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Manufacturing growth and agglomeration effects

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  • Fafchamps, Marcel

    (Stanford University)

Abstract

This paper investigates the effect of location-specific competition and diversity on manufacturing growth. Using detailed manufacturing data from Morocco, we find strong and robust evidence of agglomeration effects: competition is good for growth but diversity is not. However, in our study country these effects do not appear to be channelled through productivity or wages. First, agglomeration variables have opposite effects on growth and on individual firm productivity. Second, controlling for productivity directly does not reduce the significance or magnitude of agglomeration variables. In the study country, agglomeration variables measure something that is relevant for manufacturing growth, but it is not productivity. We also find that a rise in average productivity raises subsequent employment and investment, but has no effect on firm entry and exit.

Suggested Citation

  • Fafchamps, Marcel, 2018. "Manufacturing growth and agglomeration effects," L'Actualité Economique, Société Canadienne de Science Economique, vol. 94(1), pages 5-27, Mars.
    • Handle: RePEc:ris:actuec:0180
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    Cited by:

    1. Eyerusalem Siba & Måns Söderbom & Arne Bigsten & Mulu Gebreeyesus, 2020. "The relationship among enterprise clustering, prices, and productivity in Ethiopia’s manufacturing sector," Review of Development Economics, Wiley Blackwell, vol. 24(3), pages 831-854, August.
    2. De Silva, Dakshina G. & McComb, Robert P., 2012. "Geographic concentration and high tech firm survival," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 691-701.
    3. Nadine LEVRATTO & Denis CARRÉ, 2013. "La Croissance Des Établissements Industriels : Une Question De Localisation," Region et Developpement, Region et Developpement, LEAD, Universite du Sud - Toulon Var, vol. 38, pages 93-120.
    4. Rijkers, Bob & Soderbom, Mans & Loening, Josef, 2009. "Mind the gap ? a rural-urban comparison of manufacturing firms," Policy Research Working Paper Series 4946, The World Bank.
    5. De Silva, Dakshina G. & McComb, Robert P., 2011. "Geographic concentration and firm survival," MPRA Paper 32906, University Library of Munich, Germany.

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