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Agglomeration and Economic Growth. A New Economic Geography approach for Romania's Counties

Author

Listed:
  • Bogdan COPCEA

    () (West University of Timisoara, Faculty of Economics and Business Administration)

  • Dan VILCEANU

    () (West University of Timisoara, Faculty of Economics and Business Administration)

  • Sorin TRIFU

    () (West University of Timisoara, Faculty of Economics and Business Administration)

Abstract

Over the last 25 years and particularly over the last 10 years, Romania has achieved an important economic growth pace. Nevertheless, the level of economic development is not the same across the country and, like many other states, Romania displays a heterogeneous territory with different economic, social and geographical characteristics and therefore with great disparities among regions and among counties. Regarding this aspect, and built on the principles of the New Economic Geography approach, this paper proposes to explain the inequalities stemming from the location, distribution and spatial organization of economic activities. Using the endogenous growth theory as a foundation, and using panel data models in order to uncover the role of both agglomeration economies and positive externalities in regional development, our inquiry focuses on Romania's 41 counties plus Bucharest, analysing data from 2005 to 2012. The results show a certain positive impact of both the employment and unemployment rates, research and development and education. Nevertheless, all these components are statistically significant only in the long run, given the fact that in the short run it is very difficult to uncover and evaluate their impact on economic development. By the same vein, even if a different result was expected, in some models, public infrastructure and market potential seem to have a negative impact on Romania's regional development.

Suggested Citation

  • Bogdan COPCEA & Dan VILCEANU & Sorin TRIFU, 2014. "Agglomeration and Economic Growth. A New Economic Geography approach for Romania's Counties," International Conference on Economic Sciences and Business Administration, Spiru Haret University, vol. 1(1), pages 77-84, December.
  • Handle: RePEc:icb:wpaper:v:1:y:2014:i:1:77-84
    as

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    File URL: http://icesba.eu/RePEc/icb/wpaper/ICESBA2014_11COPCEA_P77-84.pdf
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    References listed on IDEAS

    as
    1. Redding, Stephen & Venables, Anthony J., 2004. "Economic geography and international inequality," Journal of International Economics, Elsevier, vol. 62(1), pages 53-82, January.
    2. Steven Brakman & Harry Garretsen & Charles van Marrewijk, 2009. "Economic Geography Within And Between European Nations: The Role Of Market Potential And Density Across Space And Time," Journal of Regional Science, Wiley Blackwell, vol. 49(4), pages 777-800.
    3. H. Hanson, Gordon, 2005. "Market potential, increasing returns and geographic concentration," Journal of International Economics, Elsevier, vol. 67(1), pages 1-24, September.
    4. Thomas Doring & Jan Schnellenbach, 2006. "What do we know about geographical knowledge spillovers and regional growth?: A survey of the literature," Regional Studies, Taylor & Francis Journals, vol. 40(3), pages 375-395.
    5. Judson, Ruth A. & Owen, Ann L., 1999. "Estimating dynamic panel data models: a guide for macroeconomists," Economics Letters, Elsevier, vol. 65(1), pages 9-15, October.
    6. Bruna, Fernando & Faíña, Andrés & Lopez-Rodriguez, Jesus, 2014. "Market Potential and the curse of distance in European regions," MPRA Paper 56747, University Library of Munich, Germany.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    agglomeration economies; positive externalities; regional disparities; regional development; economic growth.;

    JEL classification:

    • O41 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - One, Two, and Multisector Growth Models
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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