Regional Science Matters

This paper offers a concise holistic-historical perspective on regional science. It positions regional science among various related disciplinary approaches and presents a comprehensive image of its multi-faceted architecture.

It is argued in this paper that there are significant differences between interregional and international trade, mainly because of the existence of increasing returns at a regional level, next to comparative advantages. Consequently, location matters, although interregional trade seems to be lagging GDP growth, most likely as a result of a structurally declining regional specialisation.

Isard demonstrated as early as 1951 that traditional (national) I–O models are inadequate because they cannot capture the effects of linkages and interactions among regions. To examine the full (short-term) impacts of unexpected events, such as terrorist attacks or natural disasters on the U.S. economy, the economic links among states (e.g. interregional trade, based on detailed shipments data) had also be analyzed. IMPLAN provided State input–output data. Few MRIO models have been implemented (since Polenske’s attempt in 1980), but the potential increased after 1993 when the Commodity Flow Surveys (CFS) were introduced. This chapter introduces our model, the National Interstate Economic Model (NIEMO) which is an attempt to operationalize Isard’s ideas fully, and covers 52 regions (the 50 States, Washington DC, and the “rest of the world”) and 47 (29 commodity and 18 service) sectors. This was made possible by the expansion of the data base and the dramatic improvement in computer capacity. Much of the chapter explains how the model was built. A key step was the creation of conversion tables to make IMPLAN and CFS data compatible, and two sets of coefficients (industrial trade and regional interindustry). Model extensions were also introduced, TransNIEMO (to integrate the national highway network), FlexNIEMO (to relax the standard I–O assumption of fixed production coefficients), and adding induced impacts to indirect impacts in interregional trade analysis.

Much of spatial economic theory is based on general economic equilibrium theory, although there are problems in a direct addition of a spatial dimension. The most striking is the lack of an analysis of the role of non-material and material public capital (or infrastructure) in the deduction of a static equilibrium structure or patterns of growth and development of economies. In this paper I demonstrate how different aspects of time can improve our understanding of dynamics of economies.

In this paper I furthermore show that a proper refocusing on the time dimension can also shed light on the structure of economies in space. Four approaches are necessary for such a synthesis.

The population density function is usually applied at the level of the urban or metropolitan area. In this chapter, however, it is examined at the scale of the region, namely, an economic region of a nodal (rather than homogeneous) type. The regional density function to be employed has an inverse power form. This is shown to differ significantly from the negative exponential structure typically associated with urban areas. The primary purpose of the investigation is to explore the possibility of using the density function as a means of determining the boundary between adjacent economic regions. Initially, the boundary is examined in terms of a point and then, more conventionally, as a line. After discussing several possible extensions, the results are compared with findings of other theoretical models concerned with the specification of boundaries, but based on wholly different approaches.

Walter Isard is the founder of the post-war tradition of Regional Science. He dates the birth of this tradition back to 1944 when he became familiar with the German literature on location. Based on these studies, he published his seminal Quarterly Journal of Economics paper The General Theory of Location and Space-Economy and later his famous book Location and Space-Economy. The present paper reassesses the German contributions. Starting from von Thünen it rushes through the history of thought until the 1930s of the last century. The paper agrees with Isard’s emphasis on the fundamental insights offered by the German authors, but tries to revise some conventional wisdom about the German tradition. In particular, it argues that the so-called historical school offers more to learn from today than it is usually thought, while Weber, probably the most celebrated German spatial economist after von Thünen, chose a methodological approach that turned out not to be fruitful for later research. Finally, the paper explicitly dissents from Isard’s praise of Weigmann who, for good reasons, is now completely forgotten.

Nearly 60 years ago, North and Tiebout engaged in a vigorous debate on the nature of regional economic growth that is still relevant today. The discourse led to the formulation of the economic base model, a simple but powerful means of explaining, analyzing, and forecasting the process of regional economic growth.

The objective of this study is to explain how the Washington state economy has grown and evolved over the past 50 years in light of the theory advanced by North and Tiebout. Drawing upon Washington’s long history of regional economic modeling and analysis, the study addresses several questions, among them: Are exports the key to regional economic growth? To what extent do people follow jobs? Are the regional unemployment rate, wage rates, and consumer prices determined in the regional or national market? What are the causes of regional economic cycles?

This case study shows that the historical behavior of the Washington economy is largely consistent with the economic base theory of regional growth. The study presents a classical picture of an open regional economy operating in a much larger arena: a trade-dependent economy with little, if any, control over its unemployment rate, wages, and prices because of mobile factors of production.

The 2008/2009 global financial crisis and the unprecedented policy response in advanced economies have a worldwide impact. The episode also led many to question the standard framework of economic thinking on regional integration, financial liberalization and their repercussions on income disparity. The paper argues that one needs to take a balanced view on integration—not just the benefits but also the risks. If regional integration leads to greater inequality, the expected growth and prospect of improved welfare can be diminished. Utilizing a general equilibrium framework, it is also shown how financial liberalization and the surge of capital inflows can produce not only financial instability but also worsening income disparity. By combining model-based results and theory-based ranking applied to the Asian case, and considering the benefits, opportunities, costs and risks of alternative policies, it is revealed that imposing levy on bank-led flows can be used to reduce instability and inequality. This type of macro-prudential policy reflects a departure from the ‘First Best’ to the ‘Second Best’ approach of liberalization, where the frictionless outcome of the former is seriously questioned.

This study introduces a new method called Spatial Econometric Computable General Equilibrium (SECGE), which integrates both spatial econometrics with computable general equilibrium modeling to improve the effectiveness of impact analysis on transportation infrastructure. Elasticities of factor substitution for the Constant Elasticity Substitution (CES) production function are estimated in a spatial econometric model with consideration of spatial dependence. CGE simulations adopting different substitution elasticities show a difference between spatial econometric estimation and traditional OLS estimation. Although the differences are relatively small in this aggregate case study, implications for more sensitive disaggregated regional models are clear.

While the field of regional science has focused considerable attention on the role of structural change in affecting regional development, relatively modest attention has been directed to the influence of demographic-induced changes with the exception of migration and the impact of the demographic transition in developing countries. Further, most models of the regional economy portray significant disaggregation of the industrial system yet often capture the impacts of households in one sector. Increasing attention to household heterogeneity is justified on the basis of different consumption behavior by age, income and location. Since households account for 40–70 % of gross domestic product on the expenditure side, addressing the role of household heterogeneity would appear to be essential. In this paper, a review of recent work that captures this heterogeneity will be reviewed and some illustrative results from applications in Korea and the US will be provided.

This paper views industrial clusters as complex systems composed of multiple interdependent dimensions, firms and enterprises, organizations. A literature review is used to construct a life-cycle framework for assessing cluster dynamics and guiding related policy development. The framework is erected on seven dimensions along with measures and development related patterns associated with the different life-cycle stages. Examples of policy guidelines are provided across all seven dimensions and by stage of cluster development. Finally, a case study of the South Korea shipbuilding cluster is provided in an effort to illustrate how the framework can be used to analyze cluster dynamics and to guide related policy responses. Conclusions and future research opportunities are presented in the final part of the paper.

Much of Walter Isard’s lifelong devotion to advancing the emerging disciplines of regional science and peace science focused on a better understanding of the forces shaping the social and economic development of geographic regions and the role that analysis can play formulating public policy. This paper explores generally the use of regional science tools applied to public policy questions in two fundamentally different ways: (1) to fashion steps directed at the most desirable outcome, however desirable is defined—an explicit planning objective or (2) to articulate the consequences of possible alternative courses of action—a perhaps more modest impact analysis objective. The paper illustrates the circumstances suggesting one approach versus the other with an example involving the use of optimization tools and input–output analysis.

The elements of negotiation theory, and relations between them, in short “negotiation space”, s first investigated from the point of view of some of its properties. A two-agents case is taken up, both linear and non-linear variants being studied, and some analytical results with their properties are presented; the analysis is then generalized to multi-dimensional situations, both in terms of agents and of issues. Finally one can picture topographically the results of various negotiation stages; an example is presented.

As the number of natural disasters and their impacts increase across the globe, the need for effective preparedness against such events becomes more vital. In this paper, we construct a supply chain network optimization model for a disaster relief organization in charge of obtaining, storing, transporting, and distributing relief goods to certain disasterprone regions. Our system-optimization approach minimizes the total operational costs on the links of the supply chain network subject to the uncertain demand for aid at the demand points being satisfied as closely as possible. A goal programming approach is utilized to enforce the timely delivery of relief items with respect to the pre-specified time targets at the demand points. A solution algorithm for the model is also provided. A spectrum of numerical examples illustrates the modeling and computational framework, which integrates the two policies of pre-positioning relief supplies as well as their procurement once the disaster has occurred.

The chapter is to reflect Professor Walter Isard’s scientific reasoning and contributions to formulating spatial models for urban and regional systems and to shed light on developing a framework for spatial modeling for future cities. We need alternative spatial models for cities and regions more than ever now in light of rapidly changing socio-economic and environmental challenges that we have been confronted with and more to face in the near future. Among others, I would identify the following four major recent developments that force us to consider alternative spatial models:

Thus, the goal of this chapter is to shed light on developing framework for alternative spatial models for future cities and regions in the same spirit as what Isard advocated more than a half century ago (Isard, Location and space-economy, The MIT Press, Cambridge, 1956; Isard, Methods of regional analysis: an introduction to regional science, The MIT Press, Cambridge and Wiley, New York, 1960), and yet still inspiring us to undertake these changes and challenges.

This chapter argues that the passage of the Megalopolis from a declining industrial economy to a Mega Knowledge Region in the last three decades has been made possible by a four-part ‘Knowledge Infrastructure’: The first two components of (a) Transport and (b) Information and Communication Infrastructure (ICT) are general purpose technologies which physically link and provide access (at low and declining costs) for economic actors in a liberalized global economy, promoting economic structural changes. The passage to the Knowledge Economy requires, in addition, two other components of the ‘knowledge infrastructure’, namely (c) innovations in production and service technologies that nurture and commercialize new Industrial products and operations and the structural evolution towards a networked Knowledge-Intensive Service Economy. The final component (d) is a set of Institutional Innovations—which support physical, relational and institutional proximity among far-flung economic agents—thereby promoting new knowledge and value generation in enterprises in the Megalopolis. The Boston metropolis has arrested its decline, reinventing itself as an entrepreneurial knowledge economy, focusing on knowledge-intensive production and services—Biotechnology, Scientific instruments, Software, Finance services, Producer services, Medical and Educational services—achieving this remarkable reinvention by building on its vast stocks and variety of knowledge assets, networking opportunities, rivalry and trust-promoting contexts, and its history of institutional innovations and social cooperation. The rise of ‘Tradable’ and ‘Non-Tradable’ sectors in the Globalizing Boston metro economy is, however, widening income inequalities.

This paper uses census tract data from the 2000 and 2010 U.S. Censuses and the 2005–2009 American Community Survey to examine the locations of gay male and lesbian partnerships in 38 large U.S. cities. Gay men and lesbians are less segregated than African Americans and lesbians are less spatially concentrated than gay men. There is little evidence to support the common assertion that gays concentrate in more racially and ethnically diverse neighborhoods. We find evidence supporting the popular notion that concentrations of gay men lead to more rapid development of central city neighborhoods. Census tracts that start the decade with more gay men experience significantly greater growth in household incomes (and, therefore, presumably housing prices) and greater population growth over the next decade than those census tracts with fewer gay men. Census tracts with more lesbians at the start of the decade see no difference in population or income growth.

The concept of sustainability is increasingly applied in urban facilities planning, including a University campus. A campus can essentially be seen as a living laboratory for the development of ecologically-benign practices connected to the social interactions of an academic environment. Sustainable (re)development of a University campus calls for stakeholder-based assessment tools. The present paper offers an operational framework for such an assessment, focused on the possible transformations in the landscape of the Campus and the ecological, social and functional processes of re-development. In this study, a Regime multi-criteria evaluation method complemented with a strategic choice analysis regarding the performance and sustainability of Hokkaido University campus (Sapporo, Japan) is presented. This paper serves to trace whether and how the goals and principles defined in the strategic Plans for the development of this campus fit the needs and concerns of its users. This bottom-up approach is inter alia based on quantitative information collected in various focus group meetings with different stakeholders, followed by the use of a SWOT analysis supported by visual support tools (‘images’). This approach allows us to develop an integral and quantitative assessment of the future performance of the campus, by focusing on its physical appearance, use characteristics and ecological landscape attributes.

Most metropolitan areas suffer from traffic-related air pollution. A major reason for this phenomenon is related to the increase in vehicle-kilometers traveled, which is an outcome of urban sprawl and an increase in the motorization rate. Although significant progress in vehicle technology has greatly improved air quality in developed countries, there is still a lack of policy mechanisms to mitigate air quality impacts resulting from traffic pollution.

This paper examines policy measures that can be implemented by decision-makers in order to improve urban air quality. Focusing on parking policy, this paper attempts to gain an understanding of the relationship between parking-policy enforcement in the Central Business District (CBD) and air-pollution emissions from motor vehicles. The site chosen for study is the Tel Aviv Metropolitan Area (TAMA).

The methodology presented is applied to a real-world situation, using data and models from a Mass Transit project initiated by TAMA. The traffic-related emissions are estimated from a four-stage transportation model that provides traffic volumes and travel times for each link in the network. Two policy measures are analyzed: reducing parking supply and increasing parking fees. The paper discusses the suitability of parking policies to meet environmental objectives.