Industrial Agglomeration, Geographic Innovation and Total Factor Productivity: The Case of Taiwan
AbstractThe paper analyses the impact of geographic innovation on Total Factor Productivity (TFP) in Taiwan. Using 242 four-digit standard industrial classification (SIC) industries in Taiwan in 2001, we compute TFP by estimating Translog production functions with K, L, E and M inputs, and measure the geographic innovative activity using both Krugman's Gini coefficients and the location Herfindahl index. We also consider the geographic innovation variable as an endogenous variable and use 2SLS to obtain a consistent, albeit inefficient, estimator. The empirical results show a significantly positive effect of geographic innovation, as well as R&D expenditure, on TFP. These results are robust for the Gini coefficients and location Herfindahl index, when industry characteristics and heteroskedasticity are controlled. Moreover, according to the endogeneity of geographic innovation, the Hausman test shows that the geographic innovation variable should be treated as endogenous, which supports the modern theory of industrial clustering about innovation spillovers within clusters.
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Bibliographic InfoPaper provided by University of Canterbury, Department of Economics and Finance in its series Working Papers in Economics with number 08/14.
Length: 31 pages
Date of creation: 01 Jul 2008
Date of revision:
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Industry agglomeration; Geographic innovation; Total factor productivity; Cluster; Research and Development;
Other versions of this item:
- Chang, Chia-Lin & Oxley, Les, 2009. "Industrial agglomeration, geographic innovation and total factor productivity: The case of Taiwan," Mathematics and Computers in Simulation (MATCOM), Elsevier, vol. 79(9), pages 2787-2796.
- O32 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Management of Technological Innovation and R&D
- O33 - Economic Development, Technological Change, and Growth - - Technological Change; Research and Development; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes
- L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
- R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
This paper has been announced in the following NEP Reports:
- NEP-ALL-2008-08-31 (All new papers)
- NEP-EFF-2008-08-31 (Efficiency & Productivity)
- NEP-GEO-2008-08-31 (Economic Geography)
- NEP-KNM-2008-08-31 (Knowledge Management & Knowledge Economy)
- NEP-TID-2008-08-31 (Technology & Industrial Dynamics)
- NEP-URE-2008-08-31 (Urban & Real Estate Economics)
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