Competition for FDI with vintage investment and agglomeration advantages: A revisit

We analyze the taxation regimes that may emerge in a two-period dynamic tax competition game where a country that attracts investments during the initial period has agglomeration advantages during the later period. When competing countries choose taxation regimes simultaneously, mixed taxation may arise in an equilibrium where one country adopts a non-preferential and the other adopts a preferential taxation regime. Equilibrium tax revenues of competing countries decrease with the increase in agglomeration effects. Whether a country with a non-preferential or a preferential taxation regime obtains a higher tax revenue depends critically on the extent of agglomeration effects. Moreover, whether a country with a non-preferential or a preferential regime attracts investments during the initial period and in turn will have agglomeration advantages during the later period also depends on the extent of agglomeration effects. When competing countries choose taxation regimes sequentially, a mixed taxation regime arises, and the first mover chooses a non-preferential taxation regime when the agglomeration effect is not very large. On the other hand, when the agglomeration effect is very large, a mixed taxation regime arises where the first mover chooses a preferential and the second mover chooses a non-preferential regime. We provide the complete characterization and proof of the uniqueness of the equilibrium in mixed strategies.JEL classification: F21, H21, H25, H87

Whose Happiness in Which Cities? A Quantile Approach

The proposition that living in the largest urban agglomerations of an advanced economy reduces the average wellbeing of residents is known as the urban wellbeing paradox. Empirical tests using subjective wellbeing have produced mixed results and there are two reasons for being cautious. Firstly, the default reliance on the conditional mean can disguise uneven effects across the wellbeing distribution. Secondly, relying on respondents to define their settlement size does not ensure a consistent measure of the agglomeration. I therefore apply quantile regression to the life satisfaction and happiness measures of wellbeing as collected by the 2018 European Social Survey (ESS9) and employ a consistent local labour market-based definition of agglomeration—The Functional Urban Area (FUA). I compare three countries as proof of concept: one with a known strong negative (respondent defined) agglomeration effect (Austria), one with a slight negative effect (Czech Republic), and one where living in the main agglomeration is positively associated with average wellbeing (Slovenia). The uneven wellbeing effect of living in the largest agglomeration in each country raises questions about who benefits in which cities.

Urban Agglomeration As a Factor of Sustainable Development of Satellite Cities (On the Example of Rostov Region)

The article discusses the features of the development of the largest Rostov agglomeration in the south of the country in order to form a single territorial, economic and social space. The authors analyze the conditions for agglomeration development and identify the necessary steps for the sustainable development of the cities that are part of the agglomeration, which would correspond to the interests of the population, business and local authorities. Within the framework of the article, the agglomeration effect on the territory of the agglomeration is revealed and the most urgent issues that have to be faced in the process of its formation are identified. To do this, the following methods were used in the article: systematization, forecasting, analysis, mathematical modeling and evaluation of the degree of agglomeration effect of various urban agglomerations with their comparison. The article provides a brief analysis of the largest cities that are part of the agglomeration, with an assessment of their specialization and influence on the development of the surrounding area. The main variables are statistical data on the population, the investment attractiveness of the territory and the volume of goods produced by the company. Special attention is paid to satellite cities, which are most influenced by the core city. The research conducted in the article allowed us to show that Bataysk and Aksay (the project “Big Rostov”) developing in a single cluster with Rostov are able to achieve many competitive advantages, both for the entire territory and for each specific municipality. Based on the interaction of these cities, a synergistic effect is shown, which is characterized by an active pendulum migration, development of communications and construction, concentration of production and specialization of the economy of the municipalities that are part of the agglomeration.

Agglomeration and total factor productivity of China’s textile industry

Agglomeration is an important characteristic in China’s textile industry development. But regional textile industry isseriously unbalanced, only eastern location entropy (LQ) is greater than 1 and is the highest of all, followed by thecentral, western and north-eastern regions. Total factor productivity (TFP) is an important indicator to measure theeconomic growth efficiency. The average annual growth rate (AAGR) of eastern textile industry TFP is the least andcentral TFP growth rate is the fastest. In order to investigate the relationship between agglomeration and TFP of China’stextile industry, especially at region level, this paper applies panel model to study how agglomeration influences TFPduring 2005–2018. The results show that increasing agglomeration degree restrains the TFP growth of China’s textileindustry. The coefficients of LQ on textile industry in China and four regions are all negative. There exists crowded effectin eastern textile industry. It has not formed the significant agglomeration effect in western and north-eastern textileindustry for very low agglomeration degree. So it implies that eastern textile industry can accelerate the implementationof industrial transfer and structural adjustment to lower agglomeration and maintain sustained profitability of textileenterprises. Western textile industry can strengthen agglomeration by undertaking industrial transfer from eastern regionto form agglomeration effect to promote TFP growth.