Commodity Shocks and Incumbency Effects

Why do incumbents enjoy an electoral advantage in some political settings but suffer from a disadvantage in others? We propose a novel explanation linking variation in incumbency effects with exogenous commodity shocks. While voters attempt to sanction incumbents for economic performance, changes in commodity prices affect their evaluations and condition the electoral fortunes of incumbents vis-à-vis challengers. We test our argument in Brazilian municipalities, combining a plausibly exogenous measure of variation in commodity prices with a close election regression discontinuity design. Our results show that increases in the price of agricultural commodities greatly enhance the prospects of incumbents, while negative shocks exacerbate their incumbency disadvantage, especially in rural municipalities. Further investigation suggests that commodity shocks do not operate via voter learning about candidate quality, changes in the pool of candidates, shifts in voter preferences, or strategic elite investments. Instead, we find suggestive evidence that commodity shocks affect voters' evaluations through their effect on local economic growth.

Impact of Logistics Development on Economic Growth: An Empirical Research from Guangdong Province in China

This paper evaluates the impact of the development of the logistics industry on economic growth based on panel data of 21 cities in Guangdong Province in China from 2007 to 2019. Using the overall entropy method, the comprehensive development index of the logistics industry is constructed to capture the performance of the logistics industry. On this basis, by using Moran’s index, we measure the spatial agglomeration effect of the logistics industry. Furthermore, direct and spatial spillover effects are also obtained. The estimation results of the spatial Durbin model (SDM) reveal that the elasticity coefficient of the effect of the comprehensive development level of the logistics industry on economic growth is 0.2590, which is significant at the 1% level. In addition, the coefficient of the direct effect of the logistics industry on local economic growth is 0.4074, and the coefficient of the spatial spillover effect on the economic growth of the surrounding areas is 0.3596, which are both significant at the 1% level. These results indicate that the development of the logistics industry can not only improve local economic growth but also promote the economic growth of the surrounding regions.

The New Globalization of Innovation

This chapter demonstrates that not only has the production landscape changed, but that the entire innovation landscape has been transformed as well. Globalization means that innovation in goods and services is now fragmented into four stages, ranging from invention of novel gadgets and technologies to new ways to assemble finished products. Each of these stages necessitates a different local ecosystem of innovation-based growth, and success in each of these leads to very different social outcomes. The chapter introduces the basic thought concepts to be used throughout the book, organizing a narrative for the reader. This will allow readers to let go of their existing (and wrong) “taken-for-granted story” of how the world works, so they can develop a radically new understanding of innovation and local economic growth under globalization.

Conclusion

This chapter concludes the book, reminding the reader that the act of innovation is what makes humans unique, and urging for a strong belief in human ingenuity. It also briefly summarizes the main points of the book, namely innovation versus invention, innovation and local economic growth, global fragmentation of production, innovation stages, the only two innovation actors, the three goals of innovation policy, and how to adhere to the four fundamentals (flows of local-global knowledge, demand, and inputs; the supply and creation of public and semi-public goods; building a local ecosystem that reinforces the firm-level benefits of the previous two fundamentals; and the co-evolution of the previous three fundamentals).