The Centre for Economic and Regional Studies of Hungarian Academy of Sciences launched a new seminar series in 2013. A quarterly event, it features the presentation of an academic paper and a short discussion. In this seminar, papers will be presented on diverse topics from international trade, regional development, competition, game theory to labor markets or education. A one hour presentation will be followed by a moderated policy discussion where the author and the moderator will discuss the policy relevant conclusions and potential applications in the European Union and Hungary. The location for the lectures is MTA Research House, conference room nr. K13, ground floor, 4 Tóth Kálmán street, 1097 Budapest.The lectures start at 2 pm and held in English. Event coordinator: Kiss Károly Miklós (Institute of Economics, MTA KRTK)

Forthcoming lectures

24 January 2019 – MTA HTK 1097 Budapest Tóth Kálmán u. 4. K.0.11-12.

Hansjörg Herr (Berlin School of Economics and Law, FMM Fellow and Berlin
Institute for International Political Economy):

Underdevelopment and unregulated markets: why free markets do not lead to
catching-up

Abstract:
After World War II, only a few developing countries were able to catch up to the real GDP per capita levels prevailing in developed countries. These successful countries in almost all cases were in Asia and did not follow the free-market doctrine in the tradition of the Washington Consensus.
There must be theoretical explanations as to why underdevelopment is reproduced and most countries in the world do not catch up. This essay reviews different economic approaches that attempt to explain the lack of convergence. The aim is to explain why neither trade based on comparative advantages, nor on economies of scale, nor in global value chains, can cure the lack
of sufficient productivity development. The essay will also cover special features like negative terms-of-trade effects, abundance of scarce resources, and premature de-industrialisation. Also distorted financial systems, high inequality, and restrictions on macroeconomic demand management are briefly discussed. As most developing countries suffer from several of these factors, this approach can explain why development is only possible with the support of comprehensive regulatory government policies and a change in global governance.

Past lectures

06 December 2018

Ricardo di Clemente /Newton International Fellow of Royal Society, University College London (UCL), Centre for Advanced Spatial Analysis (CASA), London, UK/

Disentangling features of bipartite networks: The case of the World Trade Web

Bipartite networks have vertices that can be divided into two disjoint sets (layers) and they have been recognized to provide particularly insightful portraits of many different systems, including: trade (products and country), location analysis (users, visited locations), mutualistic systems (plant and pollinator), citations (subject and authors), and many others. We will propose a theoretical framework to quantify the structural modification on the network during the time, defining a new class of null model with general applicability. As case of study we will analysed the binary export matrix of the World Trade Web, obtained by imposing the Revealed Comparative Advantage (RCA) on the country-product trade volumes matrix.
Our analysis shows that the global structure of trade has deeply changed during the years following the 2007 worldwide crisis. Since 2003, the WTW becomes increasingly compatible with the picture of a network where correlations between countries and products were progressively lost. Moreover, we can use our framework to statistically validate the links between the countries and products based on node similarity (a.k.a. countries with similar exported products). The community detection on the country layers reveals modules of similarlyindustrialized nations, meanwhile on the products layer allows communities characterized by an increasing level of products complexity to be detected.
This new theoretical framework not only assess the evolution of the topological structure of the WTW but is it able to highlight the temporal policy changes of the exports within the countries. Other applications range between: systems risk in portfolios’ management and similarity in recommendation networks.

12 November 2018

Maite Alguacil /Universitat Jaume I/

The Impact of Immigrant Diversity on Wages. The Spanish Experience

Abstract

The massive waves of migration that have emerged as part of the recent globalization process have attracted increasing attention in the field of economic geography. Traditionally, empirical research on this issue has focused on the possible substitution effect between native and foreign workers in the labour market. However, this evaluation omits the potential positive spillovers derived from a greater cultural diversity related to immigration. The aim of this work is to fill this gap by analysing the impact that immigrant diversity has on wages in Spain. To do so, we built three different indexes that measure cultural diversity across the Spanish regions. We control for the problem of potential simultaneity between migration and wages using instrumental variable techniques. We also consider the role of the increasing entry of foreigners coming from developed economies and other local factors. The results confirm that a greater diversity of immigrants’ birthplaces is associated with higher wages for both natives and the total population. Moreover, our findings reveal the importance of skilled labour (national or foreign), to encourage workers’ productivity and to ensure sustainable economic development.

11 October 2018

Pierre-Alexandre Balland  /Utrecht University/

Complex Economic Activities Concentrate in Large Cities   

Why do some economic activities agglomerate more than others? And, why does the agglomeration of some economic activities continue to increase despite recent developments in communication and transportation technologies? In this paper, we present evidence that complex economic activities concentrate more in large cities. We find this to be true for technologies, scientific publications, industries, and occupations. Using historical patent data, we show that the urban concentration of complex economic activities has been continuously increasing since 1850. These findings suggest that the increasing urban concentration of jobs and innovation might be a consequence of the growing complexity of the economy.

6 September 2018
Tom Broekel /Department of Spatial Planning and Human Geography, Utrecht University, The Netherlands; Institute of Economic and Cultural Geography, Leibniz University of Hannover, Germany/

Measuring technology complexity – a network approach

Extended abstract

The complexity of technologies is seen as crucial explanatory dimension of technological development and economic success (Romer, 1990; Dalmazzo, 2002). Hidalgo and Hausmann (2009) argue that country’s economic development is shaped by its ability to successfully engage in complex economic activities and technologies. Both Sorenson (2005) and Balland and Rigby (2017) show that few cities are capable of mastering complex technologies that lay the foundation for their future growth.

Despite its theoretical relevance and an increasing empirical interest, measuring the complexity of technologies empirically is a complicated issue, as Pintea and Thompson (2007) note: “We do not have any easy way to measure complexity” [p. 280]. The two most prominent approaches are put forward by Fleming and Sorenson (2001) and Balland and Rigby (2017), with the latter transferring the approach of Hidalgo and Hausmann (2009) for approximating economic complexity to the measurement of technological complexity. Both approaches essentially build on the assumption of complexity being scarce. Balland and Rigby (2017) assume technological complexity to be spatially scare, while Fleming and Sorenson (2001) build on the idea of complex knowledge combinations appearing less frequently than simple ones. However, these assumptions are theoretically problematic and induce significant limitations when applying the measures in practice.

The presentation introduces an alternative measure of technological complexity, structural complexity, which avoids these assumptions by applying a network perspective. More precise, the measure of structural complexity quantifies the diversity of technological elements’ embeddedness into the combinatorial knowledge network (aka knowledge space).

In addition to discussing the methodological basis of the measure, the presentation will empirically benchmark the new and the traditional approaches of measuring technological complexity against four stylized facts. The empirical assessment uses patent data for Europe between 1980 to 2015.

References:

Fleming, L. & O. Sorenson (2001). Technology as a complex adaptive system: Evidence from patent data. Research Policy, 30, 1019-1039.

Hidalgo, C. & R. Hausman (2009): The building blocks of economic complexity. PNAS 106(26), 10570-10575.

31 May 2018 – 2 pm

Program:

14:00-14:45 Dr. Tatyana Bystrova (Ural Federal University, Ekaterinburg, Russia)
Growth or development: Philosophical fundamentals of modern urban processes

Abstract:
The lecture aims at correlating philosophical and urbanistic development notions. While quantitative indicators help explain urban growth processes, urban development is explained by qualitative ones. Current welfare indicators like happiness (R. Florida), integrity of object and space environments (D. Brook, V. L. Glazychev, and others), health and ecological activities, education, openness and others are often unquantified. Their existence proper signifies moving both cities and urban studies to a new level, since they are connected with development rather than growth.
However, while these ideas may seem a nice metaphor for experts, they need additional arguments. In order to make them approach relevance, we resort to the history of the concept formation. This enables us to observe how successful urban existence depends on the accurate interpretation of, or on random coincidence with authoritative philosophical and theoretical sources. Relying of practical concepts on the present philosophic-methodological basis makes it possible to avoid direct borrowing from available approaches to develop a city (for example, everyone is engaged in territorial branding, or organizes a City Day, or employs the Creative City concept of Charles Landry, etc.) and to consider the peculiarity of each party as much as possible when there is the similarity of instruments, objectives and their fulfilment strategy.
In this presentation, we analyze 3 approaches:
– Reduction or Specification?
– Organicism or controlled systematicity?
– Evenness or unevenness?
The principal historic-cultural development interpretations are highlighted, and the significance of this concept for enhancing the modern urban environment is shown. The author proves that referring to philosophical development interpretations by experts provides the highest degree of specification and feasibility of urban projects.

14:45-15:30 Viola Larionova (Ural Federal University, Ekaterinburg, Russia)
Agglomeration Effects and Socioeconomic Potential for Sustainable Development of Small Cities

In the context of agglomeration processes taking place nowadays the problems of preserving small cities, their self-determination and the search for unique development paths are of major concern. It is small cities that occupy a significant part of urbanized territories in the world and mainly determine the level of social and economic development and the population welfare of the countries. Small cities in the surroundings of big agglomeration centers are experiencing strong problems connected with outflow of population, the lack of qualified personnel, decrease of the economic growth rate, deterioration of the investment climate and quality of living environment. Only some of these cities can follow a sustainable development strategy by choosing one of the alternative favorable scenarios, which include, in particular, the strategy of a small city as a part of an agglomeration with clear positioning and defining its role, functions and benefits.
The research is devoted to evaluation of agglomeration effects and potential of social and economic development of the urban territory using the case of Yekaterinburg agglomeration which includes one of the biggest Russian cities with population of about 1.5 million people and its city-satellites of the first and the second belts (in the vicinity of 60 km from Yekaterinburg). All these small cities are different in population, industry scale and level of socio-economic development. The crisis of old industrial areas caused by technological changes of the early 21st century, has led to the bankruptcy of their enterprises and population outflow from these cities, but they still have a considerable technical, industrial potential and significant natural and human resources for their sustainable development in new economic environment.
An urban agglomeration refers to a complex multicomponent dynamic system with different economic relations, transport and cultural bonds which can maximize its effect by means of integrity and cooperation. Large cities provide greater opportunity for economies of scale, availability of quality human capital, cluster effects, innovation processes and knowledge spillover, but under certain conditions smaller cities can also achieve some of the agglomeration effects which can play an important role in territory development.
On the basis of mathematical modelling the authors define dominant trends of economic development of the city- satellites of Yekaterinburg and the agglomeration as a whole, cluster them into different subgroups according to their social and economic potential and create a model of the territory development in midterm period. Using official statistic data on municipal development the time–dependences of socioeconomic development indicators for all cities of Yekaterinburg agglomeration were studied, and clustering was made with the help of Kohonen Self-Organizing Networks. To measure the level of agglomeration economies we used the Cobb-Douglas model, which allowed estimating elasticities of supply of labor and capital in the cities of the agglomeration.
Defining the tendencies of the agglomeration formation on the basis of system approach and citizens’ views allows justified optimal decision making on the strategic and tactic issues of the small cities’ development. The results of the research can be used by the cities’ administrative bodies to find the most appropriate and effective form of interaction between municipalities.

15:30-16:30 Nagy Erika–Nagy Gábor: Neoliberal European urbanism meets local strategies on the periphery – Culture and tourism-centred urban development in Gyula, Hungary (MTA KRTK RKI, Békéscsaba)

17 May 2018 – 2 pm

Paolo Zacchia  /IMT School for Advanced Studies Lucca/

Identification of Social Effects with Endogenous Network and Covariates: Theory and Simulations (joint with Santiago Pereda Fernández)

Abstract
The estimation of spillover and peer effects presents challenges that are still unsolved. In fact, even if separate algebraic identification of the endogenous and exogenous effects is possible, these might be contaminated by the simultaneous dependence of outcomes, covariates and the network structure upon spatially correlated unobservables. In this paper we characterize the identification conditions for consistently estimating all the parameters of a spatially autoregressive or linear-in-means model in presence of linear forms of endogeneity. We show that identification is possible if the spatial correlation of individual covariates and that of unobservables do not overlap, and we relate this idea to a schooling context in which the factors that determine friendships and socio-economic characteristics are different. We propose a GMM estimator to estimate the relevant parameters and we evaluate its performance through Monte Carlo simulations.

25 January 2018 – 2 pm – Budapest, Tóth Kálmán u. 4, 1097, ground floor room 13-14

Armando Rungi (IMT Lucca): Global ownership and corporate control networks

Abstract: In this contribution, at first, we introduce a basic network framework to study pyramidal structures and wedges between ownership and control of companies. Then, we apply it to a dataset of 53.5 million of companies operating in 208 countries. Among others, we detect a strong concentration of corporate power, as less than 1% of parent companies collect more than 100 subsidiaries, but they are responsible for more than 50% of global sales. Therefore, we show that the role of indirect control, i.e., through middlemen subsidiaries, is relevant in 15% of domestic and 54% of foreign subsidiaries. Among foreign companies, cases emerge of blurring nationality, when control paths cross more than one national border, in the presence of multiple passports (19.1%), indirectly foreign (24.5%), and round-tripping subsidiaries (1.33%). Finally, we relate indirect control strategies to country indicators of the institutional environment. We find that pyramidal structures arise less likely in the presence of good financial and contractual institutions in the parent’s country, as these foster more transparent forms of corporate governance. Instead, parent companies choose indirect control through countries that have better financial institutions, possibly because it is easier to coordinate decisions from remote. Finally, we find that offshore financial centers are preferred jurisdictions for middlemen subsidiaries, probably due to a lower taxation and a lack of financial disclosure.

7 December 2017 – 2 pm – Budapest, Tóth Kálmán u. 4, 1097, ground floor room 13-14

David Manlove (University of Glasgow): Algorithms for Paired and Altruistic Kidney Donation in the UK

Abstract: A patient who requires a kidney transplant, and who has a willing but incompatible donor, may be able to ‘swap’ his or her donor with that of another patient in a similar situation. The UK Living Kidney Sharing Schemes (UKLKSS), run by the National Health Service Blood and Transplant, aim to find optimal sets of ‘kidney exchanges’ involving incompatible donor-patient pairs and also altruistic (non-directed) donors in the UK. In this talk we describe the computational techniques that we have used in order to construct optimal sets of exchanges for quarterly matching runs of the UKLKSS since July 2008. We also provide an overview of outcomes, showing the numbers of transplants that have been identified and that have proceeded from these runs.

24 November 2017 – 11 am – new venue! – 7621 Pécs, Papnövelde u. 22. – Institute for Regional Studies, conference room

Ugo Fratesi (Politecnico di Milano)
Border regions in Europe: obstacles, (in)efficiency and compensation
(joint work with Roberta Capello and Andrea Caragliu)
Abstract: Border regions have special situation within EU Member states, since along borders run barriers of different physical institutional and cultural nature. Therefore, border regions have been the target of cross-border policies to reduce these obstacles and fully exploit their growth potential. The seminar starts by identifying whether EU border regions suffer more from inefficiencies or underendowment because of the border, then analyses which types of obstacles are obstructing the exploitation of which growth assets, finally it explores the possibility of compensating underendowment or internal inefficiency with increased internal or external efficiency.

23 November 2017 – 2 pm – new venue! – Budapest, Tóth Kálmán u. 4, 1097, ground floor room 13-14

Matt V. Leduc (Aix-Marseille School of Economics, Aix-Marseille Université / GREQAM): Networked markets and relational contracts

12 October 2017 – 2 pm – Budapest XI., Budaörsi út 45. VIII/807.

Peter McAdam (Research Department at the European Central Bank)

Anatomy of a “Miracle” – Assessing the Reform Period in China

Abstract: We offer a macroeconomic assessment of China’s Reform Period, highlighting a number of rather neglected channels underlining the Chinese ‘miracle’ growth and assess the optimality of its savings rate. We begin by estimating the key parameter of the supply side of the post-Reform economy. This reveals the relatively high (above unity) value of the elasticity of substitution and the time-varying growth pattern of the economy since the Reform period. We then show how in addition to factor accumulation and technical progress, the elasticity of substitution can itself be a source of growth. We then our framework to help rationalize and justify China’s high and rising savings ratio over the previous decades.

5 October 2017 – 2 pm – Budapest XI., Budaörsi út 45. VIII/807.

Fabio Berton (Assistant Professor of Economic Policy at the Department of Economics and Statistics, University of Torino)
Employment Protection Legislation and Mismatch: Evidence from a Reform

15 June 2017 – 2m – Budapest XI., Budaörsi út 45. VIII/807.

Jordi Brandts /Instituto de Analisis Economico (CSIC) and Barcelona GSE/
Market Interaction and Efficient Cooperation

8 June 2017 – 2 pm – Venue: Hungarian Academy of Sciences, Human Sciences Research Building, 1097 Budapest, Tóth Kálmán utca 4

Frank Neffke /Harvard Kennedy School/

Coworker Complementarities

on the 2nd “Networks, Complexity, and Economic Development” workshop

11 May 2017 – 2 pm

Corina Haita-Falah  /University of Kassel – Department of Environmental and Behavioral Economics/
Sunk Contributions in a Dynamic Threshold Public Good Game

23 March 2017 – 2 pm

Jan Fałkowski /Faculty of Economic Sciences – University of Warsaw/
Do political and economic inequalities go together? Mayor’s turnover, elite families and the distribution of public support to agricultural producers.

Abstract
This paper studies the effects that the distribution of political power may have for the allocation of economic resources and the distribution of benefits resulting from policy intervention. Using local level data from Poland, we investigate the relationship between changes in political power and the distribution of public support for agricultural producers provided in the form of direct payments which are based on the area of land owned. Our results indicate that higher levels of concentration of political power are associated with more unequal distribution of rents created by land ownership. More specifically, we find that in municipalities where mayor’s turnover is less frequent, elite families amass disproportionally large amount of wealth.

Keywords: Political power; public support for agricultural producers; elite families

9 March 2017 – 2 pm
Bogdan J. Góralczyk /Director of the Centre for Europe, University of Warsaw/
Europe in China’s New Strategy

Abstract
China under current leadership of ever-stronger, charismatic leadership of President Xi Jinping has abrogated former formula and strategy of low profile, dictated by the visionary of reform, Deng Xiaoping, and known as “Constitution of 28 Chinese characters”, usually identified with famous motto: taoguang yanghui (conceal your capabilities and avoid the limelight). Instead, under the current Fifth Generation of Leadership of the Chinese Communist Party we have much more assertive and active political course and imaginative strategy of the Middle Kingdom, as the People’s Republic of China is more and more frequently returning to the rich tradition and civilization of China, starting from ancient times.

2 February 2017 – 2 pm
Paloma Lopez-Garcia /European Central Bank/
Is corruption efficiency-enhancing?A case study of nine Central and Eastern European countries

22 Aug 2016 – 2 pm
Alex Teytelboym
/Otto Poon Research Fellow at the Institute for New Economic Thinking (INET) at the University of Oxford/

David DeRemer (ECARES)
Domestic Policy Coordination in Imperfectly Competitive Markets

22 May 2014

Zsolt Darvas (Bruegel, MTA KRTK)
Sustainability as Determinant of Potential Output in Open Economies
15 April 2014

Guy Michaels (London School of Economics)
Resetting the Urban Network: 117-2012 (with Ferdinand Rauch)
1 April 2014

Alejandro Cunat (Universitat Wien)
Offshoring with heterogeneous firms. (with Juan Carluccio, Harald Fadinger and Christian Fons-Rosen)
4 March 2014

Marc Gurgand (Paris School of Economics)
Adjusting your dreams? The effect of school and peers on dropout behavior (with Dominique Goux, Eric Maurin)
18 February 2014

Paola Conconi (Université Libre de Bruxelles és ECARES)
Guns and Votes (with L. Bouton, F. Pino, M. Zanardi)
4 February 2014

Marius Brülhart (HEC Lausanne)
Alleged Tax Competition: The Mysterious Death of Bequest Taxes in Switzerland (with Raphael Parchet)
3 December 2013

Ron Boschma (U. Utrecht)
Evolutionary approach on regional development
12 November 2013

Beata Javorcik (U Oxford)
Accession to the World Trade Organization and Tariff Evasion
15 October 2013

Carlo Altomonte (U Bocconi)
Business Groups as Hierarchies of Firms: Determinants of Vertical Integration and Performance
18 June 2013