MUNI ECON Plná verze článku / Full paper antošová, a., arias gomez, h. y, (2021). Sectors and industry regions - Case study Italy. In (Klímová, V., Zítek, V., eds.) XXIV. mezinárodní kolokvium o regionálních vědách. Sborník příspěvků. Brno: Masarykova univerzita, pp. 169-175. ISBN 978-80-210-9896-1. DOI 10.5817/CZ.MUNI.P210-9896-2021-21. www.econ.muni.cz/kolokvium www.econ.muni.cz/colloquium MASARYK INSTITUTE OF ADVANCED STUDIES CTU IN PRAGUE XXIV. Mezinárodní kolokvium o regionálních vědách INDUSTRIES AND REGIONS - CASE STUDY ITALY Mgr. Helmuth Yesid Arias Gomez, Ph.D. Ing. Gabriela Antošová, Ph.D. MASARYK INSTITUTE OF ADVANCED STUDIES CTU IN PRAGUE Plan of the Presentation Theoretical Bedrock Theoretical Approaches New Economic Geography The Italian Case MASARYK INSTITUTE OF ADVANCED STUDIES CTU IN PRAGUE Alfred Marshall: 'Principles of Economies' 1890 Marshallian Sources of Agglomeration • Specialized Inputs (Linkages) • Pooled Labor Markets • Spillovers MASARYK INSTITUTE OF ADVANCED STUDIES CTUIN PRAGUE (DA GEOGRAPHICAL DISTRIBUTION OF MANUFACTURING INDUSTRY 48.4% of the manufacturing industries are concentrated in Northern Italy (almost half of the entrepreneurial network). 30.5% of the businesses are located in the South and Islands. 20.1% are located in Central Italy. At the regional level, Lombardy is first with a weight on the overall picture of 16.7% There is a gap between northern and southern Italy from the point of view of distribution and territorial resources I DISTRETTI INDUSTRIAL! IN ITALIA Source: ISTAT2011 I MASARYK I INSTITUTE li-r M OF ADVANCED U4V."1 STUDIES CTU IN PRAGUE • Paul Krugman is known as the most remarkable autor of New Economic Geography, together with Fujita and Venables. The core question is why firms agglomerate on space? There is a spontaneous incentive in firms for installing close to others? I MASARYK I INSTITUTE |,r M OF ADVANCED . i . __ | | Ek£il]cTu'iifpRAcuE Considering Three elements •Economies of scale: •To install only one plant, economies of scale can be exploited if it is built near a huge city. (If all firms have the same strategy, all of them will meet in the same place) Exceptions? Access to natural resources (cement, wood, Processing of milk, bottled water) MASARYK INSTITUTE ,7" OF ADVANCED STUDIES CTU IN PRAGUE Transport Cost Satisfying all markets depends on transport costs: In presence of low transport cost both markets can be satisfied form only one place. CONCENTRATION If transport cost are high, is more efficient to split the production into the two locations: SYMMETRIC DISTRIBUTION I MASARYK I INSTITUTE lr (•] OF ADVANCED _ _ ■h^ta™ Relevance of urban - manufacturing labor |i Urban workers can move, so they can change home according the movement of manufacturing. Higher \i higher concentration in one point: CONCENTRATION Total labor equals 1: \x in manufacturing 1- \i in agriculture Farmers (1- \i) can not move, they are stuck to the land. n»T?"urin conclusion, the conditions for concentrating OF ADVANCED r cTu.NRaaPufacturing in one point: F/S>t (l-[i)/2 \ "t— z: r ; j .... t-----'- A The criterion: F/S >t (1- \x)/2 Large-scale production => higher F/S Railroads => lower t Industrialization => higher \i Importance of mopolistic competition The problem of market structure Price, cost MASARYK INSTITUTE OF ADVANCED STUDIES CTU IN PRAGUE The Home Market Effect and the Economies of Scale good 1 good 2 Production The countries tend to specialize in goods for wich there is a large internal demand (Burenstam Linder) Demand Demand Production Ü = Net Exports Figure 1 Demand Idiosyncracies have a Magnified Impact on Production Source: Donald R. Davis David E. Weinstein (1996) MASARYK INSTITUTE OF ADVANCED STUDIES CTU IN PRAGUE Bel jfio Pii Ji-nyiK UdlIH ^ Oq THE ITALIAN CASE FoflflhJ 1 Ban"v"1tlřB»r1tHa Anií dl e>^* ITALIA ÉnnBCa piiw panto. 137.b 375 i 7sd Khi Source: OWN ACCORDING TO EUROSTAT Ba bo rated: Helmuth Aria-s Gomez MASARYK iĚl Divergence in GDP per capita Prodotto interno lordo a prezzi correnti per abitante. Anno 2011 Source: ISTAT 2011 MASARYK (^advancedITALY MANUFACTURlNG STUDIES ""'""""EMPLOYMENT NUTS2 North Valle D'Aosta 4,640 Piemonte 357,2 97 Liguria 5 9,7 07 Lombardia 8 90,773 Veneto 52 0,55 6 Trentino Alto Adige 66,233 Friuli Venezia Giulia 104,314 Emilia Romagna 439,984 South and Islands Campanial8 0, 952 Puglia 141,521 Basilicata 25,818 Calabria 2 7,671 Sicilia 91,059 Sardegna 32,3 60 Center Toscana 2 95,38 0 Umbria 5 6,815 Lazio 142,720 Marche 154,2 60 Abruzzo 81,295 Molise 12,005 NUT Manufacturing Employment I |13«6- 184» ^ 1S«7 ■ Z7871 I I 2JGI2 - 40SIÍ MA*a -»w sotkis ■ sins? 1SMS3 -357»7 I 35729S -6J9>7S ■ GJ917&-1J1U1J Source: Eurostat 2017 MASARYK INSTITUTE OF ADVANCED STUDIES CTU IN PRAGUE Worth Valle D'Aosta 4,640 Piemonte 3 57,2 97 Liguria 59,7 07 Lombardia 8 90,77 3 Veneto 520,556 Trentino Alto Adige 66,2 33 Friuli Venezia Giulia 104,314 Emilia Romagna 43 9,98 4 Center Toscana 295,38 0 Umbria 5 6,815 Lazio 142,720 Marche 154,2 60 Abruzzo 81,295 Molise 12,005 South and Islands Campanial8 0,952 Puglia 141,521 Basilicata 25,818 Calabria 2 7,671 Sicilia 91,059 Sardegna 3 2,3 60 The employment in Italian Manufacturing ~~«—Indus Li v .- Numbers T5y region 2017 Lower amount of employed workers Higher amount of employed workers Source: Eurostat 2017 I MASARYK I INSTITUTE lí-r M OF ADVANCED U4Vri STUDIES CTU in PRAGUE Composition of man jfactu ring employment by sector 2017 *i GEO food products beyeraqes tobacco textiles wearing apparel leath er wood paper Printing and coke retin in o ch emical pharma Cf btical rubber plastic non metallic basic meta Is metal products computer, electronic elctrical esuiprnent machinery motor vehicles other transbort furniture Other manuta repair Piemonte 1,3 o,o 4,7 2,2 0,3 2,2 o,o 1.7 0,3 2,9 0,3 6,6 2,7 2,3 14,8 2,0 3,0 15,9 14,2 0,0 0,9 3,7 3,7 Valle oTAostaJ Vallée ďAoste 0,0 4,9 0,0 0,8 0,5 0,1 3,3 0,0 3,3 0,2 0,2 o,o 2,0 3,4 26,6 11,6 1,9 2,0 1,1 3,0 0,0 1.5 2,9 3,9 Liguria 16,1 0,2 0,0 0,6 1,1 0,1 2,1 0,7 2,2 15 2,4 0 7 3,0 4,3 3,7 12,9 6,0 4,4 9,5 2,7 11,2 1,2 3,3 9,9 Lombardia 7,2 0,7 0,0 4,7 4,1 1,4 2,3 19 2,6 0 2 5,0 2,4 6,5 2,3 4,7 16,9 3,2 5,1 15,1 2,7 1,4 3,2 2,6 3 9 Autonoma di Bolzano/Bozen o,o 3,5 0,0 0,3 1 3 0,2 12,5 0,4 3,2 0,1 1 2 o,o 2,4 3,4 3,3 13,6 2,0 2,9 8,2 5,6 4,2 6,5 2,3 3,1 Autonoma di Trento o;o 4,2 0,0 2,0 1 6 1,4 3,5 5,1 4,3 0,1 4.0 o,o 6,1 6,5 1,3 13,7 1,3 2,1 11 6 3,5 0 4 2,2 4,0 2,3 Veneto 7,6 0,0 0,0 2,2 5,7 5,5 2,8 2,2 2,2 0,1 2,1 0 9 4,8 4,3 2,6 15,4 1,3 5,9 15,0 1.2 1,2 6,3 5,5 3,4 Friuli-Venezia Giulia 6,9 0,3 0,0 1,1 0,6 0,5 4,6 2,2 1,6 0,1 1.2 0,4 4,0 3,6 5,5 17,3 2,6 4,9 15 9 1,7 4,2 12 6 2,7 4,7 Emilia-Romagna 12,7 0,0 0,0 12 4,7 1.5 1.9 1,3 I? 0,1 3,1 10 4.1 6,4 2,0 13,5 2,9 3,8 23,6 3.7 1,2 1,9 2,5 4,2 Toscana 7,0 0,7 0,1 7,8 12,6 15,2 2,4 3,4 1,7 0,3 2,2 2,4 2 5 3,3 2,0 3,4 2,3 2,1 6,5 1,7 3,1 3,2 47 3,8 Umbria 14,3 0,0 0,0 3,5 12,6 0,9 3,6 2,9 2,9 0,1 1,9 o,o 2,5 7,0 5,6 14,3 1,0 2,2 3,6 1,9 1,3 4,5 2,1 4,3 Marche 7,4 0,5 0,0 1,5 7,0 16;2 29 2,4 1,6 0,4 1,3 o,o 6,7 2,1 1,5 12 5 19 6,6 3,5 1 1 2,2 9,1 2,3 27 Lazio 13,3 0,0 0,0 1,3 2 5 0,6 2,9 2,0 5,1 1,6 2,9 8,7 3,3 6,1 1,2 10,6 3,9 3,3 4,1 4,9 6,3 1,7 3,3 3,6 Abruzzo o,o 1,8 0,0 2,3 3,5 2,4 2 5 3,1 1,5 0,2 1,3 o,o 5,5 6,3 1,3 12,0 3,3 1,9 5,9 14,2 1,5 2,6 2,1 3,5 Molise 22.0 0,9 0,0 0,3 4,5 0,3 2,7 1,1 1,2 0,1 4,6 1,3 3,0 6,4 1,1 10,1 0,9 2,4 2 9 25,3 0,4 2,1 1,3 3,2 Campania 13,6 1,1 0,1 1,3 3,3 7,6 27 2,3 2,0 0,6 1,1 1,0 3,6 3,7 1,5 11,3 1,4 3,2 3,7 6,4 7,0 1,2 2,2 7,1 Puglia 13,7 1,7 0,0 2,1 9,9 3,9 2,9 1,2 2,0 0,6 1,2 0,4 2,7 4,7 8,4 11.2 0,5 1.2 4,3 4,5 3,9 4,9 2,1 6,4 Basilicata 15,5 1,7 0,0 1,5 1,3 0,1 2,3 0,6 1,5 0,4 0,5 0,3 3,5 5,5 1,7 10 5 0,6 1,2 3,9 37,0 0,5 4,3 1,0 4,1 Calabria 0,0 1,6 0,0 1,3 2,4 0,3 6,8 0,6 3,5 1,0 1,9 0,0 2,6 9,0 1,3 15,4 0,3 0,6 2 5 0,3 2,2 2,1 3,4 7,3 Sici lia 27,9 2 5 0,0 0,6 2,2 0,3 3,7 1,0 2,3 3,3 2,3 1,6 2,3 8,1 1,1 10 9 5,2 1,6 3,1 0,6 1,6 1,6 29 10 9 Sardegna 29,0 3,4 0,0 1,2 1,1 0,3 3,0 0,6 2,3 1,3 3,5 0,0 2,4 3,6 3,4 13,9 0,9 0,3 2 0 0,1 0,7 1,0 3,9 12,2 Source: Eurostat 2017 |VJ| S™™ Some Economic Geography Arguments: ■j't■'' rtl OF ADVANCED lk<+i SSWpmgui (Brian A'Hearn and Anthony J. Venables 2011) The combination of changing external trade patterns and internal geography have combined to repeatedly favor the North of Italy The continuing dominance of one area of the country (Gravitating around Milan) is pervasive. Italy is also distinctive in the consequences of the unequal distribution of industry for living standards. Silk production was concentrated in the North, principally because of the availability of water, an endowment which also benefited other agriculture based production. The North had the advantage of existing clusters of activity, although this was accompanied by the competitive disadvantage of higher wages. The process of European integration meant that economic opening primarily meant opening to the markets of Northern and Central Europe; foreign market access became important, and once again the North of Italy was favored over the South. MASARYK INSTITUTE OF ADVANCED STUDIES CTU IN PRAGUE THANK YOU FOR YOUR ATTENTION Qand A? MASARYK INSTITUTE OF ADVANCED STUDIES CTU IN PRAGUE SECTOR POSSIBLE LOCALIZATION REASONS Manufacture of food products ACCESS TO NATURAL RESOURCES, TO THE SEA, TO THE CROPS. ACCESS TO URBAN MARKETS, PROXIMITY TO CITIES Manufacture of beverages ACCESS TO NATURAL RESOURCES, ACCESS TO URBAN MARKETS, PROXIMITYTO CITIES Manufacture of tobacco products ACCESS TO URBAN MARKETS, (raw tobacco is a tropical commodity, 1 think it must be imported) Manufacture of textiles INTENSIVE IN CAPITAL AND EQUIPMENT, CLOSE TO THE CITIES. Manufacture of wearing apparel INTENSIVE IN LABOR. AVAILABILITY OF LABOR IN THE CITIES Manufacture of leather and related products INTENSIVE IN LABOR. AVAILABILITY OF LABOR IN THE CITIES Manufacture of wood and of products of wood and cork, except furniture; manufacture of articles of straw and plaiting materials ACCESS TO NATURAL RESOURCES, TO THE FOREST, Manufacture of paper and paper products ACCESS TO NATURAL RESOURCES, TO THE FOREST, Printing and reproduction of recorded media ACCESS TO URBAN MARKETS AND SKILLED LABOR. AVAILABILITY OF WRITERS, JOURNALIST, EDITORS, ETC Manufacture of coke and refined petroleum products ACCESS TO NATURAL RESOURCES. CLOSE TO OIL EXPLOITATIONS, AND PORTS Manufacture of chemicals and chemical products LI NKAGES WITH PETROLEUM SECTOR Manufacture of basic pharmaceutical products and pharmaceutical preparations IN THE CITIES, AVAILABILITY OF SKILLED LABOR, DOCTORS, RESEARCHERS, ETC Manufacture of rubber and plastic products PROXIMITYTO URBAN CENTERS AND CITIES. (TIRES, PLASTIC DEVICES) Manufacture of other non-metallic mineral products ACCESS TO NATURAL RESOURCES: LIMESTONE FOR CEMENT. CLAY FOR BRICKS Manufacture of basic metals ACCESS TO NATURAL RESOURCES: COAL AND MINING (METALLURGY) Manufacture of fabricated metal products, except machinery and equipment ACCESSTO URBAN MARKETS Manufacture of computer, electronic and optical products SPILLOVERS. TRANSMISSION OF SPECIALIZED KNOWLEDGE. ABUNDANCE OF TECHNICAL LABOR. Manufacture of electrical equipment SPILLOVERS. TRANSMISSION OF SPECIALIZED KNOWLEDGE. ABUNDANCE OF TECHNICAL LABOR. Manufacture of machinery and equipment n.e.c. ACCESSTO URBAN MARKETS Manufacture of motor vehicles, trailers, and semi-trailers SPILLOVERS. TRANSMISSION OF SPECIALIZED KNOWLEDGE. ABUNDANCE OF TECHNICAL LABOR. LINKAGES WITH PROVIDERS AND BACKWARD ABSORPTION OF PARTS AND INPUTS. Manufacture of other transport equipment SPILLOVERS. TRANSMISSION OF SPECIALIZED KNOWLEDGE. ABUNDANCE OF TECHNICAL LABOR. LINKAGES WITH PROVIDERS AND BACKWARD ABSORPTION OF PARTS AND INPUTS. Manufacture of furniture ACCESSTO NATURAL RESOURCES. ACCESSTO URBAN MARKETS. Other manufacturing DIVERSE FACTORS. IS A VERY VARIATED GROUP OF PRODUCTS. MASARYK INSTITUTE OF ADVANCED STUDIES CTU IN PRAGUE REFERENCES Krugman Paul (1991). Geography and Trade. MIT Press. Krugman Paul (2008). The Increasing Returns Revolution in Trade and Geography. Nobel Prize Lecture. Stockholm. Donald R. Davis & David E. Weinstein (1996) rDoes Economic Geography Matter for International Specialization ?, NBER Working Paper 5706 MASARYK INSTITUTE OF ADVANCED STUDIES CTU IN PRACUE