R00 - Urban, Rural, Regional, Real Estate, and Transportation Economics: GeneralReturn

The aim of this article is to find out how the state and EU subsidies paid in the Czech Republic since 2000 have been translated into the territory. The methodology is based on obtaining a continuous time series of data on subsidies for the smallest possible territorial level and comparing the impacts on territorial cohesion, with particular reference to structurally affected regions on the one hand and the areas of Integrated Territorial Investments (ITI) and Integrated Plan for the Development of the Territory (IPRÚ) on the other. The results show that the share of subsidies has increased steadily over the period under review. Per capita funding does not differ much between regions and no significant difference was found between assistance to structurally affected regions and the rest of the territory in the different support themes, which are mainly transport infrastructure, agriculture and education.

Price levels affect real incomes across countries and regions. We compare real incomes of workers and pensioners across 14 regions of the Czech Republic. We find that taking into account regional differences in price levels compresses the income differences between regions for private sector employees, but increases them for pensioners and some groups of public-sector employees. This result is strengthened when we employ microeconomic data to refl ect the education, occupations, age and gender of workers. Private-sector wages in Prague are 43% higher than in the rest of the country, but one half of this difference can be explained by Prague's higher price level and the other half by workers' characteristics. When we take these two factors into account, public-sector wages and pensions are the lowest in Prague. We discuss the benefi ts and costs of the government refl ecting the regional price levels in setting public-sector wages or pensions.

The spatial and regional analysis has a long tradition but until very recently the mainstream economics has not given careful attention to space. This article surveys recent contributions on the spatial or regional economics, which often overlaps with urban economics. As this literature is very heterogeneous, we use the concept of spatial externalities as the common criterion for the basic classification of the studies. The pecuniary externalities, which are by-product of the market transactions, became the cornerstone of the New Economic Geography (NEG) introduced by Krugman. NEG is presently the dominant theory in the economics of space as it builds on robust microeconomic foundations. Yet its empirical verification is at the very beginning. On the contrary the technological externalities are believed to arise rather spontaneously because of the physical proximity rather then intentional economic transactions. The existing research on these externalities is predominately empiric. Meanwhile the human capital externalities are example of static technological externalities; the related externalities of labour pooling are of pecuniary nature. Finally, the knowledge externalities or spillovers are pure technological externalities. There are three main strands of literature that employ this concept: studies on local economic growth, empirical studies on the localized knowledge spillovers (part of it known as spatial econometrics) and Italian New Industrial Geography. Many of the studies give important insight on the formation of economic space but all lacks generality. For this reason it would be vital in the future to extent the studies that they could deal with different kinds of spatial externalities and directly compare their individual importance in territory.