productivity Employement GVA
3.02
3.11
3.15
-4.86
6.86
10.08
3.32
1.15
0.87
-0.84
-4.03
-2.31
-0.07
-0.32
1.85
2.22
4.02
-0.86
9.39
10.16
3.65
-10 -5 0 5 10 15
O-U
K-N
G-J
F
B-E
A
TOTAL
Productivity Employement GVA
2009 to 2010, annual change2008 to 2009, annual change
Changes in Productivity, GVA and employment in six sectors
3. Regions by productive sectors: productive specialization and “districtual regions”
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Country Region
GVA per person employedTOTAL
All NACE activities
Mean=100
A B-E F G-J K-N O-U
UK Inner London 150.68 46 212 187 298 308 188
France Île de France 88.61 200 136 176 173
Germany Hamburg 73.33 80 157 122 162 119 115
Germany Darmstadt 68.19 74 136 91 111 133 110
Germany Oberbayern 66.33 64 146 106 114 133 105UK North Eastern Scotland 65.80 76 187 133 113 108 91Italy Lombardia 64.48 119 101 106 147 134 98
Italy Valle d'Aosta 63.77 60 109 111 141 164 131
Italy P. A. di Bolzano 63.40 150 100 103 139 156 123
France Provence-Alpes-Côte d'Azur 62.91 173 113 128 144
Ranking of the regions for the value of productivityThe first ten (2010)
3. Regions by productive sectors: productive specialization and “districtual regions”
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Country Region
GVA per person employedTOTAL
All NACE activities
Mean=100
A B-E F G-J K-N O-UUK Shropshire and Staffordshire 39.06 69 80 71 88 75 73
Portugal Lisboa 38.75 60 75 58 84 69 76
UK West Wales and The Valleys 37.58 19 92 72 75 79 75
UK Lincolnshire 37.07 173 64 122 79 83 62
UK Cornwall and Isles of Scilly 35.91 81 72 63 74 95 70
Portugal Alentejo 33.98 76 81 41 73 83 70
Portugal Algarve 32.44 83 51 42 74 75 71
Portugal R. A. dos Açores 31.59 85 49 36 75 83 76
Portugal Norte 26.30 12 42 39 63 71 70
Portugal Centro 24.46 11 54 38 66 80 69
Ranking of the regions for the value of productivityThe last ten (2010)
3. Regions by productive sectors: productive specialization and “districtual regions”
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) 3. Regions by productive sectors: productive specialization and “districtual regions”
The Districtual regions in France, Germany, Italy, Spain, United Kingdom and Portugal
In Italy there is a wide literature on the qualitative and quantitative economic analysis of industrial districts and several methodologies for the identification of industrial districts have been developed.
1.The most commonly accepted of these methodologies is by Professor Sforzi and by ISTAT, an algorithm which departing from local labour markets and activity data, provide a first operative approximation to mapping industrial districts. The application for the year 2001 identified 156 districts in Italy (ISTAT 2006).
In United Kingdom, France, Spain, Portugal and German we don’t have the same methodologies to identify the districts but we have compared the identification methods to have the number of industrial districts per region.
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) 3. Regions by productive sectors: productive specialization and “districtual regions”
The Districtual regions in France, Germany, Italy, Spain, United Kingdom and Portugal
2. United Kingdom - De Propris (2005) applied the Sforzi-Istat methodology to the United Kingdom to identify the various forms of the local system and industrial districts. The application showed the existence of 47 industrial districts in UK.
3. France - In a study for the Délégation à l'Aménagement du Territoire et à l'Action Régionale (Datar), aimed at promoting local production systems (LPS), Courlet has attempted to identify industrial districts, specialized "cluster" of the French economy. The study established the existence of fifty "industrial districts" of which 25 were selected, of very different sizes and a variety of activities. The list of districts we used is shown by Bernard Guesnier (2004).
4. Germany - To identify the presence of industrial districts in Germany regions was based on the Brenner paper (2006), in which he presents a method that allows local industrial clusters to be identified. A complete list of all local clusters that existed in Germany in 2001 and are identified by this method is given. This paper provides a methodology to identify empirically the threshold in the number of firms that separates those regions containing a local cluster in a certain industry from those that do not.
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) 3. Regions by productive sectors: productive specialization and “districtual regions”
The Districtual regions in France, Germany, Italy, Spain, United Kingdom and Portugal
5. Spain - In a research of Boxand Galletto (2006) an identification of Local Labour Markets in Spain is performed using the Sforzi-ISTAT’s methodology. The application of the adapted methodology produced 806 local labour systems in the year 2001, and 205 of them would show characteristics of Marshallian industrial district. Industrial districts are concentrated in the centre and the east of Spain.
6. Portugal - The industrial districts of Portugal were derived from work carried out by Cerejeira da Silva (2002). In that work they intend to carry out the segmentation of the entire country into “concelho” groups, slightly homogeneous in order to identify those that might be regarded as industrial districts. They use multivariate statistics and as classification technique they use the cluster analysis with an appropriate variant for the spatial analysis.
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Number of industrial districts per region
3. Regions by productive sectors: productive specialization and “districtual regions”
Industrial DistrictsGermany 439Spain 205Italy 156France 25Portugal 16United Kingdom 47Total 888
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Regional variations of the European Quality of Governament Index, 2009
The European Quality of Governament Index - 2009
4. A growth model for the districtual regions conditioned to the quality of the Institutions
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yi = + yi + QoGi + IndProd + (IndProd*NDistricts)i + Xi + i
Variable Coefficient Std. Error t-Statistic Prob. C -0.026627 0.020833 -1.278102 0.2015
LOG(GDP(-1)) -0.008603 0.004153 -2.071430 **0.0386QualIst(-1) 0.023374 0.009131 2.559779 *0.0106
DLOG(IndProd) 0.100950 0.011605 8.698818 **0.0000
DLOG(IndProd)*NDistricts 0.002970 0.000963 3.084652 **0.0021
LOG(GERD(-1)) -0.001578 0.001349 -1.169955 0.2423LOG(Tertiary(-1)) 0.009252 0.004063 2.277149 *0.0230Unemployment(-1) 0.000679 0.000216 3.144348 **0.0017
ES 0.007569 0.002515 3.009382 **0.0027DE 0.011181 0.002593 4.311832 **0.0000PT 0.012831 0.004311 2.976135 **0.0030UK -0.010749 0.002503 -4.294865 **0.0000IT 0.010134 0.004995 2.028889 *0.0427
Effects SpecificationPeriod fixed (dummy variables)R-squared 0.290550 Mean dependent var -0.006697Adjusted R-squared 0.275270 S.D. dependent var 0.024354S.E. of regression 0.020733 Akaike info criterion -4.892404Sum squared resid 0.419093 Schwarz criterion -4.784175Log likelihood 2460.863 Hannan-Quinn criter. -4.851263F-statistic 19.01452 Durbin-Watson stat 2.027195Prob(F-statistic) 0.000000
Dependent Variable: DLOG(GDP)
Method: Panel Least Squares
Sample (adjusted): 2001 2010
Periods included: 10
Cross-sections included: 122
Total panel (unbalanced) observations: 997
4. A growth model for the districtual regions conditioned to the quality of the Institutions
Concluding Remarks - 1
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In order to address the topic about the role of the quality of institutions in the districtual regions, this paper tries to answer to the question if there is relation between economic development, convergence and the quality of institutions.
The analysis shows a wide differences among the regions of the same country, for example taking into account GDP per capita but, in others cases, as for unemployment, the wider differences are between Mediterranean regions and Northern ones.
In the years of economic crisis, in fact, unemployment increases rapidly in Spain, Portugal and, enough broadly, in Italy. It is more stable in France. It increased less in United Kingdom, while in Germany unemployment grew up to 2005 and then constantly decreases, also in the years of the crises.
The percentage of intramural R&D expenditure on GDP is enough stable on the decade 2000-2010 but it has very different level in the countries: a quite uniform low level in the Mediterranean countries and higher values, but also a wide variability, among the regions of France, Germany and United Kingdom.
Concluding Remarks - 2
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The estimated model (including the variable related to the productive specialization of the regions) highlights that there is a positive and significative connection between the quality of institutions and the growth of regional GDP per capita. This decade shows a very low growth and convergence and the variation rate of productivity in the industrial sector and the interaction with the number of the districts give a (quite small) positive contribute to the growth and convergence.Further research....This study has to be improve and deepen in different directions. The chronic lack of data at regional level puts serious limits to the development of this study.First of all, in fact, we would have to split the data of industrial sector in order to deeply analyse the specialization of the different industrial districts.To define “productive chorality” we need some more economic, more disaggregated and updated dataAnother important factor that we will have to consider is the specialization of the regions to the export to evidence the level of competitiveness of the territories. A longer and updated time series variables allows to split the analysis before and after the crisis (at the present time only three years, from 2008 to 2010, are available).
