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Measuring Economic Localization: Evidence from Japanese firm-level data

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  • NAKAJIMA Kentaro
  • SAITO Yukiko
  • UESUGI Iichiro

Abstract

This paper examines the extent of localization in Japan's manufacturing sector using a unique firm-level dataset on the geographic location of firms. Following the point-pattern approach proposed by Duranton and Overman (2005), we find the following. First, approximately half of Japan's manufacturing industries can be classified as localized and the number of localized industries is largest for a distance of 40 km or less. Second, several industries in the textile mill products sector are among the most localized, which is similar to findings for the UK. This suggests that there exist common factors across countries that determine the concentration of industrial activities. Third, the distribution of distances between entrant (exiting) firms and remaining firms is, in most industries, not significantly different from a random distribution. The results by Durantan and Overman (2008) for the UK and our results for Japan suggest that most industries neither become more localized nor more dispersed over time.

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Bibliographic Info

Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 10030.

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Length: 26 pages
Date of creation: Jun 2010
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Handle: RePEc:eti:dpaper:10030

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  1. Gilles Duranton & Henry G. Overman, 2008. "Exploring The Detailed Location Patterns Of U.K. Manufacturing Industries Using Microgeographic Data," Journal of Regional Science, Wiley Blackwell, vol. 48(1), pages 213-243.
  2. Eric Marcon & Florence Puech, 2003. "Evaluating the geographic concentration of industries using distance-based methods," Journal of Economic Geography, Oxford University Press, vol. 3(4), pages 409-428, October.
  3. Michael Devereux & Rachel Griffith & Helen Simpson, 1999. "The geographic distribution of production activity in the UK," IFS Working Papers W99/26, Institute for Fiscal Studies.
  4. Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117 Elsevier.
  5. Tomoya Mori & Koji Nishikimi & Tony E. Smith, 2004. "A Divergence Statistic for Industrial Localization," KIER Working Papers 587, Kyoto University, Institute of Economic Research.
  6. Ellison, G. & Glaeser, E.L., 1994. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Working papers 94-27, Massachusetts Institute of Technology (MIT), Department of Economics.
  7. Guy Dumais & Glenn Ellison & Edward L Glaeser, 1998. "Geographic Concentration as a Dynamic Process," Working Papers 98-3, Center for Economic Studies, U.S. Census Bureau.
  8. Duranton, Gilles & Overman, Henry G., 2002. "Testing for Localization Using Micro-Geographic Data," CEPR Discussion Papers 3379, C.E.P.R. Discussion Papers.
  9. Glenn Ellison & Edward L. Glaeser & William Kerr, 2007. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," NBER Working Papers 13068, National Bureau of Economic Research, Inc.
  10. Marshall, Alfred, 1890. "The Principles of Economics," History of Economic Thought Books, McMaster University Archive for the History of Economic Thought, number marshall1890.
  11. Eric Marcon & Florence Puech, 2010. "Measures of the geographic concentration of industries: improving distance-based methods," Journal of Economic Geography, Oxford University Press, vol. 10(5), pages 745-762, September.
  12. Rosenthal, Stuart S. & Strange, William C., 2001. "The Determinants of Agglomeration," Journal of Urban Economics, Elsevier, vol. 50(2), pages 191-229, September.
  13. Maurel, Francoise & Sedillot, Beatrice, 1999. "A measure of the geographic concentration in french manufacturing industries," Regional Science and Urban Economics, Elsevier, vol. 29(5), pages 575-604, September.
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Citations

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Cited by:
  1. Kentaro Nakajima & Yukiko Saito & Iichiro Uesugi, 2012. "The Localization of Interfirm Transaction Relationships," ERSA conference papers ersa12p503, European Regional Science Association.
  2. TOKUNAGA Suminori & KAGEYAMA Masahiro & AKUNE Yuko & NAKAMURA Ryohei, 2012. "Empirical Analysis of Agglomeration Economies in Japanese Assembly-type Manufacturing Industry for 1985-2000: Using a flexible translog production function," Discussion papers 12082, Research Institute of Economy, Trade and Industry (RIETI).
  3. NAKAJIMA Kentaro & SAITO Yukiko Umeno & UESUGI Iichiro, 2012. "Localization of Interfirm Transaction Relationships and Industry Agglomeration," Discussion papers 12023, Research Institute of Economy, Trade and Industry (RIETI).
  4. Nakajima, Kentaro & Saito, Yukiko Umeno & Uesugi, Iichiro, 2012. "The Localization of Interfirm Transaction Relationships and Industry Agglomeration," Working Paper Series 17, Center for Interfirm Network, Institute of Economic Research, Hitotsubashi University.
  5. NAKAJIMA Kentaro & SAITO Yukiko & UESUGI Iichiro, 2013. "Role of Inter-firm Transactions on Industrial Agglomeration: Evidence from Japanese firm-level data," Discussion papers 13021, Research Institute of Economy, Trade and Industry (RIETI).
  6. Nobuaki Yamashita & Toshiyuki Matsuura & Kentaro Nakajima, 2014. "Agglomeration effects of inter-firm backward and forward linkages: evidence from Japanese manufacturing investment in China," AJRC Working Papers 1401, Australia-Japan Research Centre, Crawford School of Public Policy, The Australian National University.
  7. Kristian Behrens & Théophile Bougna, 2013. "An Anatomy of the Geographical Concentration of Canadian Manufacturing Industries," Cahiers de recherche 1327, CIRPEE.
  8. Eric Marcon & Florence Puech, 2012. "A typology of distance-based measures of spatial concentration," Working Papers halshs-00679993, HAL.
  9. SAITO Yukiko, 2013. "Role of Hub Firms in Geographical Transaction Network," Discussion papers 13080, Research Institute of Economy, Trade and Industry (RIETI).
  10. INOUE Hiroyasu & NAKAJIMA Kentaro & SAITO Yukiko, 2013. "Localization of Collaborations in Knowledge Creation," Discussion papers 13070, Research Institute of Economy, Trade and Industry (RIETI).
  11. Steven Brakman & Harry Garretsen & Zhao Zhao, 2014. "Spatial Concentration of Manufacturing Firms in China," CESifo Working Paper Series 4872, CESifo Group Munich.

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