The Jean Monnet Group on Competition and Regional Development in the EU (GCD) organized the second GCD workshop on Regional Development and Innovation in October 2019, which featured prestigious speakers from European universities.
The content of the conference focused on the economic impact on regions of important international and global change factors, such as the development of artificial intelligence, Brexit, international worker migration, and regional inequalities.
During the two-day workshop, fourteen presentations were given that provided a strategic vision of the evolution and economic development in present-day Europe, with the aim of raising awareness and understanding current economic and social movements.
HOW ARTIFICIAL INTELLIGENCE CAN PREDICT ENTREPRENEURIAL SUCCESS.
MANUEL CHAVES MAZA AND EUGENIO M. FEDRIANI MARTEL
DEPARTMENT OF ECONOMICS, QUANTITATIVE METHODS AND ECONOMIC HISTORY, Universidad Pablo de Olavide, SEVILLE
The presentation by Chaves-Maza and Fedriani-Martel focuses on predicting the success of entrepreneurs using artificial intelligence (AI) techniques. Their results, based on a database of more than 2,000 Andalusian entrepreneurs, show that it is possible to consistently classify 98% of cases with the definitions of business success, survival, and failure.
To train the algorithm, 70% of the cases are used. Another subset of 10% of cases is used to validate the significance of the relationships found between explanatory variables. The remaining 20% of cases are used to test the accuracy of the algorithm’s predictions. This type of AI application can be very useful in policy design, although at present the use of AI in the economic field is mainly focused on practical applications in the business sector with tangible results and short-term performance.
THE EFFECTIVENESS OF PUBLIC TOOLS TO PROMOTE R&D INVESTMENT IN SPANISH COMPANIES.
INMACULADA ÁLVAREZ
Universidad Autónoma de Madrid
Álvarez’s presentation studies the effectiveness of different public policy measures to promote medium and long-term growth of business investment in R&D in Spain. Her estimates show evidence of the positive effect of public subsidies and tax credits on R&D. On the one hand, subsidies are shown to be an effective tool in those companies with a solid innovation trajectory and an appropriate selection of priority projects. On the other hand, the tax credit has a broader cross-cutting effect on investment in R&D.
THE ENTREPRENEUR IN THE REGIONAL INNOVATION SYSTEM. A COMPARATIVE STUDY FOR HIGH AND LOW INCOME REGIONS.
JOSÉ FERNÁNDEZ-SERRANO, JUAN A. MARTÍNEZ-ROMÁN AND ISIDORO ROMERO
Department of Applied Economics I. Universidad de Sevilla (Spain)
Fernández-Serrano, Martínez-Román and Romero’s presentation conducts a comparative study of the profile of Spanish entrepreneurs in high and low income regions. One interesting result is the different priority given to barriers to innovation in Spain between regions with higher and lower income levels. In regions with higher income, administrative, financial, and tax barriers are considered the most important, while in lower income regions, infrastructure and human capital deficiencies stand out. These results would support different priorities in development policies.
INNOVATIVE PATENTS AND TECHNOLOGICAL INTERCONNECTION
ROSINA MORENO
Universitat de Barcelona
Moreno’s presentation discusses the available evidence on breakthrough innovation with cutting-edge patents (superpatents), focusing on the central question that these superpatents at a regional level are more likely to be generated from the combination of unrelated technologies but present in the region. Empirical evidence in the EU supports the idea that breakthrough innovations tend to emerge to a greater extent in regional areas with a wide presence of diverse, unrelated technologies.
THE IMPACT OF COHESION POLICY SUPPORT FOR COMPANIES IN DIFFERENT TERRITORIES
JULIA BACHTRÖGLER, UGO FRATÉSI, GIOVANNI PERUCCA
Politecnico di Milano
Bachtrögler, Fratesi, and Perucca’s presentation analyzes the impact evaluation of EU cohesion policy at the company level, using econometric techniques that allow the selection biases (the characteristics of the companies that receive support – «treatment» in econometric language) to be purified to more precisely analyze the causal effects of these business support instruments. Using the ORBIS database, they identified supported companies in seven EU countries during the 2007-2013 programming period (treatment group) and created a control group for companies with similar characteristics to the treated companies. The results generally show a positive effect of cohesion policy on employment and production. However, in terms of productivity, the results have much less impact, mainly because subsidies to companies generate growth in quantity rather than quality. Empirically, these results are in line with the conclusions of Alvarez’s presentation and, from an analytical perspective of «game theory,» with the contribution of Faíña, López-Rodríguez, and Montes-Solla on the stability of the «trap equilibrium» of growth with low levels of productivity and innovation.
GROWTH AND INNOVATION: THE TRAP OF LOW SKILLS/LOW QUALITY IN PERIPHERAL REGIONS
ANDRÉS FAÍÑA, JESÚS LÓPEZ-RODRÍGUEZ & PAULINO MONTES-SOLLA
FACULTY OF ECONOMICS AND BUSINESS OF THE UNIVERSIDADE DA CORUÑA
Within the innovation block, Faíña, López-Rodríguez, and Montes-Solla’s presentation demonstrates with a game theory framework how an economy can be trapped in a «trap equilibrium» of low-productivity growth not based on innovation. The Spanish case (1995-2007) is a paradigmatic example of growth not based on innovation, where GDP grew at an accumulated annual rate of 3.5% and the productive efficiency of the economy (Total Factor Productivity, TFP) fell at a rate of 0.7%.
The presentation emphasizes the difficulty of transitioning to a higher equilibrium with innovation and productivity. On the one hand, it is necessary to strengthen confidence and create credible expectations for the various actors in the innovation ecosystem, and on the other, it is essential for institutions and public policy to accompany and promote the exit from the «trap equilibrium» of low productivity.
THE ROLE OF ARTIFICIAL INTELLIGENCE IN UNEMPLOYMENT: A NON-LINEAR APPROACH TO G7 COUNTRIES
MIHAI MUTASCU
ESCE INTERNATIONAL BUSINESS SCHOOL. INSEEC U RESEARCH CENTER IN PARIS (FRANCE)
Mutascu’s presentation addresses the impact of AI on unemployment. In contrast to the literature that analyzes the positive and negative effects of AI on unemployment separately, Mutascu derives a U-shaped relationship between AI and unemployment. In the first phase, AI displaces jobs and generates unemployment, but in a later phase – once the peak is reached – the wave of innovations associated with AI will generate new activities and new jobs (it is estimated that 80% of the new jobs that will be created in 2030 are not yet known). The theoretical framework that underpins this relationship combines two classic macroeconomic relationships: inflation-unemployment (the unemployment rate that maintains the level of inflation, the Phillips curve) and unemployment-economic growth (the economic growth rate that does not generate unemployment, Okun’s Law).
Finally, the measurement of AI’s progress with big data via Google Trends Index for the G7 countries provides empirical evidence of the initial (negative) effect of AI on unemployment and the change in trend (positive effect) that AI subsequently generates in the economy. A clear implication for employment and development policy is to cushion the initial impact on employment and support the unemployed. What should not be done is to curb the waves of innovation associated with AI in order not to compromise development and potential in different territories.
THE CONSEQUENCES OF BREXIT FOR REGIONAL COMPETITIVENESS IN THE EU AND THE UK
FRANK VAN OORT IN CO-AUTHORSHIP WITH MARK THISSEN, PHILIP MCCANN, RAQUEL ORTEGA-ARGILES AND TROND HUSBY
ROTTERDAM UNIVERSITY
Frank Van Oort’s presentation offers regional impact estimates of Brexit based on a detailed database (sectors and regions) that allows for the computation of interregional transaction flows for EU regions. His results for the UK show a clear economic disadvantage in most regions (with the London area being one of the least affected), while in relation to post-Brexit agreements, most regions are relatively insensitive to economic arguments. In continental Europe, the regional effects of Brexit are mixed, but its impact in terms of regional inequalities will be greatly influenced by the nature of the trade agreements adopted for the UK’s exit from the EU.
Article submitted for publication in Economic Geography.
SMART SPECIALIZATION, INSTITUTIONS AND LOCAL ECONOMIC DEVELOPMENT IN EUROPE
TEODORA DOGARU
LEIDEN UNIVERSITY, NETHERLANDS
Dogaru’s presentation, focused on Central and Eastern European countries, highlights the relevant role played by formal institutions (governments and legislation) and informal institutions (social capital in the form of trust, associative participation of individuals, and capacity to generate links with the outside world) in economic development and innovative behavior of different territories.
INTERNATIONAL MIGRATION AND LABOR MARKET: SOME SAMPLES FROM SPAIN
ADOLFO MAZA
UNIVERSIDAD DE CANTABRIA
Maza’s presentation analyzes the impact of migration on wages between 2004 and 2015 for the Spanish case (currently one of the main receiving countries with more than four million immigrants). The most notable conclusion is that migration had a negative (though moderate) impact on wages, although this fact alone does not support any corrective policy.
THE GRASS IS GREENER ON THE OTHER SIDE: RELATIONSHIP BETWEEN THE RESULTS OF THE BREXIT REFERENDUM AND LOCAL INCOME INEQUALITY
DIANA GUTIÉRREZ-POSADA CITY-REDI – UNIVERSITY OF BIRMINGHAM, UNITED KINGDOM
MARÍA PLOTNIKOVA – UNIVERSITY OF ABERYSTWYTH, UNITED KINGDOM
FERNANDO RUBIERA-MOROLLÓN REGIOLAB – UNIVERSIDAD DE OVIEDO, SPAIN
Rubiera-Morollón’s presentation analyzes the influence of disparities in local income levels on the Brexit vote based on a self-developed database with information on local income levels in 11 EU countries (IMAJINE project of H2020). Its results highlight that disparities in local income levels had a significant influence on the vote in favor of leaving the EU, with a similar voting behavior among neighbors (spatial proximity), due to the spatial concentration of less prosperous areas in the UK.
R&D ACTIVITIES IN THE EUROPEAN CONTEXT: A NATIONAL AND REGIONAL PERSPECTIVE
CAMÉLIA TURCU
UNIVERSITY OF ORLÉANS, LEO CNRS
Turcu’s presentation focuses on the location and spatial attraction of R&D, innovation and creative industries (IC) activities in different territorial contexts (European Union, France, and Romania). The main conclusions of this presentation can be highlighted as follows:
the capacity of foreign R&D attraction depends on factors such as the economies of agglomeration of international R&D, qualified human capital, the existence of centers of excellence in research, and the strength of the regional research and innovation system;
the presence of IC and the specialization of workers in these industries favor the attraction of other sectors and the creation of new companies;
The business experience of R&D+i in the specific case of Romania depends on key factors such as the separation between ownership and management of companies, financial practices, and business dimension.
