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The relation between a Regions‘ Accessibility and Economic Growth

The relation between a Regions‘ Accessibility and Economic Growth. Assembly of European Regions Conference: „Low Noise – Low Fare – High Impact“ Eindhoven Airport (NL) 13 and 14 December 2006. Richard Kämpf, BAK Basel Economics. Contribution of regional accessibility to economic growth.

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The relation between a Regions‘ Accessibility and Economic Growth

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  1. The relation between a Regions‘ Accessibility and Economic Growth Assembly of European Regions Conference: „Low Noise – Low Fare – High Impact“ Eindhoven Airport (NL) 13 and 14 December 2006 Richard Kämpf, BAK Basel Economics

  2. Contribution of regional accessibility to economic growth • What accessibility to measure? • BAK accessibility model • Results • Contribution of regional accessibility to economic growth • Theoretical framework • Empirical results: Research Program „Policy and Regional Growth“ • Summary of results

  3. Definition of accessibility Kay Axhausen (ETHZ): Accessibility can be understood as the number of opportunities available for social and economic life that can be reached within a travel time appropriate to the relevant purpose. ESPON (EU Study Programme on European Spatial Planning): Accessibility ist the main „product“ of a transport system. It determines the locational advantage of an area (i.e. a region, a city or a corridor) relative to all areas (including itself).

  4. The modelWhat accessibility to measure? 5 questions have to be answered: 1. Who shall have access? Representatives of international companies and institutions 2. Access to what? Markets for inputs & goods (GDP as activity parameter, outbound accessibility) 3. Which measure for Travel time (fastest connection) spatial impedance? 4. Which traffic modes? Rail, road and air 5. What spatial scale? Global & continental

  5. The modelList of destinations • Global destinations:120 international airports representing the world economy outside Europe • Continental destinations:291 regional centers representing European economy www.bakbasel.com

  6. The modelThe accessibility function AU = S(WZ* e -b*cU Z) • A = Accessibility • U = Origin • W = Activity (GDP) • Z = Destination • c = Travel time • b = Parameter

  7. Network dataCalculation of shortest intermodal travel time for every connection • Global connections: 280 (Origins) x 120 (Destinations)Central station origin è Central station destination outside EuropeFastest connection including:- Access time to departure airport (average of public transport and car access)- Transfer time (change of traffic mode)- Check-in time (destination- and airportspecific)- Flight time including connecting time- time from arrival airport to central station destination Continental connections:280 (Origins) x 291 (Destinations)Central station origin è Central station destinationFastest connection from modes:- Road- Railway- Flight (travel time including access and transfer time departure airport, check-in time, flight time, transfer time at arrival airport and access time from arrival airport to central station destination)

  8. Global accessibility 2004in Europe Source: BAK 100 = total sample 2002 www.bakbasel.com

  9. Global accessibility 2004Metropolitan cities (2004 vs. 1980) Source: BAK 100 = total sample 2002

  10. Continental accessibility 2004in Europe Source: BAK 100 = total sample 2002 www.bakbasel.com

  11. Road accessibility 2000in Europe Source: BAK 100 = total sample 2002 www.bakbasel.com

  12. Railways accessibility 2002in Europe Source: BAK 100 = total sample 2002 www.bakbasel.com

  13. Contribution of regional accessibility to economic growth • Theoretical framework Approaches to model (regional) economic growth The dimension of „space“ • Empirical results: Research Program „Policy and Regional Growth“ www.bakbasel.com

  14. How relevant is policy for regional growth? • Policy question: What are the drivers of regional growth? What are the measures decision makers can choose to foster economic growth? • BAK research project: Understanding the relation between location factors and Policy and Regional Growth regional growth using empirical and econometric tools • BAK Analytical Approach: • Benchmarking: Comparing economic performance and location factors • Analysis: Understanding the relationship between performance and location factors • Policy: Advice on policy measures and possible trade-offs

  15. DatabaseInternational Benchmarking Database Economic Performance (1980-2005) Indicators: GDP Gross value added Employment Hours worked Productivity (hourly productivity and output per employee) Measures: Gross and real Level and growth (time series 1980 to 2005) In national currency and in common currency Total, per capita Industries: 60 different industries (following NACE 2-digit level)

  16. Database International Benchmarking Database Location Factors Innovation: Expenditure on R&D* (1980-2003) University quality (Shanghai Index) (2003-2005) Number of higher education degrees* (tertiary degrees) (1990-2005) Education level of labour force* (secondary / tertiary) (1980-2003) Patents* (1990-2005) Bibliometric indicators* (1990-2005) Company start-ups* (1993-2003) Taxation: Taxation of highly qualified employees (1980-2005) Taxation of companies (1980-2005) Regulation: Regulation of product markets (1980-2003) Regulation of labour markets (1980-2003) * Indicators by industries, directly or through subjects/technology fields. Some parts of database still in development.

  17. Database International Benchmarking Database Location Factors Accessibility: Global accessibility (1980-2004) Continental accessibility (1980-2004) Labour costs: Wages costs (1980-2004) Unit labour costs (1980-2004) Population: According to gender and different age cohorts (1980-2005) Agglomeration:Agglomeration size Proximity to an agglomeration

  18. Why does a region grow?Econometric analysis • Theory and observation (questionnaires) can tell which location factors are important … • … but they do hardly tell the size of the impact on regional growth • Econometric analysis based on the benchmarking database • Basic equation: • Growthit = α0 + α1*Global Effectt + α2*Structural Effectit + β1*L1it-1 + β2*L2it-1 + … + εit • Panel data estimation (random effects, fixed effects) with • i = 142 regions • t = 15 years (1990 – 2004) • several location factors (L)

  19. Econometric resultsCoefficients (annual productivity growth, 1990-2003) Variable Variable definition coefficient prob. (βi=0) Global Effect overall sample productivity growth + < 1% Structural Effect productivity growth for given industry mix + < 1% Company Taxation 4 years moving average, relative to sample mean  < 5% Manpower Taxation 4 years moving average, relative to sample mean  < 1% Labour Market Regulation 4 years moving average, relative to sample mean + < 1% Product Market Regulation 4 years moving average, relative to sample mean + < 1% Innovation: Secondary Educ. difference, 4 years moving average + < 1% Innovation: Tertiary Educ. difference, 4 years moving average + < 10% Innovation: R&D Expen. difference, 4 years moving average + < 5% Accessibility: global difference, 10 years moving average + < 10% Accessibility: continental difference, 10 years moving average  < 1% Regional Spill Over time invariant  < 5%

  20. Impact of location factorsSample-distribution (regions), impact on productivity growth (1990-2003) Source: BAK International Benchmarking Database 2005 Impact on productivity growth, cumulated 1990-2003 (in %-points, max impact against min impact) Coefficient negative

  21. Impact of global accessibility on real productivity growthChanges in global accessibility 1990 - 2003 Source: BAK International Benchmarking Database 2005 Impact on productivity growth, cumulated 1990-2003 (in %-points)

  22. Impact of spatial spillover effects on real productivity growth Source: BAK International Benchmarking Database 2005 Impact on productivity growth, cumulated 1990-2003 (in %-points)

  23. Summary of results • Research program on impact of location factors on economic growth • Signs of location factors largely as expected from theory & significant • Available location factors can only explain a part of the regional variation • Impact of accessibility • Accessibility matters • A better global accessibility increases efficiency and competitiveness and enhances productivity growth • A better accessibility is a double-edged sword: On the one hand, it enhances business activities and boosts the attractiveness of a region. On the other hand, it allows high value activities to be delivered from a central region • Further research is necessary!

  24. Research agenda • Further research directions • Regional coverage • More specific on sources of growth (productivity, hours worked, employment ratio, population) • Advanced Methods (system estimation) • Add more location factors, especially varying between regions(regulation; fragmentation and decentralization; innovation; …) • Industry specific estimations • Further research directions (accessibility) • Sub samples of regions with similar characteristics • Industry specific estimations • Research on the intraregional accessibility • Mix of macro-economic and micro-economic methods

  25. Thank you for your attention! Richard Kämpf BAK Basel Economics Güterstrasse 82 Postfach CH-4002 Basel Tel.    +41 61 279 97 00 Fax    +41 61 279 97 28 richard.kaempf@bakbasel.com

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