The Space of Economics
‘Economics and Geography’ was the topic of the 12th Annual Conference of the series of Leontief Readings which took place from February 15-16, 2013, at the Leontief Centre with the support of the Saint Petersburg government. Theoreticians and empirical researchers looked for answers related to the spatial development of cities, regional inequality and transport.
‘Economics and Geography’ was the topic of the 12th Annual Conference of the series of Leontief Readings which took place from February 15-16, 2013, at the Leontief Centre with the support of the Saint Petersburg government. Theoreticians and empirical researchers looked for answers related to the spatial development of cities, regional inequality and transport.
The Leontief Readings are held annually and here topical problems and perspectives on economic reforms in Russia are discussed at the highest professional level. But the spatial dimension of economic development was discussed at the Leontief Centre for the first time. This topic is closely connected with the work of the HSE Center for Market Studies and Spatial Economics, and its Academic Supervisor, Jacques-François Thisse, read the opening honorary lecture on ‘Does geography matter for economic theory and politics?’ at the conference.
The role of the Leontief Readings, as defined by its organizers, is enlightenment. Often the solutions and essence of the problem as seen by researchers differs from the view of people who outline the economic policy in countries and regions. In order to understand real life mechanisms, including the economic dimension, a dialogue between science and government is necessary. Sometimes officials, in an act of goodwill, come to academic events, as happened this year with a visit from representatives of the Saint Petersburg Government Committee of Economic Policy and Strategic Planning.
Professor Thisse started his lecture by showing photos of the Korean Peninsula in East Asia. We know that two countries are located there, North Korea and South Korea. On a satellite photo it is clear that things are humming in South Korea even at night, while in North Korea only a small patch of light is visible, marking Pyongyang. These countries have a mutual culture, religion and language, but their political and economic situations differ. But South Korea is also heterogeneous; it has some lighter and brighter spots on its territory. Within one country, with one political system and the same economic conditions, there are more and less economically active regions. Seoul, which is only 10% of South Korea’s territory, includes over half of the country’s population and produces over half of its GDP. It has a high concentration of economic activity. If we look at other countries, they also have spatial inequality; certain regions produce the major part of a country’s GDP, unrelated to their size.
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Jean Claude Prager, Chief Economist at the Greater Paris Project (France) shared some almost insider information and unveiled a project concerning the future transport infrastructure which will link a planned academic district in Paris with the centre. André de Palma, Professor at the École Normale Supérieure de Cachan (ENS Cachan, France) looked at such phenomenon as distance work. The plenary session ‘Transport and Developments of Cities’ was closed with a presentation by Martin Rosenfeld, Researcher at the Halle Institute for Economic Research (IWH, Germany) who showed, through the example of five German cities, how new trends in competition between cities and regions lead to the decline of certain territories and promote prosperity in others.
The second block of presentations shared the theme of ‘Institutional Differences and Regional Inequalities’. The session was opened by Leonid Polishchuk, Head of the HSE Laboratory for Applied Analysis of Institutions and Social Capital. He presented a study (prepared together with Alexey Makarin) on the role of citizen culture and social networks in political self-organization among the urban middle class. According to the speakers, the reasons for the recent boom of political activity in Russia were connected to recent economic and cultural changes, which backs up one of the theses of the postmodernism theory of Prof. Ronald Inglehart, Academic Supervisor at the HSE Laboratory for Comparative Social Research.
Prof. Boris Zhikharevich presented a study into the level of salaries of state officials in different Russian regions in the context of these regions’ economic development. Alexander Libman, Junior Professor at the Frankfurt School of Finance & Management, spoke about how the economic policy of a region depends on its governor’s background.
The third plenary session included presentations related to international trade, customs unions, economic integration, and border cooperation. There were particularly interesting papers in this session from Sergey Afontsev, Head of Department at the RAS Institute of World Economy and International Relations, on ‘The consequences of accession to the WTO’, and Natalia Volchkova, who in a joint paper with Natalia Kapelko, gave an economic evaluation of the influence of such trade barriers as the visa system.
The final session of the first day of the conference was dedicated to the spatial development of urban systems and agglomerations. Leonid Limonov, Director of the Leontief Centre and Professor at the HSE in Saint Petersburg, spoke about the problems of development and administration in the Saint Petersburg agglomeration. One of the key problems is a lack of incentives for joint development of the city and the region; the political system of elections and appointments makes short-term profits more important than joint prosperity in a long-term perspective. Natalia Zubarevich, Professor at the Moscow State University Department of Geography, showed in her presentation that empiricists and theoreticians in economics should work together. Economic theory, new economic geography and political spatial economics suggest mathematically complex models, but they are simplified by a real life perspective. She demonstrated that if we take empirical data from real Russian cities, the ideal picture is distorted by institutional factors, the specifics of regional financing, and the various ideologies of political solutions.
The afternoon of the next day was dedicated to the 7th Award Ceremony for the International Leontief Medal Laureates 2012 for Contribution to Economic Reforms. The awards were given to Revold Entov, Member of the Russian Academy of Sciences, Professor, Head of the HSE Department of the Theory of Money and Credit, and Erik Berglöf, Chief Economist and Special Adviser to the President of the European Bank for Reconstruction and Development (EBRD), London.
The first half of the day was dedicated to presentations, and some of them were particularly noteworthy. Tatiana Mikhailova, Associate Professor at the New Economic School, spoke about the influence of the location of GULAG camps and industrial evacuation routes during WWII on regional development. Vladimir Vakhitov, Assistant Professor at the Kiev School of Economics, through examples from the IT and processing industries concluded that agglomeration effects only appear gradually, and time is needed to evaluate the influence of agglomerations on economic growth. Vladimir Matveenko, Senior Research Fellow at the HSE Center for Market Studies and Spatial Economics, presented a mathematical model of external influences on economic growth. One of his conclusions was that living standards improve wherever bureaucrats choose to live. It means that, based on this model, we can assume that if the Supreme Court officials move to Saint Petersburg, it will change for the better.
Tatiana Chernova