Regional Disparities in Small Countries

325 Pages·2005·3.65 MB·English

by  Daniel Felsenstein, Boris A. Portnov (auth.), Professor Dr. Daniel Felsenstein, Professor Dr. Boris A. Portnov (eds.)

Advances in Spatial Science
Editorial Board
Luc Anselin
Manfred M.Fischer
Geoffrey J.D.Hewings
Peter Nijkamp
Folke Snickars (Coordinating Editor)
Titles in the Series
H.Eskelinen andF.Snickars(Eds.) G.Atalik andM.M.Fischer (Eds.)
Competitive European Peripheries Regional Development Reconsidered
VIII,271 pages.1995.ISBN 3-540-60211-9 X,220 pages.2002.ISBN 3-540-43610-3
A.Nagurney andS.Siokos Z.J.Acs,H.L.F.de Groot andP.Nijkamp(Eds.)
Financial Networks The Emergence ofthe Knowledge Economy
XVI,492 pages.1997.ISBN 3-540-63116-X VII,388 pages.2002.ISBN 3-540-43722-3
M.M.Fischer andA.Getis(Eds.) R.J.Stimson,R.R.Stough andB.H.Roberts
Recent Developments in Spatial Analysis Regional Economic Development
X,434 pages.1997.ISBN 3-540-63180-1 X,397 pages.2002.ISBN 3-540-43731-2
P.McCann S.Geertman andJ.Stillwell(Eds.)
The Economics ofIndustrial Location Planning Support Systems in Practice
XII,228 pages.1998.ISBN 3-540-64586-1 XII,578 pages.2003.ISBN 3-540-43719-3
R.Capello,P.Nijkamp andG.Pepping(Eds.) B.Fingleton(Ed.)
Sustainable Cities and Energy Policies European Regional Growth
XI,282 pages.1999.ISBN 3-540-64805-4 VIII,435 pages.2003.ISBN 3-540-00366-5
M.M.Fischer,L.Suarez-Villa andM.Steiner (Eds.) T.Puu
Innovation,Networks and Localities Mathematical Location and Land Use Theory,
XI,336 pages.1999.ISBN 3-540-65853-X 2nd Edition
X,362 pages.2003.ISBN 3-540-00931-0
J.Stillwell,S.Geertman andS.Openshaw(Eds.)
Geographical Information and Planning J.Bröcker,D.Dohse andR.Soltwedel(Eds.)
X,454 pages.1999.ISBN 3-540-65902-1 Innovation Clusters and Interregional Competition
VIII,409 pages.2003.ISBN 3-540-00999-X
G.Clarke andM.Madden(Eds.)
Regional Science in Business D.A.Griffith
VIII,363 pages.2001.ISBN 3-540-41780-X Spatial Autocorrelation and Spatial Filtering
XIV,247 pages.2003.ISBN 3-540-00932-9
M.M.Fischer andY.Leung(Eds.)
GeoComputational Modelling J.R.Roy
XII,279 pages.2001.ISBN 3-540-41968-3 Spatial Interaction Modelling
X,239 pages.2004.ISBN 3-540-20528-4
M.M.Fischer andJ.Fröhlich(Eds.)
M.Beuthe,V.Himanen,
Knowledge,Complexity and Innovation Systems
A.Reggiani andL.Zamparini (Eds.)
XII,477 pages.2001.ISBN 3-540-41969-1
Transport Developments and Innovations
M.M.Fischer,J.Revilla Diez andF.Snickars in an Evolving World
Metropolitan Innovation Systems XIV,346 pages.2004.ISBN 3-540-00961-2
VIII,270 pages.2001.ISBN 3-540-41967-5
Y.Okuyama andS.E.Chang(Eds.)
L.Lundqvist andL.-G.Mattsson(Eds.) Modeling Spatial and Economic Impacts
National Transport Models ofDisasters
VIII,202 pages.2002.ISBN 3-540-42426-1 X,323 pages.2004.ISBN 3-540-21449-6
J.R.Cuadrado-Roura andM.Parellada(Eds.) L.Anselin,R.J.G.M.Florax andS.J.Rey
Regional Convergence in the European Union Advances in Spatial Econometrics
VIII,368 pages.2002.ISBN 3-540-43242-6 XXII,513 pages.2004.ISBN 3-540-43729-0
G.J.D.Hewings,M.Sonis andD.Boyce(Eds.) R.J.G.M.Florax andD.A.Plane (Eds.)
Trade,Networks and Hierarchies Fifty Years ofRegional Science
XI,467 pages.2002.ISBN 3-540-43087-3 VIII,400 pages.2004.ISBN 3-540-22361-4
Daniel Felsenstein
Boris A. Portnov
Editors
Regional Disparities
in Small Countries
With 61 Figures
and 54 Tables
123
Professor Dr.Daniel Felsenstein
Department ofGeography
Hebrew University ofJerusalem
Mount Scopus 91905
Israel
E-mail:[email protected]
Professor Dr.Boris A.Portnov
Department ofNatural Resources
and Environmental Management
University ofHaifa
Mount Carmel,Haifa 31905
Israel
E-mail:[email protected]
Library ofCongress Control Number:2005921919
ISBN 3-540-24303-8 Springer Berlin Heidelberg New York
This work is subject to copyright.All rights are reserved,whether the whole or part ofthe material
is concerned,specifically the rights oftranslation,reprinting,reuse ofillustrations,recitation,
broadcasting,reproduction on microfilm or in any other way,and storage in data banks.Dupli-
cation ofthis publication or parts thereofis permitted only under the provisions ofthe German
Copyright Law ofSeptember 9,1965,in its current version,and permission for use must always
be obtained from Springer-Verlag.Violations are liable for prosecution under the German Copy-
right Law.
Springer is a part ofSpringer Science+Business Media
springeronline.com
© Springer-Verlag Berlin Heidelberg 2005
Printed in Germany
The use ofgeneral descriptive names,registered names,trademarks,etc.in this publication does
not imply,even in the absence ofa specific statement,that such names are exempt from the
relevant protective laws and regulations and therefore free for general use.
Cover design:Erich Kirchner
Production:Helmut Petri
Printing:Strauss Offsetdruck
SPIN 11375630 Printed on acid-free paper – 88/3153 – 5 4 3 2 1 0
Contents
Introduction
1. Introduction 1
DANIELFELSENSTEINand BORISA. PORTNOV
Part I: Concepts, Theory and Methods
2. The Liability of Smallness:
Can We Expect Less Regional Disparities in Small Countries? 13
DANIELFELSENSTEINandBORISA. PORTNOV
3. Country Size in Regional Economics 25
MICHAELBEENSTOCK
4. Measures of Regional Inequality for Small Countries 47
BORISA. PORTNOVandDANIELFELSENSTEIN
5. Investigating Spatial Patterns of Income Disparities Using Coordinate
Transformations and GIS Mapping 63
BORISA. PORTNOVandRIMMAGLUHIH
Part II: Empirical Evidence
6. Regional Employment Disparities in Belgium: Some Empirical
Results 85
OLIVIERMEUNIERandMICHELMIGNOLET
7. Regional Income Convergence and Inequality in Boom and Bust:
Results from Micro Data in Finland 1971-2000 109
HEIKKIA. LOIKKANEN, MARJARIIHELÄandRISTOSULLSTRÖM
8. Regional Disparities in Ireland: The Roles of Demography,
Profit Outflows, Productivity, Structural Change and Regional Policy
1960-1996 129
EOINO’LEARY
9. The Persistence of Regional Unemployment Disparities in the
Netherlands 147
OEDZGEATZEMAandJOUKE VAN DIJK
10. The Dynamics of Regional Disparities in a Small Country:
The Case of Slovenia 169
PETERWOSTNER
vi Contents
11. Interregional Disparities in Israel: Patterns and Trends 187
BORISA. PORTNOV
12. Does Decentralisation Matter to Regional Inequalities? The Case of
Small Countries 211
CARLOSGIL, PEDROPASCUALandMANUELRAPÚN
13. Regional Inequalities in the EU Enlargement Countries: An Analysis
of Small Versus Large New Member States 233
GEORGEPETRAKOS, YIANNISPSYCHARISandDIMITRISKALLIORAS
Part III: Policy Issues
14. Has the Financial Economy Increased Regional Disparities in
Switzerland over the Last Three Decades? 251
JOSÉCORPATAUXandOLIVIERCREVOISIER
15. Regional Policy Lessons from Finland 267
HANNUTERVO
16. The Globalisation of Austrian Regions:
New Policy Challenges and Opportunities 283
MICHAELSTEINER
17. Innovation Policy: An Effective Way of Reducing Spatial Disparities
in Small Nations? 297
STEPHENROPER
Figures 313
Tables 317
Author Index 319
Subject Index 325
Contributors 331
1 Introduction
Daniel Felsenstein1 and Boris A. Portnov2
1 Department of Geography, Hebrew University of Jerusalem, Israel
2 Department of Natural Resources and Environmental Management, University
of Haifa, Israel
During the Candiot War of 1645-1669, the Ottoman Sultan Ibrahim I ordered his
chief admiral to attack Malta. Fearing imminent defeat by the superior Venetian
forces stationed on the island, the admiral decided to trick the sultan out of the
idea. As the story goes, he placed a candle on his naval map, allowing the wax to
drip on the tiny island until it was completelycovered. Then he exclaimed in false
surprise, “Malta Yok!” (There is no Malta!), and convinced the sultan to sail his
fleet to the Island of Crete instead.
Although Malta is not featured in this volume, most of the countries it covers
are of “wax drip” size. Intuitively, it may be expected that everything in small
countries is diminutive: distances, population, economies, and even regional
inequalities. Thus, at a symposium on “The Challenge of Development” convened
in Israel in 1957 to mark the inauguration of a new building for the Department of
Economics at the Hebrew University of Jerusalem, the eminent US economist
Simon Kuznets stated that “developed small states seem to have succeeded in
spreading the fruits of economic growth more widely among their populations
than the larger states at comparable levels of income per capita”. While noting that
he did not really have any empirical evidence to bolster this claim, he continued
that “it is my belief that income is distributed more equally among the populations
in the Scandinavian countries and Switzerland than say in France, Germany or
even the United States…. These smaller countries have no proportionately large
regions like our South with a per capita income distinctly lower than the rest of the
country” (Kuznets 1960, p. 30).
Similar sentiments also appear in discussions of the impacts of country size on
economic development. For example, Streeten (1993) has claimed that ‘large
countries show, of course, larger inequalities by region than small countries (p.
199). Perkins and Syrquin (1989) state similarly that “if inequality between
regions in a country is a major source of inequality between households, then one
would expect large countries to have greater regional diversity and hence higher
1
levels of inequality” (p. 1694) .
This book revisits these common conceptions. The motivation for the volume is
to examine both conceptually and empirically the “belief” that small countries
(which are often not much larger than regions in a large country), do not exhibit
1 This expectation is not supported in their subsequent empirical analysis.
2 Daniel Felsenstein and Boris A. Portnov
significant regional differences. While we are not sure whether the empirical data
would have supported Kuznets’ contention when it was stated nearly 50 years ago,
half a century later we are able to garner evidence to test whether his intuitive
feeling has stood the test of time.
Neo-classical growth theory, as developed in the context of international trade
and applied to regions, and Schumpeter’s (1934) theory of economic expansion,
assert that competitive forces and interregional migration of labour and capital
equalize differences and factor prices across regions and lead to more even
regional development (Hirschman 1958; Siebert 1969; Richardson 1977). In
contrast, the so-called “new economic geography” asserts the opposite: the uneven
concentration of production that manifests itself, inter alia, in a “core-periphery
geography”, is sustained by circular production linkages and may become
increasingly entrenched over time (Krugman 1991, Brakman et al. 2001, Fujita et
al. 2001). However much of the evidence, in both directions, is based on large
countries such as US states or areas within a supra-national economy such as the
EU (Armstrong 1995, Le Gallo and Ertur 2003, Tsionas 2000).
Do any of these theories hold for small countries generally characterized by
small land area and small population size? These two determining attributes lead
to a slew of implications with respect to regional disparities. If distances are
shorter, access costs are lower, the number of regions (and therefore inter-regional
variance) is smaller, government structures more centralized and population more
homogenous, ostensibly, this should point to narrower disparities across regions in
small countries.
On the other hand it can be argued that certain unique features of small
countries may mitigate any regional convergence. For example, even in small
countries physical distance between central cities, which are main centres of
employment, and hinterland regions may surpass those practicable for daily
commuting. Therefore, any interregional income equalization in such countries or
spillover effects cannot but be limited in scope. Furthermore, small countries are,
most often, densely populated. This leads to the emergence of considerable
diseconomies of agglomeration, not only in their central areas but also in their
hinterlands. Whereas in large countries, such diseconomies may be concentrated at
major metropolitan areas, in small countries, they may spread over the entire
national territory, resulting in considerable gradients of transport outlays and
general production costs. In addition, small countries are characterized by a
dependence on external markets, international trade and the global economy (Poot
2004). These activities are invariably conducted from the major population
centres, leaving peripheral areas at a distinct disadvantage and further entrenching
any agglomerative tendencies.
In other respects, the characteristics of small countries may give rise to regional
outcomes very different to those in large countries. For example, the measurement
of spatial disparities in small countries may lead to very different results to those
obtained for large countries due to very different spatial scales of analysis. In large
countries, such units are often restricted to regions, which are internally
heterogeneous. Since either aggregates or averages are compared, the results may
often be misleading. In contrast, inequalities among municipalities and even
Introduction 3
individual localities in small countries may be analysed, leading (presumably) to
more realistic estimates. Internal migration in small countries and its equalizing
effects on interregional disparities may also be distinctively different from those
found elsewhere. Smaller land areas mean that long-distance commuting can often
substitute for internal migration. In addition it can be claimed that in small
countries, the efficacy of public policy in closing regional gaps may be higher,
compared to that in large countries with diverse economic, environmental and
governance structures.
How does this deductive reasoning hold up empirically? This volume attempts
to come to terms with the empirical questions and with the attendant issues of
conceptualisation, theory, measurement and policy that they presuppose. Primarily
this is a book about regional disparities. Small country size and the unique features
that stem from this attribute, form the context. Despite the intuition, the book
seeks to examine whether there is any a-priori case to expect more regional
convergence in small countries than in large ones.
Counter to the contemporary trend in edited volumes, the motivation for this
book is a real-world regional issue looking for a set of papers and not a set of
(invariably, conference) papers looking for an issue. As such, the editors
commissioned all the papers in this volume from authors with a publishing interest
in the topic areas of small countries and the process of regional convergence
therein. The result is a focussed series of theoretical, methodological, empirical
and policy-oriented essays grounded heavily in the traditional nexus of regional
science and calling on the research competencies of applied economists, urban/
regional economists, economic geographers, business economists and regional
planners.
We adopt a broad approach to the definition of “regional disparities”. While the
common indicators of regional income, product and value added are all examined
here, they do not form the exclusive focus. Regional employment and productivity
are equally legitimate yardsticks and are also addressed. In addition, we further
widen the focus to incorporate regional differences in technological innovation
and R&D and responsiveness to global challenges and opportunities as indirect
indicators of regional economic welfare.
1.1 Scope of the Book
We are ecumenical as to what constitutes a “small country”. While there is a
tendency to distinguish between small “economies” based on level of GDP and
economic diversification and small “nations” based on territory sometimes
combined with population, we opt for the more nebulous small “countries”
terminology. While inherently intuitive, this term suggests some logical
combination of national territory, population and wealth (Alesina and Spolaore
2003, Crowards 2002). In this volume, while we do not overtly favour one
criterion over another, the common denominator that emerges for defining “small
countries” is the spatial (land area) factor. The result is a reasonably coherent set