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The relation between a Regions‘ Accessibility

and Economic Growth

Assembly of European Regions Conference:„Low Noise – Low Fare – High Impact“Eindhoven Airport (NL)13 and 14 December 2006

Richard Kämpf, BAK Basel Economics

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Contribution of regional accessibility to economic growth

• What accessibility to measure?BAK accessibility modelResults

• Contribution of regional accessibility to economic growthTheoretical frameworkEmpirical results: Research Program „Policy and Regional Growth“

• Summary of results

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Definition of accessibility

Kay Axhausen (ETHZ):Accessibility can be understood as the number of opportunities available for social and economic life that can be reached within a travel time appropriate to the relevant purpose.

ESPON (EU Study Programme on European Spatial Planning):Accessibility ist the main „product“ of a transport system. It determines the locational advantage of an area (i.e. a region, a city or a corridor) relative to all areas (including itself).

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The modelWhat accessibility to measure?

5 questions have to be answered:

1. Who shall have access? Representatives of international

companies and institutions

2. Access to what? Markets for inputs & goods (GDP as

activity parameter, outbound

accessibility)

3. Which measure for Travel time (fastest connection)

spatial impedance?

4. Which traffic modes? Rail, road and air

5. What spatial scale? Global & continental

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The modelList of destinations

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Global destinations:

120 international airports

representing the world economy

outside Europe

Continental destinations:

291 regional centers

representing European

economy

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The modelThe accessibility function

AU = (WZ * e cU Z)

A = Accessibility

U = Origin

W = Activity (GDP)

Z = Destination

c = Travel time

= Parameter

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Network dataCalculation of shortest intermodal travel time for every connection

Global connections: 280 (Origins) x 120 (Destinations)Central station origin Central station destination outside Europe

Fastest connection including:

- Access time to departure airport (average of public transport and car access)

- Transfer time (change of traffic mode)

- Check-in time (destination- and airportspecific)

- Flight time including connecting time

- time from arrival airport to central station destination

Continental connections: 280 (Origins) x 291 (Destinations)Central station origin Central station destination

Fastest connection from modes:

- Road

- Railway

- Flight (travel time including access and transfer time departure airport,

check-in time, flight time, transfer time at arrival airport and access time from

arrival airport to central station destination)

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Global accessibility 2004in Europe

Source: BAK

100 = total sample 2002

< 80

< 85

< 90

< 95

< 100

< 105

< 110

< 115

> 115

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50

60

70

80

90

100

110

120

130

Amst

erdam

Frankf

urt

LondonPar

is

Man

ches

ter

Zürich

Köln

Bruxel

les

Dublin

Stuttg

art

Kobenhav

n

Münch

en

Mad

rid

Gen

eve

Stock

holm

Mila

no

Basel

Wie

n

Berlin

Luxembourg

Praha

Athin

a

1980 2004

Source: BAK100 = total sample 2002

Global accessibility 2004Metropolitan cities (2004 vs. 1980)

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Continental accessibility 2004in Europe

< 70

< 80

< 90

< 100

< 110

< 120

< 130

< 140

> 140

Source: BAK

100 = total sample 2002

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Road accessibility 2000in Europe

< 30

< 50

< 70

< 90

< 110

< 130

< 150

< 170

>170

Source: BAK

100 = total sample 2002

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Railways accessibility 2002in Europe

< 30

< 50

< 70

< 90

< 110

< 130

< 150

< 170

>170

Source: BAK

100 = total sample 2002

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Contribution of regional accessibility to economic growth

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Theoretical framework

Approaches to model (regional) economic growth

The dimension of „space“

Empirical results: Research Program „Policy and Regional Growth“

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Policy question: What are the drivers of regional growth?

What are the measures decision makers can choose to foster economic growth?

BAK research project: Understanding the relation between location factors and Policy and Regional Growth regional growth using empirical and econometric tools

How relevant is policy for regional growth?

BAK Analytical Approach:

1. Benchmarking: Comparing economic performance and location factors

2. Analysis: Understanding the relationship between performance and location factors

3. Policy: Advice on policy measures and possible trade-offs

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DatabaseInternational Benchmarking Database

Economic Performance (1980-2005)

Indicators: GDPGross value addedEmploymentHours workedProductivity (hourly productivity and output per employee)

Measures: Gross and realLevel and growth (time series 1980 to 2005)In national currency and in common currencyTotal, per capita

Industries: 60 different industries(following NACE 2-digit level)

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Database International Benchmarking Database

Location Factors

Innovation: Expenditure on R&D* (1980-2003)University quality (Shanghai Index) (2003-2005)Number of higher education degrees* (tertiary degrees) (1990-2005)Education level of labour force* (secondary / tertiary) (1980-2003)

Patents* (1990-2005)Bibliometric indicators* (1990-2005)Company start-ups* (1993-2003)

Taxation: Taxation of highly qualified employees (1980-2005)Taxation of companies (1980-2005)

Regulation: Regulation of product markets (1980-2003)Regulation of labour markets (1980-2003)

* Indicators by industries, directly or through subjects/technology fields.Some parts of database still in development.

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Database International Benchmarking Database

Location Factors

Accessibility: Global accessibility (1980-2004)Continental accessibility (1980-2004)

Labour costs: Wages costs (1980-2004)Unit labour costs (1980-2004)

Population: According to gender and different age cohorts (1980-2005)

Agglomeration: Agglomeration size Proximity to an agglomeration

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• Theory and observation (questionnaires) can tell which location factors

are important …

• … but they do hardly tell the size of the impact on regional growth

• Econometric analysis based on the benchmarking database

- Basic equation:

Growthit = α0 + α1*Global Effectt + α2*Structural Effectit + β1*L1it-1 + β2*L2it-1 + … + εit

- Panel data estimation (random effects, fixed effects) with

i = 142 regions

t = 15 years (1990 – 2004)

several location factors (L)

Why does a region grow?Econometric analysis

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Econometric resultsCoefficients (annual productivity growth, 1990-2003)

Variable Variable definition coefficient prob. (βi=0)

Global Effect overall sample productivity growth + < 1%

Structural Effect productivity growth for given industry mix + < 1%

Company Taxation 4 years moving average, relative to sample mean < 5%

Manpower Taxation 4 years moving average, relative to sample mean < 1%

Labour Market Regulation 4 years moving average, relative to sample mean + < 1%

Product Market Regulation 4 years moving average, relative to sample mean + < 1%

Innovation: Secondary Educ. difference, 4 years moving average + < 1%

Innovation: Tertiary Educ. difference, 4 years moving average + < 10%

Innovation: R&D Expen. difference, 4 years moving average + < 5%

Accessibility: global difference, 10 years moving average + < 10%

Accessibility: continental difference, 10 years moving average < 1%

Regional Spill Over time invariant < 5%

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Source: BAK International Benchmarking Database 2005Impact on productivity growth, cumulated 1990-2003(in %-points, max impact against min impact)

Impact of location factorsSample-distribution (regions), impact on productivity growth (1990-2003)

Coefficient negative

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%

Innovation - tertiary education

Innovation - secondary education

Innovation - R&D expenditures

Global Accessibility

Taxation of Companies

Regulation of Product Markets

Continental Accessibility

Spatial Spillover Effect

Structural Effect

Regulation of Labour Markets

Taxation of highly qualified employees

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0.0%

0.1%

0.2%

0.3%

0.4%

0.5%

Bruxe

lles

Københ

avn

Mün

chen

Frank

furt

Mad

ridPar

is

Dublin

Mila

noW

ienBas

el

Zürich

Helsink

i

Stock

holm

Lond

on

Glasgo

w

Intercontinental Accessibility

Source: BAK International Benchmarking Database 2005Impact on productivity growth, cumulated 1990-2003(in %-points)

Impact of global accessibility on real productivity growthChanges in global accessibility 1990 - 2003

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Source: BAK International Benchmarking Database 2005Impact on productivity growth, cumulated 1990-2003(in %-points)

Impact of spatial spillover effects on real productivity growth

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• Research program on impact of location factors on economic growth

Signs of location factors largely as expected from theory & significant

Available location factors can only explain a part of the regional variation

• Impact of accessibility

Accessibility matters

A better global accessibility increases efficiency and competitiveness and enhances productivity growth

A better accessibility is a double-edged sword: On the one hand, it enhances business activities and boosts the attractiveness of a region. On the other hand, it allows high value activities to be delivered from a central region

Further research is necessary!

Summary of results

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• Further research directions

Regional coverage

More specific on sources of growth (productivity, hours worked, employment ratio, population)

Advanced Methods (system estimation)

Add more location factors, especially varying between regions(regulation; fragmentation and decentralization; innovation; …)

Industry specific estimations

• Further research directions (accessibility)

Sub samples of regions with similar characteristics

Industry specific estimations

Research on the intraregional accessibility

Mix of macro-economic and micro-economic methods

Research agenda

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Thank you for your attention!

Richard Kämpf BAK Basel EconomicsGüterstrasse 82PostfachCH-4002 Basel Tel.    +41 61 279 97 00Fax    +41 61 279 97 28

richard.kaempf@bakbasel.com