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A Spatial Approach to Identifying Agglomeration Determinants

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  • MORI Tomoya
  • Tony E. SMITH

Abstract

Typical analyses of industrial agglomerations start with some aggregate measure of the "agglomeration degree" for each industry, and attempt to explain differences in these values across industries by regressing them on sets of industrial attributes. But this aggregation makes it difficult to capture the spatial aspects of individual agglomerations. In the present paper, we develop a more explicit spatial approach to identifying agglomeration determinants by means of a two-stage analysis. First, we detect individual spatial clusters of each industry on a map. We then attempt to explain differences in these cluster patterns between industries by employing an appropriate regression framework. Here, cluster employment sizes are regressed on selected regional attributes for each industry-cluster pair, and significant differences between industries are captured in terms of industry-level interactions with these attributes. This modeling approach is then applied to the three-digit manufacturing industries in Japan.

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Paper provided by Research Institute of Economy, Trade and Industry (RIETI) in its series Discussion papers with number 13014.

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Length: 53 pages
Date of creation: Mar 2013
Date of revision:
Handle: RePEc:eti:dpaper:13014

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  1. 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.
  2. Pierre-Philippe Combes & Gilles Duranton & Diego Puga & Sebastien Roux, 2009. "The productivity advantages of large cities: Distinguishing agglomeration from firm selection," Working Papers tecipa-353, University of Toronto, Department of Economics.
  3. Tomoya Mori & Koji Nishikimi & Tony E. Smith, 2005. "A Divergence Statistic for Industrial Localization," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 635-651, November.
  4. George S Olley & Ariel Pakes, 1992. "The Dynamics Of Productivity In The Telecommunications Equipment Industry," Working Papers 92-2, Center for Economic Studies, U.S. Census Bureau.
  5. Thomas J. Holmes & John J. Stevens, 2002. "Geographic Concentration and Establishment Scale," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 682-690, November.
  6. Antonio Ciccone & Robert E. Hall, 1995. "Productivity and the density of economic activity," Economics Working Papers 120, Department of Economics and Business, Universitat Pompeu Fabra.
  7. James Levinsohn & Amil Petrin, 2003. "Estimating Production Functions Using Inputs to Control for Unobservables," Review of Economic Studies, Oxford University Press, vol. 70(2), pages 317-341.
  8. 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.
  9. James Levinsohn & Amil Petrin, 2000. "Estimating Production Functions Using Inputs to Control for Unobservables," NBER Working Papers 7819, National Bureau of Economic Research, Inc.
  10. Rosenthal, Stuart S. & Strange, William C., 2001. "The Determinants of Agglomeration," Journal of Urban Economics, Elsevier, vol. 50(2), pages 191-229, September.
  11. Melo, Patricia C. & Graham, Daniel J. & Noland, Robert B., 2009. "A meta-analysis of estimates of urban agglomeration economies," Regional Science and Urban Economics, Elsevier, vol. 39(3), pages 332-342, May.
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