Spatial Spillovers

There are no book length treatments of spatial spillovers that provide theoretical and empirical analyses of this topic within different regions in the continent of Asia. As such, the primary objective of this book is to provide expansive studies of spatial spillovers and their salience by focusing on several regions in Asia. Following this introductory chapter, which comprises Part I of the book, there are 11 chapters and each of these chapters discusses a particular research question or questions about spatial spillovers in Asia. For ease of comprehension, we have divided the present volume containing 12 chapters into four parts. Part II of this book focuses on theoretical approaches to studying spatial spillovers and this part consists of three chapters. Part III concentrates on agriculture and the environment and this part of the book consists of two chapters. Finally, part IV provides a variety of regional perspectives on spatial spillovers in Asia and this part consists of six chapters.

We analyze the nexuses between consumption spillovers and water pollution cleanup in the Ganges river in India. The spillovers arise in two cities through which the Ganges flows, namely, Kanpur and Varanasi, and we focus on the aggregate economy consisting of these two cities. We think of water pollution cleaned up in each city as a local public good. The representative citizen in each city faces a tradeoff between the consumption of a private good and clean river water. First, we determine how much polluted water is cleaned up in each city. Second, we show that the total amount of polluted water cleaned up depends only on the sum of the incomes of the two representative citizens. Third, we compare the amount of water cleaned up in the first part with the cleanup when a social planner undertakes this task. Fourth, on the assumption that the incomes of the two representative citizens are functionally related, we investigate income ranges that result in interior solutions for the water cleanup amounts. Fifth, we study how much polluted water is cleaned up inside and outside the above income ranges. Finally, we show how social welfare from water pollution cleanup in our aggregate economy depends on the income of the representative citizen of one city, namely, Varanasi.

This chapter proposes a dynamic game of two regional monopolies in the same industry. It contains two special features: spillovers and time delays. Other than the usual profit maximization through a linear price function in its region, one regional monopoly experiences a cost-increasing spillover associated with the presence of the other regional monopoly. Each regional monopoly needs time to produce output and to acquire information on spillovers. It is demonstrated first that the production delay can be a source of the birth of cyclic oscillations via a Hopf bifurcation. Second, stability loss and gain repeatedly occur according to the relative magnitude between the production and information delays. The number of the regional monopolies is limited to 2 only for analytical simplicity and will be increased to be more than 3 in a future study.

Both environmental and population problems are major issues that result in the extinction or collapse of societies, economies, and nations. Additionally, transboundary pollution affects the efficient allocation of human and physical resources among regions. Using economic growth theory’s framework, several macroeconomic studies have focused on the compatibility of environmental protection and sustainable economic growth; by contrast, a few studies have highlighted the effects of transboundary pollution on population mobility and capital accumulation. Therefore, we construct a two-region overlapping generations model, wherein the environment interacts with economic activity in the presence of transboundary pollution. This model analyzes the impact of transboundary pollution caused by production in one region on population distribution between two regions, alongside regional and total fertility. Increasing transboundary pollution, the population tends to concentrate more in the pollution source region. Moreover, an increase in the rate of transboundary pollution can decrease total fertility rate.

Gender differences in the agricultural sector of many Asian countries are quite pronounced, not only in terms of unpaid work burdens but also in the types of employment in which people engage. This chapter explores the evidence on these gender differences, specifically focusing on gendered labor access and opportunities in the agricultural sectors across Asia’s developing countries. First, it conceptualizes gender-contested spaces in the agricultural sector and how gender differences are linked with social norms, economic constraints, institutions, and international processes. Second, it analyzes major patterns shaping the extent of women’s experience in agricultural industries by exploring the relationships between women’s agricultural employment and economic development, trade liberalization, the availability of opportunities to work as wage laborers versus self-employed farmers, and global value chains. Third, it elaborates on how gender differences are constructed and sustained with regard to age, perceptions, social norms, time use, unremunerated productive work, agricultural productivity, landholding, and the allocation of agricultural resources. Lastly, the chapter explores how to dismantle the gendered structure of constraints and eliminate barriers to women’s participation. Along the way, we bring in lessons about spatial spillover effects and how women’s employment in agriculture along these various dimensions can contribute to employment generation, poverty reduction, and overall economic growth in other parts of the economy in Asia.

The continuous increase in environmental challenges has significantly propelled global attention towards sustainable development. The construct of sustainable development hinges on the optimal allocation of resources, which is optimized by efficient market mechanisms. However, given the incompetency of market mechanisms in specific contexts, such as environmental externalities, designing and enforcing environmental regulations can serve as an alternative pathway to guide resources for optimal allocation. The effectiveness of environmental regulation is realized both within and across the regions. However, unlike the local impacts, the significant realm of the spatial spillover effects has only recently started to attract the attention of the researchers. The gap in knowledge regarding the spatial spillover effects is striking, given their theoretical and practical significance. Addressing the gap, this study offers a comprehensive review of existing literature on the spatial spillover effect of environmental regulation in Asia. This study presents a framework to consolidate the different approaches and outcomes of existing studies. This framework may enhance the understanding of the generation and function of the spatial spillover effects of environmental regulation. This framework is also supposed to enhance the scope and effectiveness of environmental regulatory policy measures.

In open market economies, spatial externalities play a crucial role in economic growth. These spatial externalities emerge from the agglomeration economies or the market potentials of the regions. The present study examining the economic growth spillovers among states of India for the period 2005–2020 finds that growth spillover plays a major role in shaping the regional economic development in India. The impact of labor and capital on economic growth is weaker, showing the structural issues in these two sectors, but human capital is found to have a significant impact on regional economic growth. The states with direct access to the sea (coasts) are found to be having higher levels of development. The study also shows that household inequalities in asset ownership within states negatively impact economic growth. This shows that economic inequality within Indian states is already higher, and there is a need to bring it down to accelerate economic growth. The chapter also discusses the infrastructural bottlenecks, lack of effective governance, and rising cost of higher education, which may have a negative impact on the economic spillover process.

Defining city as an aggregate of firm-level activities, this chapter connects Indian city growth with spatially varying service sector performance. With empirical granularity, this chapter examines a new dataset to identify distinct levels of sectoral achievement, in terms of hierarchically classifying headquarter (HQ) agglomerations, contributing to uneven Indian city activity. Examining the financial records (prowess) of nearly 36,000 registered Indian firms between 1988 and 2014, the performance indicators of service-oriented firms are aggregated at city-level to gauge sectoral growth contributing to Indian urban development. Using a conceptual city classification, Indian cities are organised and mapped to their common HQ locations (using ArcGIS) to engage the performance-based findings with the geography of dissimilar service clusters across India. First, Mumbai, Delhi and Bangalore were identified as India’s Alpha, Beta and Gammaˉ financial, hardware and software agglomerations. Second, classifying contemporary activities, Alpha (1) and Beta (1) cities occupied the top tier with large-sized firms; Gammaˉ (6) cities occupied the middle tier with medium-sized firms; and Theta (45) cities occupied the bottom tier with many small-sized firms, implying a bigger role of dispersed small companies in complementing activities of big companies in nearby large cities. Third, the rising entrepreneurship of Theta cities near Alpha/Beta cities suggests the importance of regional and local policies in driving knowledge and resource spillover effects on city growth.

Understanding the complex spatial interaction between urban livability and tourism is critical for promoting sustainable development of tourist destinations taking into account the spatial spillover effects of visitors. The present chapter assumes that the local recreation system—comprising of effective demands, internal mobility, and spatial costs of recreation mobility—plays a critical role in the above interaction between tourism development and urban livability. This research question leads to the need for a coupling coordination analysis in the context of spatial tourism dependence effects. In our study, a spatial tourism analysis framework and related hypotheses are put forward and tested, using data from 253 Chinese prefecture-level cities based on the Geographical Detector Method. The statistical results show a low degree of correspondence between general tourism spillovers and urban livability. More specifically, internal mobility appears to exert a more significant influence on the coupling coordination degree, while the effects of effective visitors’ demand and spatial interaction costs related to urban tourism spillovers are relatively weaker. Finally, there is a reciprocal superposition effect when it comes to the geographical interaction effect of the combination of these influencing factors.

Environment regulation, through land adjustment, promotes changes in industrial structure and facilitates regional economic transformation, offering a new path for renovating traditional industrialization and urbanization trajectories. Based on panel data from 128 prefecture-level cities in the Yangtze River Economic Belt in China from 2000 to 2020, this chapter employs a spatial Durbin model to analyze the relationship between environmental regulation, land use efficiency, and industrial structure upgrading. Considering that different intensities of environmental regulation may lead to differentiated impacts on land use structure, a panel threshold model is further set to examine how environmental regulation affects industrial structure upgrading through its influence on land use efficiency. The results indicate that formal environmental regulation has significant positive spatial effects on rationalization and upgrading of industrial structure, with coefficients of 0.1734 and 0.2854, respectively, manifested by the forced transfer of polluting industries to neighboring provinces. Nonformal environmental regulation has a negative spillover effect on neighboring provinces, which is detrimental to economic growth in adjacent provinces, although this effect is not pronounced. Land use efficiency (LUE) has a significantly negative effect on industrial structure rationalization but a significantly positive effect on upgrading. Heterogeneous environmental regulation exhibits a distinct “dual-threshold effect” on industrial upgrading through its influence on land use efficiency. When the intensity threshold of environmental regulation is within [0.0315, 0.0886], environmental regulation continues to have a suppressive effect on land use efficiency and industrial structure upgrading. When the intensity of environmental regulation exceeds the threshold of 0.0886, environmental regulation has a positive but insignificant effect on land use efficiency, indicating an interactive promotion. As the intensity of environmental regulation increases from weak to strong, a “strong suppression - weak suppression - interactive promotion” dual-threshold effect is observed on the upgrading of the manufacturing industry through adjustments in land use efficiency.

This chapter measures effects of employment centers’ accessibility level on housing prices, focusing specifically on the road and urban railroad network pattern in Seoul. The analysis reveals that the impact of road accessibility on housing prices was larger than that of railway accessibility, regardless of housing lot size, while the values of road and the railway accessibility elasticity with respect to the price were 4.0146 and 0.8385, respectively. However, the impact of railway accessibility was relatively higher on small- and medium-sized houses than on large houses, which may be due to the relationship between residents’ commuting preferences and the size of their residences. In addition, we found a complementary relationship between accessibility to the business district by road and railway, while the relationship of a distance to the primary business district in Seoul with housing price was significantly negative because of the area’s local-specific amenities. Finally, urban railway lines’ development strategies could lead to housing price disparities between and within five macro planning communities in Seoul. Therefore, policymakers and urban planners need to implement housing supply policies integrated with development of transportation networks to take into account how various household groups have transportation mode preferences.