Konstantinos A. Melachroinos

European Integration and the Spatial Dynamics of Manufacturing-Employment Change

The author examines the dynamics of manufacturing-employment change in thirteen European Union countries between 1978 and 1996, mainly through the utilisation of shift-share techniques. Despite the momentum that European integration gained over this period, the key finding is that the geography of manufacturing employment has remained almost intact. Processes operating at the European scale appear to have the largest impact on labour outcomes in each member state, while there is little deviation from the widespread declining trends. Spatial stability is reinforced even further through the homogeneity of several national industrial structures. In addition, the moderate increase in the industrial specialisation of the participating economies, and the localisation tendencies of a few traditional subsectors, pose little if any threat to the stability of the present map of manufacturing distribution. This evidence suggests that, contrary to some political rhetoric, the integration process has not, so far at least, adversely affected the relative competitiveness of manufacturing either in peripheral or in core countries.

Constructing a Manufacturing Fixed Capital Stock Series for the Regions of Greece

Although regional variation in rates of capital accumulation is considered a major component of spatially uneven industrial development, it remains largely an understudied area. The theoretical and methodological problems that surround the measurement of capital, generally, alongside the lack of necessary information about a wide range of specific aspects, pose serious obstacles in any attempt to construct regional capital stock series. In such a context, the main aim of this paper is to make the best possible effort to construct a regional manufacturing fixed capital stock series for Greece. The limited availability of information (not unusual in regional as opposed to national contexts) and the necessity of making some arbitrary, but specified, assumptions mean that the estimation steps have to be presented in detail to assess reliability. Four regional fixed capital stock series for total manufacturing activity are generated. The results are then assessed in the context of uneven spatial development in Greece.

Regional Productivity Dynamics of Manufacturing in Greece

Although employment change captures only one dimension of spatially uneven industrial growth, geographers have often tended to treat it as almost the exclusive indicator of regional performance. As a result, it is not infrequently the case that this more or less sole focus on employment, although valuable in itself, produces an incomplete and sometimes some what distorted view of spatial economic change. The case of regional manufacturing restructuring in Greece during the 1970s and 1980s provides an example of the problems that over-concentration on employment can involve. By jointly examining the evolution of employment together with output, and the consequent labour productivity in the regions of Greece, the existence of two distinct geographies of uneven industrial expansion becomes apparent. The prefectures gaining most in terms of employment are not necessarily those gaining most in output. Although locally focused case-studies are probably what is required for a full understanding of the different facets of regional accumulation processes, the parallel examination of these three parameters provides a general idea of the possible different spatial outcomes of manufacturing expansion. It is this latter focus that is the purpose of this article.

FDI and Local Economic Development: The Case of Taiwanese Investment in Kunshan

The extent to which foreign direct investment (FDI) can foster the long-term economic development of lagging regions remains a highly debated issue in the literature, even in the current era of intense territorial competition for mobile investment and resources. The emergence of new industrial spaces in China that have flourished through FDI offers a good opportunity to revisit the topic. Kunshan in Suzhou, China has evolved from an impoverished area into a world-class information technology (IT) centre within 25 years. FDI, mainly from Taiwan, has enabled Kunshan to gradually upgrade its economy, following a development path that has been largely based on the transplant of entire production chains from Taiwan. Local innovative strategies for attracting and increasing the embeddedness of Taiwanese FDI are also an important element of Kunshans success. This paper discusses the positive aspects, as well as the potential costs and negative facets, of FDI in Kunshan, with the view to draw some policy lessons regarding the impact of FDI on the economic development of lagging regions.

Conceptualizing sunk costs in economic geography: cost recovery and the fluctuating value of fixed capital

Several studies in economic geography have attempted to understand the spatial implications of sunk costs. In this paper it is argued that, although these efforts are most valuable, issues remain that deserve closer examination. The first begs the question whether the introduction of this concept into economic geography has occurred with due regard to the contexts set by the academic fields where the notion originates. If this is not the case, then perhaps some doubt should be cast on the suitability of the imported definition and theoretical frameworks for the geographical purposes envisaged. The second issue concerns the regional dimension of sunk costs, given that most of the literature focuses on their importance at the corporate level. A final concern relates to the empirical measurement of these costs. These issues serve as the starting point of the formulation of an alternative view of sunk costs. It is suggested here that the issue of sunk costs is, in the final analysis, a problem of realizing value. Concepts of fixed capital measurement and depreciation offer the basis of an alternative theoretical framework for conceptualizing sunkness.

Capital and labour productivity convergence of manufacturing industry in the regions of Greece

Given that spatially uneven industrial growth is a prime topic in economic geography, it is surprising that changing regional productivity is a relatively understudied area. However, there are clear signs that this situation has started to change lately. Recent findings in the field of international economics regarding productivity convergence have led to a proliferation of studies focused on the sources of this phenomenon at the regional scale, with structural change and technological diffusion prominent. This paper explores the process of manufacturing productivity convergence in the regions of Greece. The first issue to be addressed is methodological and concerns the evolution of current thinking about productivity in regional analysis. Why is it the case that more attention seems to have been paid to the input factors of production, especially labour, rather than their productive use? Definitional issues in the measurement of productivity follow next. The main aim of the research is to estimate and understand the evolution of regional manufacturing productivity in Greece during the period 1984-1993. Detailed econometric analysis in this case is precluded by inadequate data, but rather more straightforward comparative analysis of labour and capital productivity clearly points to a significant convergence. A variety of approaches are then employed in an attempt to isolate and account for the forces behind regional productivity dynamics in Greece. Key words: capital productivity, convergence, labour productivity, regional disparities, uneven growth, Greek regions.

The Impact of Intangible Assets on Regional Productivity Disparities in Great Britain

During the past few years there has been a growing consensus in the literature that intangible assets represent a major source of productivity growth. Intangibles facilitate the accumulation of knowledge and information via learning and innovation, allowing, in this way, modern economies to improve the efficiency with which they utilise their resources. Nonetheless, despite the proliferation of studies that investigate the territorial impact of intangibles (variously defined), the full effect of these assets on regional productivity dynamics remains elusive. National Accounts still treat most of what can be considered intangibles as intermediate expenditure entailing that they are largely excluded from conventional measures of gross value added (GVA) and investment. The present paper attempts to tackle this shortcoming not only by including intangibles as capital in the aggregate production function, but also by employing GVA data that are adjusted for intangibles as output. The aim is to investigate the role of intangible assets on the evolution of regional productivity disparities in Great Britain during the period 1995–2004. The analysis considers the spatial effects of intangibles on both partial productivity measures and total factor productivity levels, while the regional figures are also scrutinised for the possible presence of σ-convergence and β-convergence trends during this time.

The Territorial Impact of the Knowledge Economy: Intangibles and Regional Inequality in Great Britain

Knowledge-based activities are an important source of national and regional competitiveness. In the UK and other European Union countries knowledge industries represent not only one of the fastest growing sources of new jobs, but also account for an increasing share of Gross Value Added (GVA) and exports. Nonetheless, there are also indications that the actual importance of the knowledge economy still remains understated. Within the conventional System of National Accounts, expenditure on intangible assets, such as research and development or human and organizational capital, is not considered either as part of GVA or as investment. In the UK, Marrano et al. (2009) report increased market sector GVA figures by as much as 13% in 2004 after treating intangibles as investment. Considering that expenditures on intangibles vary considerably across regions, it is likely that the territorial impact of this aspect of the knowledge economy has remained largely unreported so far. Spatial inequalities in the investment in intangibles should result in sharper inequalities in regional output. This paper aims to address this issue, first by adjusting the UK regional GVA series for investment in intangibles and second by exploring the trends in regional economic convergence during the period 1991–2004.