Mª De Loreto Delgado González (p), Javier Gamero, Juan Antonio Martínez Román , Juan Aurelio Tamayo

The effect the uncertainty and risk associated with internationalization is a topic of current interest (Buckley, 2016) which underscores the value of risk management in exporting firms (Cavusgil and Knight, 2015; Johanson and Vahlne, 2009). The complexity of international markets increases the level of uncertainty (Knight and Cavusgil, 2004) and the danger of knowledge leakage (Kafouros et al., 2008). However, it is also true that innovation can raise the level of uncertainty and risk when the introduction of new products is decisive for the positioning of a firm in international markets. In this line of investigation, our study seeks three objectives. Firstly, it aims to analyze the effect of product innovation on geographical extension of the market, both at a community level and in different European countries in order to compare the national effect. The second objective is to analyze the variation of uncertainty in market extension when the level of innovation rises, both on a community level and in different countries. Indeed, innovation may drive internationalization, for this reason, in third place, the internal and external bases for innovation are analyzed using a conceptual model. This model will be contrasted on a community level and by countries, and a comparative analysis will be carried out on national models.
The results of the empirical study indicate that market extension conditioned to innovation level is a variable whose average value is growing. A finer analysis leads us to calculate the empirical curve of regression using conditioned means, and the standard deviation for each innovative level. The results show a significant non-linear relationship between product innovation and expected market extension, with a greater positive impact on market extension when an initially non-innovating firm adopts novelties or technological improvements, a reduced impact when changing from firm-level to market-level innovation, and an even lesser impact when beginning to carry out both types of innovation. This finding on a community level is analyzed comparatively on a national level in order to determine the effect of a country’s economic characteristics on the typical conditioned means and deviations that analytically determine this relationship, with interesting results for the policy and management of firms in Europe. Finally, the results show a prevalence of internal variables over external ones; among these variables, those related to market are more influential than those defining institutional support of innovation in Europe, though certain significant differences exist between countries.

Theodore Tsekeris (p), Sotiris Papaioannou

The enhancement of productivity is regarded as crucial for the long-term sustainable development of an economy. Productivity growth in Europe presents significant variations among countries as well as between regions, with evident implications for the processes of convergence and cohesion. This paper investigates how different types of agglomeration economies, such as the density and diversity of local markets and land uses, the specialisation and the market access, influence the efficiency and productivity disparities across EU regions. It encompasses a rich dataset for 245 regions at the NUTS-2 level, spanning the decade 2007-2016. In contrast with other approaches considering the measure of total factor productivity, the present methodology relies on a regional production function which is simultaneously estimated with an inefficiency equation, using a two-stage econometric model.
The findings show the existence of considerable disparities in the level of technical efficiency across EU regions. In particular, they denote the significant positive impact of the concentration of economic activity and land uses, the total (external and internal) market potential, and the human capital, defined as the percentage of hours worked by people with tertiary education, on regional efficiency. These results suggest the productivity-enhancing role of geographical proximity, spatial spillovers, transport improvements and accessibility. In addition, they indicate the positive impact that institutions related to land use planning may have on reducing regional inefficiencies. Furthermore, they stress the significant influence of country-specific factors, such as national macroeconomic policies, as well as region-invariant time-specific factors on the technical efficiency of EU regions. The study findings can provide valuable insights into addressing core-periphery disparities in efficiency and failures in the spatial planning system, and deploying active labour, education and R&D policies to strengthen the productivity of the lagging EU regions.

Ada Spiru (p), Angela Stefania Bergantino , Claudia Capozza

The definition of an enterprise as a “black box” (Melitz, 2003) leads to continuously investigations by scholars for possible effects caused by internal and contextual factors of enterprises. Despite the importance of internal characteristics in determining performance heterogeneity (Davis et al., 1996), further investigation about the context in which firms operate is still required. Particularly, it has been asserted that the contextual factors affect aggregate performance. Nevertheless, these studies estimate the association between the national context and macroeconomic performance rather than identify the causal effects of it on firm performance (Commander et al., 2008).
The success or failure of the economies can be traced in large part to the performance of their enterprises (McMillan and Woodruff, 2002). Therefore, studying firms’ performance became important to explain the economies as a hole, especially in emerging ones, where national context might be very diversified and firms operating are quite heterogeneous (Goldszmidt et al., 2011). This research is focused on a particular aspect of the national context, recognizing the importance of “infrastructure as the platform for economic activity” (EBRD, 2017) that positively affects economic growth (Calderón and Servén, 2004) especially for emerging economies (Baum-Snow et al., 2017). Even though, there are not in-depth microeconomic evidences that directly link country transport infrastructures endowment to firms’ performance heterogeneity.
This study explores firm performance heterogeneity and its relationship with country transport infrastructures endowment in East Europe and Central Asia using firm-level data from the fifth round of BEEPS which covers 32 countries over the period 2012-2016. Due to the interaction at different levels of the factors that influence firm performance, we deemed appropriate to study them in an integrated structure through a multilevel approach (Srholec, 2011). We assess the impact of several factors on sales firms’ performance. Specifically, firm-level characteristics like size, age, export activity, foreign ownership and qualification of the labour force, are nested at the second level with country-factors such as macro-control variables, transport infrastructure endowment – road, rail, port and airports – and logistic performance indicators.
The empirical findings contribute to the literature on bringing micro-evidence that despite firms operating in different countries have same characteristics, there is performance heterogeneity at country-level which is partially explained by different country transport infrastructures endowment and logistics performance. Moreover, we consider more inclusive transport infrastructures features that have not been yet jointly explored in the microeconomic literature using the appropriate approach, the “intercept-as-outcome” model.

Lucia Bolea (p), Rosa Duarte , Julio Sánchez-Chóliz

The phenomenon of the emergence of groups of countries that share certain economic and political characteristics, has led to the generation of several economic areas in recent years that apparently seemed to work correctly, but that have finally had problems after the integration. This could be the case of the European Union, in which a group of countries decided to create an area in which they shared, not only certain political decisions, but economic ones. However, the arrival of the international financial crisis in 2007 caused imbalances in relations and collaborations between countries. Several studies have focus on the analysis of the consequences of several recent economic phenomena through econometric techniques, others with a multiregional perspective and others through building counterfactuals.
In this paper, the objective is to focus on the possibility of defining a type of synthetic indicators in an input-output framework, in a dynamic context, building "counterfactuals" and alternative scenarios to evaluate the impact of certain phenomenon in a European context, as well as in a global context. As a first example, and because of the problems that have arisen recently, the study of the “non-integration” of Eastern European countries could be an interesting scenario. We use the multisectorial and multiregional perspective provided by a MRIO model and the associated databases.
More specifically, inspired by the synthetic indicators methodology and the hypothetical extraction methods we first study the trends in the intra-EU and extra-EU trade relationships for these countries and in the technological and structural composition of the economies. Second, we design hypothetical scenarios on the trends in the evolution of these components based on the behavior observed in the pre-adhesion period and in different hypothesis of integration.
In this regards, this paper attempts to shed light on the discussion about the consequences of certain areas of economic integration, and the effects of these phenomenon on bilateral trade flows between countries within the EU and worldwide. To do this, the information provided by the World Input-Output database (WIOD), as well as the information provided by other databases are used.
In our view, the results could contribute to calculate the structural effect of the most recent integration and disintegration processes within the European Union and worldwide, that currently set as a new challenge that must be faced by several groups of countries, which today present certain structural differences.

Dennis Gaus (p), Heike Link

Also see Extended Abstract

The hypothesis that public capital fosters private productivity has been in the research focus for decades, and a low, yet significant positive effect has found wide-ranging evidence. Spillovers, i.e. effects across the borders of investing regions, have seen increasing attention. Little research has been done, however, on the symmetry of effects and the role of infrastructure quality.
Claims for higher maintenance investment into German transportation infrastructure (TransI) are made repeatedly. As the economic mechanism indicates that decreasing functionality of TransI endangers economic prosperity, this paper empirically addresses the question whether investment into TransI, specifically the German highways, influences economic growth from the perspective “(How) Does maintenance investment of TransI, causing fluctuating TransI quality, influence economic growth and production efficiency?”
The paper employs a stochastic frontier analysis (SFA) to explain inefficiencies based on a translog production function with highway asset value and conditions as “shifters”, accounting for spillovers through the use of a spatial (SLX-)model. An AR(1)-corrected feasible GLS estimation with panel-corrected standard errors is applied to provide a starting point for the maximum-likelihood based SFA.
Yearly data for the 401 German counties (Landkreise) for the period 2007-2016 are combined from (regional) national statistics, data from the Federal Highway Research Institute (BASt), and own calculations. Regional asset values of the highway network are derived through topographical information in combination with a category-specific perpetual-inventory model of TransI asset values, while quality is determined using the pavement and construction quality assessment data of the BASt.
Preliminary results support the expectations and previous research: the spatial production function shows an elasticity of output with respect to highway capital of 0.1, while spillovers, i.e. regional growth caused by TransI investment in other regions, amount to 0.4% per 1% increase in the supra-regional asset value. With respect to highway conditions, the data support the hypothesis that lower road quality relates to a decrease in economic output: the effect is insignificant with regard to the Autobahn network, but the quality of the more regionally branched Bundesstraßen has a significant negative impact with elasticities of -0.04 locally and -0.21 interregionally. The next step in the ongoing work is to include bridge conditions as part of TransI quality. Furthermore, the model is to be estimated in a SFA context to identify inefficiencies and explain the impact of TransI quantity and quality in this environment.