The role of key regions in spatial development

Raphael Niklas Becker and Marcel Henkel

No 331, DICE Discussion Papers from Heinrich Heine University Düsseldorf, Düsseldorf Institute for Competition Economics (DICE)

Abstract: We discuss the role of key regions in spatial development. Local productivity shocks can affect the entire economy as they expand via tight connections in the domestic production network and in uence the geographical allocation of labor. In particular, we identify the set of key regions with the highest potential to affect aggregate productivity, output, and welfare. Key regions are central locations with strong spatial linkages in the production network but are not too large and congested so they can still attract additional labor in response to positive productivity shocks without local rents and input costs rising too much. Using a spatial equilibrium model and data from German districts, we find that a relatively modest development of productivity in key regions lowered German output and welfare growth by a factor of two from 2010 to 2015.

Keywords: Regional trade; Input-output linkages; Labour mobility; Spatial economics; Economicgeography; Regional productivity; Sectoral productivity (search for similar items in EconPapers)
JEL-codes: F1 F10 F16 O4 O51 R10 R12 R15 (search for similar items in EconPapers)
Date: 2020
New Economics Papers: this item is included in nep-geo, nep-gro, nep-net, nep-tid and nep-ure
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Persistent link: https://EconPapers.repec.org/RePEc:zbw:dicedp:331

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