Jacques-François Thisse speaks at HSE Nizhny Novgorod

HSE's Nizhny Novgorod branch has hosted Belgian economist, professor at the Catholic University of Louvain, Jacques-Francois Thisse, and Academic Supervisor at HSE St Petersburg's Center for Market Studies and Spatial Economics, who read his paper 'Urban development, regional differences and effective transport'. Professor Thisse is very well known and respected for his research in spatial economics, new economic geographies, international trade and market analysis.

Professor Thisse's report gave an overview and provided an analysis of numerous contemporary economic problems arising at the global, regional, and urban levels, which can be solved by applying spatial economic models and new economic geographies.  These problems include the influence of transport spending and investment in the transport sector on spatial diversity in economic activity, the ever-growing disparity in incomes, the role cities play in economic growth and issues of regulating urban transport streams.

Distance and the concrete locations of people and firms, despite significantly reduced transport costs, continues to play a key role in receiving goods and services. Getting high-qualified medical care, for example, is a great deal simpler in the capital at a large clinic with good specialists, than in a rural hospital or small city. You can boost your skill-set more easily and achieve a higher quality of life among good specialists, than you would be able to working among the mediocre. This is why able workers want to find a position in firms that also employ international professionals, and why talented sportsmen want to get a contract with a well-known club. All this, in the end, means that economic (and other forms of ) activity is concentrated in a limited number of places. The likelihood of finding a more suited and higher paid position is higher in a larger city than in the provinces.

Reduced transport and communications costs help people get to the right place at the right time, giving them a competitive advantage and at the same time concentrating people in a small numbers of centers of economic activity. In the United States, for example, 50% of the GDP is produced in 20 industrial zones. Paris is just 2% if France's territory, but is responsible for 30% of its GDP. Empirical research shows that increased efficiency, in most cases, is achieved by significantly reducing the spatial conformity in economic activity. Urbanization is a way of boosting developing economies. Economic growth will not follow a uniform path or pace everywhere.

Professor Thisse focused on the analysis of problems in the urban economy, in particular – traffic jams. Thisse believes the state and local authorities should play a greater role in developing urban development policy to have an impact on people's behavior. The main goal of this policy must be to develop human capital. Planned urban construction demands more modern models of land use, integrated business, residential areas, and transport infrastructure. Instead of spending billions of rubles on developing major infrastructure projects and buildings, local agencies and authorities should focus on finding effective economic and non-economic instruments for regulating transport flows. For example, they should consider flexible regulation for costs on public transport at peak times, or introducing road tolls for some areas. A well thought out price policy of this kind would reduce the transport burden.