The theme of regional centrality, more commonly known as accessibility, has been increasingly invoked in recent years, mainly due to a clearer understanding that proximity to the markets is a key determinant of the location of firms. This chapter improves the most standard accessibility index using a decomposition method that allows considering the influence of (1) internal and external factors and (2) economic and geographical aspects. Each component identified has a specific interpretation and allows the identification of policy recommendations, such as the development of the transport and communication networks and active interventions to attract investment. The baseline decomposition method is adjusted in order to incorporate differences in spatial terms among the regional units considered. In order to illustrate the proposed methodology, the authors consider 171 countries. Results lead to the conclusion that the centrality level of the countries analyzed derives from different sources. Therefore, different countries may require different policy interventions to improve their centrality.
TopIntroduction
Measures of regional centrality (commonly designated by accessibility) which aim to describe the centrality of the spaces assuming that the potential for economic activity of a location is a function of proximity to other economic centers and economic size or “mass” seems to have been rediscovered recently. Several reasons can be invoked to explain this renewed interest on accessibility and economic potential.
First, in spite of globalization being one of the most remarkable trends of the last decades (Head & Mayer, 2013), with trade growing faster than GDP since the 1980, the friction of distance on trade has remained consistently high since the middle of the last century, as shown by Disdier and Head (2008). The average result emerging from their meta-analysis points to the fact that a 10% increase in distance has a negative impact of 9% on bilateral trade.
Second, while proximity to the markets is one of the location determinants traditionally included in the empirical studies, in most cases only the demand that is specific to the region/country under analysis is considered, i.e., the importance of neighboring spaces is ignored (Head & Mayer, 2004). On the contrary, the concept of regional centrality explicitly incorporates and quantifies the external influence.
Third, since the beginning of the 1990s the new economic geography approach has put the importance of proximity to the markets into mainstream economics, discussing alternative mechanisms, based on the relative strength of centrifugal and centripetal forces, through which agglomeration of production may occur. In this group of models increasing returns and decreasing trade costs are key elements that generate an uneven spatial distribution of economic activity (Fujita et al., 1999). This perspective thus highlights that behind first nature aspects, second nature dimensions also matter for final location configurations. As stated by Krugman (1993, p. 131):
“\Firms that have an incentive to concentrate production at a limited number of locations prefer, other things equal, to choose locations with good access to markets; but access to markets will be good precisely where a large number of firms choose to locate.
Fourth, the centrality theme has extremely important implications for economic policy, namely in the areas of transports and economic and social cohesion (Ottaviano, 2008). In fact, as Spiekermann and Neubauer (2002, p. 7) affirm, “accessibility is the main ‘product’ of a transport system. It determines the locational advantage of an area (…)”.
Fifth, different interventions can be requested in order to minimize the disadvantage associated with peripherality. Therefore, a clear understanding of the factors that constitute an obstacle to an easier access to the markets is valuable knowledge for policy actors.
Sixth, economic centrality has been the subject of an intense debate due not only to the negative impact of remoteness from the markets but also to the positive relationship between centrality and per capita income (Redding & Venables, 2004).1
A common approach to build an indicator of the family of accessibility indices is based on a gravity model to estimate “economic” or “market” potential. In its traditional formulation, this methodology assumes that the potential for economic activity of a location is a function of its proximity to other economic centres and economic size. This group of indicators has its origin in the pioneering contributions of Keeble et al. (1982) and Keeble et al. (1988) and includes the indexes suggested by Gutiérrez and Urbano (1996), Linneker (1996), and Schürmann and Talaat (2000), among others (see [Spiekermann & Neubauer, 2002] for a discussion of some of these measures).