Tres ensayos sobre economía regionalel impacto de la geografía económica en Ecuador

Abstract

This PhD thesis analyses, from the perspectives of regional economics and geographical economics literatures, three topics related to the economic development of the Ecuadorian provinces over the period 2007-2014. The first issue that we address and that is developed in the first chapter of the thesis focuses on the analysis of the spatial structure of Ecuador and the dynamics of the distribution of economic activity across the Ecuadorian provinces over the period 2007-2014. To carry out this analysis, we resort on the one hand to a traditional concept used in the regional economics literature, the Harris (1954) market potential, and also to the calculation of the Gini indexes and the associated Lorenz curves. In this chapter different Harris (1954) market potential indexes are calculated (depending on the proxy we use to measure the volume of economic activity-population, gross domestic product, gross added value) and are represented on a map at the provincial level to be able to make the spatial interpretation of the results. The information obtained through the reading and interpretation of the maps is complemented with the calculation of the Gini indexes and representation of the Lorenz curves. Thus we are able to make a more accurate analysis on the dynamics and concentration of economic activity within Ecuador. The results obtained confirm the existence of a center-periphery spatial pattern along an axis of division of the country north-south. The center would be represented by the westernmost Ecuadorian provinces and the periphery by the easternmost provinces. The second topic discussed and developed in chapter 2 of the thesis analyses to what extend market potential affects the disparities observed in the levels of development in the Ecuadorian provinces throughout the 2007-2014. This analysis is carried out departing from the theoretical predictions of a core-periphery geographical economics model. In Chapter 2, a structural derivation of the so-called nominal wage equation of the core-periphery geographical economics model is made. The estimation of this equation is carried out using a panel of data on the Ecuadorian provinces for the period 2007-2004. The nominal wage equation predicts that within a spatial context (for example, a country) the wages paid in each location (region / province) depend on a weighted sum of the volume of economic activity of the surrounding locations. That weighting is the inverse of the distance. This concept is simply the derivation and theoretical foundation of the concept of market potential of Harris (1954) that we used in chapter 1. The results of the estimation of the nominal equation of wages are in line with the theoretical predictions of the model. We confirm that economic geography variables (market potential) play a key role in explaining the income disparities observed in Ecuador over the 2007-2014 period. Finally, the third topic that we deal with in the thesis and that is developed in chapter 3 is the role of economic geography in explaining business location decisions and therefore levels of private investment. Starting again from the core concept of Harris (1954) market potential concept and from the studies within the theoretical and empirical literature on the determinants of business location decisions, chapter 3 addresses the role of market potential as a key variable to characterize the levels of private investment at the provincial level in Ecuador over the period 2007-2014. In the explanation of the determinants of private investment levels we also control for other relevant variables that affect these decisions, such as the role of the public sector through both public investment and tax policy (taxes on income and consumption) and we also control for the role of remittances. The results of the empirical estimations made reveal that the economic geography (market potential) is a key variable to understand the spatial distribution of private investment levels in the Ecuadorian provinces. In relation to the role of the public sector, there is evidence of a crowding-out effect by public investment (expulsion effect of private investment), as well as a positive (negative) effect generated by indirect (direct) taxation. Finally, remittances have a revitalizing effect on the volumes of private investment across the Ecuadorian provinces.