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Regional economic development is driven by the accumulation of production factors. More traditional factors like labour and physical capital are accumulated under the law of diminishing returns. This, in turn, allows less developed regions to better perform. Recent branches of theoretical and empirical literature have paid attention to the role of increasing returns in an attempt to explain the persistence in regional economic disparities. Increasing returns are commonly attributed either to the accumulation of non- traditional inputs such as human and knowledge capital or to the presence of local externalities generated by the spatial concentration of economic activities. The aim of the present paper is to address the importance of both decreasing and increasing returns for the economic growth of European regions. While economies will definitively converge in the long-run if production is characterized by decreasing returns, divergence is the likely outcome in presence of increasing returns. As regional growth is probably the result of a combination of both, from a policy perspective it is important to understand where the sooner stops and the latter starts. In this paper the economic performance of 186 European regions is analysed by using the ordinary growth regression approach. An empirical specification which simultaneously accounts for the presence of both decreasing and increasing returns is derived. The study is intended to examine the extent to which regional development originates from the (un)balance between convergence, driven by diminishing returns and divergence, boosted by increasing returns. Results indicate that the accumulation of traditional inputs leads the economic development of less favoured areas while the presence of increasing returns plays a more crucial role in developed regions. More in the detail increasing returns seem to be generated by the accumulation of knowledge and human capital while there is no clear evidence of agglomeration externalities. By using a non-linear specification for the growth equation it is also found evidence of important threshold effects in entering the stage of development characterized by increasing returns. Regional development process is accordingly depicted as a far more complex process than what the simple dualism between increasing and decreasing returns may help to figure out, with very important implications for policy.

Regional economies are continuously evolving shifting from more traditional manufacturing toward more service-oriented production systems. Despite the increasing relevance of services, however, the analysis of innovation at the regional aggregate level has mainly focused on manufacturing, gathering the attention on the role of R&D expenditure as input in the production process and, in some cases, accounting for research-based knowledge externalities. In this paper the role of Knowledge Intensive Business Services is studied and their contribution to the regional aggregate innovation is evaluated. The aim is twofold. First is to provide insights on the role covered by KIBS as a second knowledge infrastructure. Second is to examine the extent to which KIBS operate as bridges between the general purpose analytical knowledge produced by scientific universities and more specific requirement of innovative firms. A role commonly acknowledged to KIBS is in fact that of knowledge transferors. If on the one side it is however clear to whom they transfer knowledge, their client firms, on the other it is not as clear from whom the knowledge is originally transferred. For this reason a major attention in this work is dedicated to scientific universities considered as a primary source of knowledge. Being this knowledge analytical and highly codified, it probably can be more easily accessed by nearby located firms having higher opportunities of research collaboration and less easily by firms located in different regions. It is argued that KIBS, in transferring knowledge from universities to firms, are therefore specially important in the latter case. To test hese hypothesis a knowledge production function is estimated for a sample of 200 EU NUTS II regions including also information of university research and KIBS concentration. Parameters are estimated using the heteroschedasticity-consistent G2SLS estimator for spatial models and the evidence suggests that the contribution of KIBS to regional innovation is considerable. In fact accounting for the knowledge embedded in business services can considerably contribute to explain the cross-regional variation in innovative activities. Furthermore it is find that the KIBS contribution is more sizeable in regions in which there are not scientific universities. The highlighted results have important policy implications asking to rethink to how much effective an R&D-centered innovation strategy could be, at least in some regions.

In this paper we estimate the relationship between urban sprawl and a measure of air quality, namely the number of days in which the PM10 concentration exceeds safeguard limits in European Union cities. Building on a multidimensional representation of sprawl, the paper employs several indicators to account for built-up area development, population density, and residential discontinuity. The paper employs generalised additive models to disentangle the non-linear effects in the variables and the interaction effects of the three sprawl dimensions. A significant and robust effect of urban morphology emerges after controlling for socio-economic, demographic, and climatic factors and the geographical location of the city. We find that urban sprawl impacts positively on pollutant concentration, but the effect is highly context-specific because of threshold effects and interactions.

This article examines the relationship between institutional fragmentation and the spatial extent of cities in Europe's Functional Urban Areas. European Union planning regulations vary across member states, but in most cases, local authorities determine land use within the more general regulatory frameworks set by national or subnational authorities. More decentralised and fragmented settings may favour urban sprawl, allowing developers to avoid land-use restrictions in one municipality by moving to adjacent ones and providing incentives for municipalities to adopt less strict land-conversion regulations to attract households and workers. The empirical results fully support this hypothesis and unveil significant differences between small and large cities, the effect of governance fragmentation being a substantial factor in the latter case.

This study assesses the effects of urban governance structure on the spatial expansion of metropolitan areas. A more fragmented governance structure, represented by a high number of administrative units with decision power on land use per inhabitant, is expected to increase the competition between small towns in the suburbs of metropolitan areas to attract households and workers, which, in turn, induces more land uptake. We study empirically the relationship between administrative fragmentation and the spatial size of cities in a sample of 180 metropolitan areas in the contexts of the US and Europe in the period 2000-2012. Results shed light on the structural differences between the two broad regions and suggest that administrative fragmentation impacts positively on land uptake in both the United States and Europe, although to different extents.