Abstract:The improved availability of value-added trade data allows us to identify more clearly what fragment in the production chain is internationally competitive in a particular country. Rather than focusing on particular sectors or examples, we determine the distributions of revealed comparative advantage (RCA) in terms of both gross exports and value-added for 40 countries. Systematically comparing these distributions reveals significant differences for RCA based on gross exports versus value-added data. Using data on the Great Recession as an example, we argue that value-added RCA is more informative regarding the workings of the real economy than gross sector RCA. Resumen La mayor disponibilidad de datos sobre valor anadido a traves del comercio nos permite identificar mas claramente los fragmentos de la cadena de produccion que son competitivos a nivel internacional en un pais determinado. En lugar de centrarse en sectores o ejemplos en particular, se determinaron las distribuciones de la ventaja comparativa manifiesta (VCM), en terminos tanto de las exportaciones brutas como del valor anadido para 40 paises. La comparacion sistematica de estas distribuciones revelo diferencias significativas para la VCM en funcion de las exportaciones brutas con respecto a los datos sobre el valor anadido. Mediante el uso de datos sobre la Gran Recesion a modo de ejemplo, se argumenta que la VCM debida al valor anadido es mas informativa en relacion al funcionamiento de la economia real que la VCM bruta del sector.

Abstract:This special section aims to fill a gap in the regional resilience literature and to stimulate future spatial studies of resilience to include the international dimension in empirical analyses. It demonstrates the do-ability and relevance by the natural experience of the global trade collapse that allows us to separate the effect of collapse upon event and ex post recovery because no ex ante resilience measures were taken. This is a great methodological advantage with respect to the literature on natural disasters and financial crises that is confronted with the difficulty of identifying resilience because of ex ante measures (prevention or inherent resilience measures) and ex post measures (recovery or adaptive resilience measures). Resumen Esta seccion especial tiene como objetivo llenar un vacio en la literatura sobre la resiliencia regional y estimular los estudios espaciales futuros sobre la resiliencia, para que incluyan la dimension internacional en los analisis empiricos. Demuestra la factibilidad y la relevancia por medio de la experiencia natural del colapso del comercio mundial, que nos permite separar el efecto del colapso tras el evento y la recuperacion ex-post debido a que no se tomaron medidas de resiliencia ex-ante. Esta es una gran ventaja metodologica con respecto a la literatura sobre los desastres naturales y las crisis financieras que aborda la dificultad de identificar la resiliencia, debido a medidas ex-ante (prevencion o medidas inherentes de resiliencia) y medidas ex-post (recuperacion o medidas de resiliencia adaptativa). ?? ???????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????????(?????????????????)????????(?????????????????)????????????????????

Abstract:A key result in neoclassical trade theory, or the Heckscher–Ohlin model, is the so-called factor price equalization theorem (FPE; see Leamer, 2012 for a survey). It states that countries engaged in free trade that produce the same set of commodities, using similar techniques, have identical factor prices. This is a surprising result if one considers that in this stylized neoclassical world, countries that differ with respect to factor supplies still have the same factor prices. This result implies that, for example, (il)legal immigrants do not affect local wages. The differences in factor supplies are absorbed by differences in the commodity bundle that a country produces. In equilibrium, a labor-abundant country produces more of the labor-intensive commodity, and the capital-abundant country more of the capital-intensive commodity. So an inflow of migrants does not lower wages because this inflow increases production of the labor-intensive commodity and thereby raises demand for labor. Consumers are not affected either because international trade corrects for the differences in local supply and demand (the excess supply of the labor-intensive commodity is traded in order to restore equilibrium). In a closed economy this outcome is not possible because an increase in labor supply and the resulting increase of the production of the labor-intensive commodity would lower its price and also wages. If this seems too good to be true, this opinion is correct. FPE is a mathematical result that has produced an enormous (empirical) literature, but, as observed by Leamer and Levinsohn (1995, p. 1357), ‘the real question isn’t whether FPE is true or not. Trust us, it isn’t true. The real question is what causes the violations we observe.’ In addition there is also no unambiguous evidence of global convergence of factor prices (Milanovic, 2005).

Abstract:Usingmicro-data for Dutch firms, we argue that both the geographic component (what country is the import from) and the intensity component (what type of good is imported) is crucial for measuring and understanding productivity premia associated with importing. For example, our results indicate that the productivity premium associated with importing technology-intensive products from Taiwan differs from importing unskilled-labor-intensive products from Switzerland. We show that increasing distance and decreasing levels of development of the origin economy are negatively associated with the productivity premia of importing. Similarly, these premia are larger for technology-intensive goods and smaller for unskilled-labor-intensive goods. This implies that the geographic-intensity markets are unique and cannot be lumped together. In addition, a more dispersed import portfolio (the extensive dimension) is always positively associated with firm-level productivity.

Abstract:Since the seminal work of Krugman (1991) led the way, many researchers have further analyzed and explained the intricate connections between international trade flows, factor mobility, agglomeration and production; see Brakman et al. (2009) for an overview of the literature. As explained in Brakman and Van Marrewijk (Chapter 3 of this volume), there are now three ‘core’ models of new economic geography, or ‘geographical economics’, as we prefer to label it: (i) Krugman’s model based on labor mobility; (ii) the solvable human capital model based on Forslid and Ottaviano (2003); and (iii) the intermediate goods model based on Krugman and Venables (1995). All these models give rise to similar dynamics and core–periphery patterns with path-dependency and multiple long-run equilibria. This chapter focuses on empirical studies that stay relatively close to the core models in geographical economics. Our contribution is limited to providing an update of the contributions regarding four key features of geographical economics as identified by Head and Mayer (2004a, p. 2616): A large market potential raises local factor prices. ● A large market will increase demand for local factors of production and this raises factor rewards. Regions surrounded by or close to regions with high real income (indicating strong spatial demand linkages) will have relatively higher wages. ● A large market potential induces factor inflows. Footloose factors of production will be attracted to those markets where firms pay relatively high factor rewards. In the Krugman core model footloose workers move to the region with highest real wage and similarly firms prefer locations with good market access. ● Reduction in trade costs induces agglomeration, at least beyond a critical level of transport or trade costs. For a large range of transport costs a change in these costs may not lead to a change in the equilibrium degree of agglomeration, but if a shock moves the economy beyond its break or sustain point the economy goes from spreading to agglomeration, or vice versa, respectively. This also implies that more economic integration (interpreted as a lowering of transport costs) should at some point lead to (more) agglomeration of the footloose activities and factors of production. ● Shock sensitivity. Changes in the economic environment can (but need not!) trigger a change in the equilibrium spatial distribution of economic activity. This hypothesis goes to the heart of the idea that geographical economics models are characterized by multiple equilibria.

Abstract:Using a novel data set for 207 European regions from 22 different countries, we analyse the relevance of urbanisation for the short-term resilience to a major shock. We take the Great Recession, the economic and financial crisis that started in 2008, as our shock and analyse how the European NUTS 2 regions differ in their short-run resilience in the aftermath to the crisis in terms of unemployment and real GDP per capita. We find that the degree and nature of regional urbanisation is important for resilience. EU regions with a relatively large share of the population in commuting areas are relatively more resilient. In addition, regions with a large output share in medium-high tech industries were also less affected by the crisis.

Abstract:The financial crisis of 2008 not only started the Great Recession, but also set off fundamental changes in production processes, government fiscal practices, and housing. Technological progress has enabled firms to outsource and offshore parts of the production process, leading to a fragmentation of global value chains. We briefly discuss this "second unbundling,"global versus regional fragmentation and some of the consequences that became visible during the Great Recession's trade collapse. We discuss the consequences for some local clusters, both from a theoretical and empirical perspective, and some consequences for government fiscal health and housing from an American perspective.

Abstract:Global income inequality has been declining for several decades. We argue that global income inequality will reach its lowest level around 2027 and then will rise again. This development is the result of both economic and demographic forces. By combining economic projections with demographic developments and by using GDP per worker instead of GDP per capita in projecting income levels we emphasize the role of demographics in income inequality. Especially in the long run (after 2030), differences in population growth and population structure between countries in different stages of development are shown to increase global income inequality. (C) 2015 Elsevier Ltd. All rights reserved.