city lights at night

Economic Geography

Research cluster

The Economic Geography cluster integrates spatial and urban economists with more institutionally-oriented economic geographers. It has established an international reputation for economic geography, regional and urban economics.

A key player in facilitating interaction between economic geography and geographical economics

Research across the cluster is anchored in a shared culture and core research values, which place strong emphasis on theoretically-informed, policy-relevant and evidence-based research. Regardless of individual approach, we strongly believe that economic geography as a sub-discipline has to engage with rigorous research emanating both from mainstream economics and from more institutional/social perspectives.

The emphasis on 'economic' logics as a crucial element differentiates us from most other economic geography groups in the UK and elsewhere. As a result, the cluster has become a key player in facilitating interaction between economic geography, as practiced by geographers, and a resurgent geographical economics, as practiced by economists.

Research focus

Substantively the cluster has largely been concerned with the traditional economic geography issues of regional and urban development, spatial inequality, location of economic activity, innovation, agglomeration, and labour market outcomes.

Geographically, while there is a strong focus on the UK and Europe, cluster members have worldwide interests (including China, Brazil, India and the US). Methodologically, we have concentrated on applying and developing quantitative approaches to economic geography, as well as pushing the boundaries of the discipline in areas such as the New Economic Geography and the impact of institutions on economic development.

A related focus, reflecting the Department's longstanding planning interests, is in property markets, their regulation and the relation to environmental externalities/public goods (e.g. education and crime) and underlying urban economic theory. We have been successful in publishing in the top scholarly journals in both Geography and Economics, as well as in the very best field journals.

Research centres and prizes

The international standing of the cluster has been recognised in a number of ways. We host the Spatial Economics Research Centre (a sub-centre of the Centre for Economic Performance, funded by the Economic and Social Research Council) and the What Works Centre for Local Economic Growth (co-financed by the ESRC and HM government).

Our members have been awarded a number of prestigious prizes, including a major European Research Council Starting Grant, a European Investment Bank-European Regional Science Prize – the highest accolade for any regional scientist – a Doctorate honoris causa, a Leverhulme Foundation Major Research Fellowship, two Philip Leverhulme Prizes, a Royal Society-Wolfson Merit Award, and a number of prizes for the best papers published in scholarly journals.

Staff

We play key roles as advisers and consultants to numerous international organisations, government departments and the private sector.

This includes: the European Commission, the OECD, the World Bank, Regional Development Banks, various UN agencies and the government of New Zealand’s Productivity Commission and UN HABITAT; the Bank of England Residential Property Forum, Department for Business, Innovation and Science, Department for Communities and Local Government, Department for Environment, Food and Rural Affairs, Department for International Development, Department for Transport and HM Treasury; the English Regional Development Agencies and their successors the Local Enterprise Partnerships, the Greater London Assembly, Local Authorities including in particular Birmingham, Cambridge, Manchester and Newcastle; McKinsey and Co.

Academic staff

Dr Gabriel Ahlfeldt, Associate Professor of Urban Economics & Land Development
g.ahlfeldt@lse.ac.uk

Prof Paul Cheshire, Emeritus Professor of Economic Geography
p.cheshire@lse.ac.uk

Prof Riccardo Crescenzi, Professor of Economic Geography
r.crescenzi@lse.ac.uk

Prof Steve Gibbons, Professor of Economic Geography
s.gibbons@lse.ac.uk

Prof Ian Gordon, Emeritus Professor of Human Geography
i.r.gordon@lse.ac.uk

Prof Vernon Henderson, School Professor of Economic Geography
j.v.henderson@lse.ac.uk

Prof Christian Hilber, Professor of Economic Geography 
c.hilber@lse.ac.uk

Prof Simona Iammarino, Professor of Economic Geography 
Head of Department
s.iammarino@lse.ac.uk

Dr Alex Jaax, LSE Fellow in Economic Geography
a.jaax@lse.ac.uk 

Dr Neil Lee, Assistant Professor of Economic Geography 
n.d.lee@lse.ac.uk

Dr Vassilis MonastiriotisAffiliate; Associate Professor of Political Economy 
v.monastiriotis@lse.ac.uk                    

Prof Henry Overman, Professor of Economic Geography 
h.g.overman@lse.ac.uk

Dr Ted Pinchbeck, LSE Fellow in Real Estate Economics & Finance
e.w.pinchbeck@lse.ac.uk

Prof Andrés Rodríguez-Pose, Professor of Economic Geography
a.rodriguez-pose@lse.ac.uk

Dr Olmo Silva, Associate Professor of Real Estate Economics & Finance
o.silva@lse.ac.uk

Prof Michael Storper, Professor of Economic Geography
m.storper@lse.ac.uk

 

Research projects

City Growth, Decline and Resilience

Staff involved: Henry OvermanNeil Lee

This project will analyse patterns of urban ‘decline’, resilience and recovery in Britain in recent decades. The aim would be initially to characterise these patterns in cities in terms of underlying population, labour market and industry trends and then to understand the factors that lie behind them. A number of potential triggers for turning points in city development will then be investigated, such as the impacts of big plant and industry closures, other employment shocks, plus shocks to amenities and housing. The work will build on recent developments in the theory and empirical analysis of regional growth and decline (Breinlich, Holger & Ottaviano, 2014) and on existing case study work on selected US and European cities (Power,  Ploger, Winkler 2010). The project will use administrative and large scale survey micro-data e.g. BSD, ARD, NES/ASHE mapped into other geocoded data sources.

The aim is to be able to characterise ‘key events’ that could be early warning systems for areas that are in danger of decline. Part of the aim of the project is to help policy makers come to more informed decisions on how cities can prosper and be more resilient to negative shocks. In this sense it builds on the economy wide approach of the LSE Growth Commission as envisioned by the City Growth Commission (chaired by former Goldman Sachs’ Chief Economist Jim O’Neill and that involved Henry Overman and John Van Reenen as Commissioners). But we need to also consider how we identify cities that are in long-run decline and how their adjustment can be managed.

City Micro-Structure

Staff involved: Henry OvermanOlmo Silva

Firstly, micro-data on establishments’ birth, location, expansion and death will be used to investigate how cities are internally organized in terms of the distribution and evolution of economic activities (BSD, ARD, ASHE etc.).

Secondly, the project will investigate what the effects of this diversity are. In particular, information on establishments’ employment and their dynamics will be related to key aspects of diversity highlighted by Jacobs (1961), namely: mixed-use buildings, mix-aged buildings, short and irregular urban blocks and high population density (using linked GIS data e.g. digital surface models, building heights).

Lastly, the project will investigate the impact of changes in urban infrastructure (transport) and other urban policy (e.g. land use planning) on the distribution of economic activity within cities and on the consequences of these changes for firms and people. 

Multinationals, Institutions and Innovation in Europe (MASSIVE) - European Research Council (2015-2020)

Staff involved: Riccardo Crescenzi (PI and Grant Recipient); Simona Iammarino (Research Team Member)

Multinational Enterprises (MNEs) are key ‘tectonic forces’, shaping the ‘mountains’ in a far-from-flat world economic geography. In 2010, MNEs generated value added for approximately US$16 trillion accounting for more than a quarter of world GDP (UNCTAD, 2012). The progessive expansion of firms from emerging economies into multinational enterprises is unprecedented. Outflows of FDIs from developing economies reached the record level of $426 billion in 2012, corresponding to 31% of global outflows, up from 16% in 2007 (UNCTAD, 2013).

However, there is no consensus in the academic literature on both the factors able to shape the long-term location decisions of MNEs and, more generally, on the ultimate impact of MNEs on their host economies. This lack of consensus reflects three fundamental gaps in the existing literature. First the omission of some fundamental determinants of MNEs investment decisions in ‘traditional’ national-level analyses. Territorial/spatial factors, MNEs heterogeneity and local institutional conditions have been often overlooked in MNEs location analyses. Second, the limited attention to the broader set of impacts of MNEs in their host economies and the role of institutional factors as selective ‘filters’ for these impacts. Third, the intimate inter-connection between location motives and impacts has remained unexplored in the grey areas between separate streams of literature.

This research project will investigate the location strategies of MNEs and their territorial impacts addressing these three fundamental gaps in the existing literature, shedding new light on the factors shaping the economic geography of MNEs and their impacts and providing policy-makers at all levels with new tools to promote innovation, employment and economic recovery after the current economic crisis.

One hundred years of land values in Chicago

Staff involved: Gabriel Ahlfeldt

Chicago during the 20th century. Based on Olcott’s Land Value Blue Book of Chicago a unique and highly disaggregated panel data set of historical land values is being created that covers a period between 1913 and 1994. Combined with a detailed data set containing all vacant land sales in Chicago from the 1980s onwards data allows for a unique century long analyses of the long-run evolution of a city at a spatial micro-level.

Partly due to the availability of the Olcott ‘Blue Books’ Chicago has become well known as a laboratory for urban economic research. However, only a small fraction of this rich data source has so far been used for research due to the size of the extraction task it poses. This project, funded by the Lincoln Institute for Land Policy, constructs a complete data set which will be available for historic urban research. The result will be a unique set of data representing the development of a location’s value for more than 60,000 grids per period over the entire century. This opens up the opportunity of analysing the impact of the 20th century shocks on the city’s structure based on micro level as well as comparative studies, particularly a comparison of Chicago with Berlin. By investigating important economic and social questions valuable implications for applied planning can be derived.

What were the effects of improved public and private transport infrastructure on households’ and firms’ location decisions regarding their places of residence, work and production? What impact did the immigration of different ethnic groups, which occurred in several big waves over the 20th century, have on the city’s segregation patterns? What was the effect of the introduction of skyscrapers (which were first conceived and constructed in Chicago) on the concentration of economic activity? The project’s basic groundwork will allow for the analysis of these and many more research questions that will come to occupy the international urban economic and historic research community for years to follow.

Prime Locations

Staff involved: Gabriel Ahlfeldt and Christian Hilber

One of the arguably most striking features of the contemporary economic geography of the world is the uneven distribution of economic activity. Across the globe, economic wealth is evidently concentrated in relatively few countries. Within countries, there are typically cities and regions that thrive at the expense of others. The largest spatial differentials, however, can be found within cities. As an example, the City of London attracts more than 300 thousand commuters per day and hosts more than 500 bank offices and several global headquarters on just about one square mile. The City produces 2.4% of UK GDP and about 25% of Greater London GDP, a dense urban area of about 1500 times the size of the City. The strength of such ultra-dense clusters of economic activity, which we refer to as prime locations, illustrates that despite decreasing transport and communication costs the economic benefits of spatial density are hardly substitutable.

In this project we analyse the internal structure of a large sample of cites around the world. We identify the contemporary prime locations within these cities and investigate how the spatial structure of cities is organized around these focal points of economic activity. We analyse the locational characteristics of prime locations and compare them to historic city centres, which we trace back to the first settlements, often several thousands of years ago. At the heart of our analysis, we analyse factors, which determine the degree of persistency in internal city structure to rationalize the variety of observed spatial outcomes. Concretely, we analyse the extent to which major shocks shift the internal structure between multiple equilibria and how the mutually reinforcing effects of productivity and density lead to path-dependency in the internal structure of cities. 

The Big Society: Does Public Expenditure Crowd-Out Private Donations and Volunteering?

Staff involved: Dave Backus, Steve GibbonsChristian Hilber

The proposition that public expenditure ‘crowds out’ (i.e. reduces) the private provision of public services – such as aid to the poor – lies at the heart of the ‘Big Society’ agenda, promoted by the Coalition government. In this project we empirically test this proposition by answering the following research questions:

  • Do cuts to the state provision of public services increase or reduce (and by how much?) the giving of private donors?
  • Do cuts to the state provision of public services increase or reduce the private provision of public services by the voluntary sector?
  • What are the spatial patterns in voluntary activity, charitable giving and the provision of public services through charities and Local Authorities in the post-Coalition years and how has the response to budget cuts differed across different types of area?

The Economics of Conservation Areas

Staff involved: Gabriel AhlfeldtNancy Holman

Since 1960s, over 9800 conservation areas have been designated in England. These areas are designated on the grounds of an external value of society that requires protection. This research project investigates the costs and benefits that are associated with a location of a property in conservation areas in England, the political economy of the designation process as well as the value of attractive and distinctive urban design.

To achieve these objectives we use an original combination of quantitative and qualitative methods including differences-in-differences, regression discontinuity designs, quantitative interviews as wells the textual analysis of interviews with local residents, conservation area officers, architects and real estate agents. Project has received funding from English Heritage and The Suntory and Toyota International Centres for Economics and Related Disciplines (STICERED).

Related publications: 

1)      http://rlab.lse.ac.uk/_new/publications/abstract.asp?index=4574

2)      http://rlab.lse.ac.uk/_new/publications/abstract.asp?index=4328 and http://epn.sagepub.com/content/47/1/172.abstract

3)      http://rlab.lse.ac.uk/_new/publications/abstract.asp?index=4317

Urbanization and city development in Africa

Staff involved: Vernon Henderson

I am a co-principal investigator on a multi-year project examining urbanization across Sub-Saharan Africa. A major part of the project involves building a credible database to describe the speed, magnitude and spatial form of urban development. The data combine satellite imagery with other sources of geo-referenced data (from maps, infrastructure systems, and population and economic census, as well as geo referenced household and economic surveys) to build a picture of spatial transformation at the country and city levels. The data set will look both across cities and within certain cities.

So far my work in the programme focuses on:

  1. The impact of national resource rent shocks at cities at different points in the political hierarchy under different political regimes. To what extent are resource income windfalls spread across the urban hierarchy as opposed to focused on key political or large cities and how are those patterns affected by democratization.
  2. Rapidly growing cities expand spatially and develop formal and informal neighbourhoods. As house and land prices escalate, do cities reconstruct especially near the city centre to have higher building; are slums gentrified or torn down? Why in some cities do traditional slums near the centre persist while in others they are redeveloped? How do different urban planning cultures leftover from the colonial era affect urban shape and sprawl. In general, the aim is to understand the dynamics of city spatial and capital development, including the role of infrastructure investments.    

Urban development, land use regulation and environmental change

Staff involved: Paul CheshireChristian HilberCharles PalmerTed Pinchbeck

Urban development and land use regulation affect the environment in manifold ways. While it seems obvious that urban form and regulations - via influencing transport behaviour and the built environment - matter for environmental change, little is known about the exact mechanisms that govern the relationship. In this project we explore some of these channels. 

A first sub-project provides a global perspective. We exploit a worldwide panel of cities to analyse the link between urban development and air pollution (Hilber and Palmer).

In a second sub-project (Hilber, Palmer & Pinchbeck) we investigate the impact of preservation policies (Conservation Areas and Listed Buildings) on domestic energy consumption in England.

We first analyse the impact of rising national gas prices on energy efficiency installations and domestic energy consumption. Next, we explore to what extent energy savings in buildings are adversely affected by preservation policies.

A final sub-project (Cheshire, Hilber, Sanchis-Guarner) focuses on the retail market and explores the impact of Town Centre First Policies on average shopping distance and travel times. 

Urban Economics in Historical Perspective: Evidence from Berlin in the Late Era of Industrialization

Staff involved: Gabriel Ahlfeldt

This project, funded by the German Science Foundation (DFG), aims at a comprehensive empirical evaluation of classic and recent Urban Economics theories. It encompasses the collection and digitalization of a one-of-a-kind historical dataset for Berlin, Germany from 1850 to 1940 in order to quantitatively test and reassess theories as well as historical evidence.

Following the digital processing of historical maps, a rich set of dynamic variables that capture the city's economic development will be extracted. Highly disaggregated intra-urban spatial data on land use and value, public infrastructure and transport networks as well population and income proxies will be merged within a GIS environment to facilitate the dynamic evaluation of the urban structure in a spatial economic analysis.

While Berlin at the beginning of the 19th century still represented a typical monocentric city it became one of the most dynamic urban agglomerations in continental Europe over the sample period. The city thereby offers one of the rare opportunities to track the evolution of a city's structure from the onset of emerging (monocentric) functional segregation until its transformation into a polycentric metropolis. As a result, the project will produce a unique body of historic data and evidence that, if at all, is only matched worldwide by the case of Chicago.

Related publications:

1)      http://rlab.lse.ac.uk/_new/publications/abstract.asp?index=4415 and http://joeg.oxfordjournals.org/content/15/6/1169

2)      http://rlab.lse.ac.uk/_new/publications/abstract.asp?index=4107 and http://onlinelibrary.wiley.com/doi/10.3982/ECTA10876/abstract

3)      http://joeg.oxfordjournals.org/content/13/1/53

4)      http://www.sciencedirect.com/science/article/pii/S0166046210000736

5)      http://www.sciencedirect.com/science/article/pii/S0165176509002043

Urban Europe: Industrial Network and Institutional Perspectives on Economic Growth and Well-Being (2014-2017, ESRC-funded)

Staff involved: Andrea Ascani, Riccardo CrescenziSimona Iammarino (PI)

The recent economic crisis has dramatically affected the UK and the World Economy. Pathways to recovery are still uncertain and far from linear and clearly defined. In response to this challenge a substantial body of scholarly literature has rapidly developed to support international and national macro-economic policy decisions in order to promote recovery and minimize the risks of future systemic crises. However, even if the social and economic impacts of the crisis are experienced at the local and urban level (where job losses and lack of economic opportunities are felt by individual communities), rigorous research on how cities are coping with the crisis and building resilience is still limited.

The focus of this project on ‘Resilient Cities’ aims to fill these gaps by looking at resilience as a regional, local and urban process that needs to be placed in a ‘global’ perspective and assessed with reference to global flows and networks of goods, capital and knowledge. The analysis of local and urban resilience in a truly global perspective is an innovative research challenge that calls for an internationally diversified and multi-disciplinary research consortium, clear aims and objectives and detailed research questions and methods. All these aspects are discussed providing a clear picture of the rationale, value added and policy relevance of this project. 

Urbanization Globally

Staff involved: Vernon Henderson

I am a co-principal investigator on a multi-year project examining urbanization across the world. The programme examines the patterns, causes, consequences, and policy implications of the spatial development of cities in developing countries, with a focus so far on China, India, sub-Saharan Africa and Vietnam. My own work in that programme focuses on:

  1. The impact of the national highway construction in China on city growth. How to assess that impact on population relocation, GDP growth, differentiating between regional primate and other cities and assessing the impact of new highways on promotion of domestic vs international trade by cities.
  2. The effect on city growth in China of favouritism in capital markets. In the state influenced capital markets cities preferential treatment varies as national and local political leaders change. Changes in preferential treatment affect city growth.
  3. The effect of past climate change in Africa on local urbanization. As climate has dried out in much of Sub-Saharan Africa over the last 50 years under what conditions do regions experience enhanced urbanization, or when does enhanced urbanization provide an “escape value” for climate deterioration.

Urban sprawl: determinants and political responses

Staff involved: Christian Hilber

During the last 40 years the phenomenon of urban sprawl has progressively become widespread in most developed countries. Its surge has typically been associated to rising incomes coupled with the large-scale distribution of the car which, by reducing transportation costs, allowed individuals to move from compact urban centres to less densely populated areas.

In this project we focus on Switzerland to explore (i) the determinants of urban sprawl and (ii) the political responses to urban sprawl. A first sub-project (Hilber, Schöni, von Ehrlich) considers the impact of two policies through which administrative units in a decentralized government may affect sprawl patterns: local tax policies and regulatory policies. We investigate the complementarity of these two policies in a setting in which local jurisdictions compete against each other to attract residents and assess their impact on urban sprawl.

The second sub-project (Hilber and Schöni) exploits a natural experiment in Switzerland: the ‘Second Home Initiative’, which banned second home investments in touristic areas, as a political reaction to increased sprawl in these areas. We explore whether the initiative – via adversely affecting the local economy and restricting the option to convert primary homes into second homes – had the effect of lowering prices of primary homes.