Michiel N. Daams (p), Philip McCann, Paolo Veneri, Richard Barkham

Andrés Fuentes Hutfilter

The aim of this paper is to uncover the role which capital shocks and investment allocation processes play in shaping local and regional productivity responses. Our analysis examines how the links between the macroeconomic and national governance features of a country and the internal economic geography of a country shape the productivity-driving role of cities and regions. In order to do this, we build on the approach which is based on the integration and analysis of real estate capital inflows spanning all sectors into cities and regions across Europe.
The importance of real estate capital flows is that they are both location-specific and they also represent large scale and long-term investments into a locality which bundle together the capital from many different stakeholders and institutions, and in turn act as a key conduit for leveraging additional investment flows for other business investment purposes. We decompose the various elements of the capital-asset pricing model broken down by location and city and time period and relates these to different potential explanatory features to the investment allocation characteristics.
Our analysis will exploit the enormous heterogeneity of European nations, region and cities so as to identify which national, regional, or city-specific features either mediate, ameliorate or exacerbate the productivity-related implications of national monetary shocks. In order to do this we will analyse real estate investment flows for the period 2003-2015, in other words during the years prior to the 2008 global financial crisis as well as in the years following the crisis. We use uniquely detailed real estate investment data, which provides a wide range of transaction-specific information on more than 60,000 transactions of investment-grade European real estate. These data cover 26 countries and include information on yield values, pricing, and other characteristics of the individual transactions. We enrich these data with OECD-standardised national, regional, and city data as relevant to different national and regional institutional and policy settings within which we examine real estate capital flows.

Giulia Iannone (p), Andrea Ascani, Alessandra Faggian, Alexandra Tsvetkova

Michiel N. Daams

This paper adopts an evolutionary framework for the joint study of productivity and resilience. Although they are both fundamental factors of economic performance, the interaction between the two has been neglected. We aim at filling this gap by analyzing how productivity and resilience combine with each other in European regions during the first year of the Covid-19 pandemic and then we investigate which factors explain and influence their relationship, with a particular focus on related and unrelated variety between industrial sectors. Data from different sources at the NUTS2 level are used, initially to build a taxonomy of European regions according to productivity and resilience indicators, and then to model the relation through a multinomial logit regression. Preliminary results show that related and unrelated variety have heterogeneous effects on the combined measure of productivity and resilience. Although still in its initial stage, this work can contribute to constructing a theoretical framework which can be used as a building block for further academic research and as a support for designing more balanced policies which can unlock and foster both productivity and resilience enhancing elements.

Andrés Fuentes Hutfilter (p), Jolien Noels, Valentina Ventricelli, Daiana Derecichei, Jaebeum Cho

Giulia Iannone

We study the transition to climate neutrality in manufacturing and its impacts on local employment, firm productivity and regional development. This work identifies manufacturing sectors which need to undergo particularly deep transformations and describes infrastructure gaps. Activity in these manufacturing sectors are regionally concentrated. Regions most vulnerable to these sectoral transformations are identified using regional employment data and a novel dataset that allocates EU ETS emissions to 3-digit NACE sectors at a fine geographical level. The transformations will change skill requirements, redistribute jobs across locations, decrease jobs in some activities and raise them in others. While the transformations bring both opportunities and challenges, employment losses may not occur where opportunities arise. They may also result in shifts of regional comparative advantage.
Integrating new zero-emission technologies is one of the main approaches for moving key manufacturing sectors to climate neutrality by 2050. The most productive firms are likely to be best able to integrate these new technologies. High productivity also boosts profitability which serves to finance the needed major investment. Regions with more productive firms in key sectors may therefore face fewer challenges and may be better placed to grasp opportunities in the transition to climate neutrality. Based on a novel ETS-ORBIS matched dataset, we explore the productivity of firms in regions identified as undergoing the largest transformations due to the transition. Regions differ substantially with respect to the labour productivity of companies active in them, notably in the production of chemicals and steel. Further analysis on existing socio-economic and worker characteristics gives a broader picture of regional vulnerabilities. Understanding the regional development impacts of the transition to climate neutrality can support policy makers make it more equitable.