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Spatial Localization in Manufacturing: A Cross-Country Analysis

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Abstract

This paper employs a homogenous firms database to investigate industry localization in European countries. More specifically, we compare, across industries and countries, the predictions of two of the most popular localization indices, i.e., the Ellison and Glaeser (1997) index and the Duranton and Overman (2005) index. We find that, independently from the index used, localization is a pervasive phenomenon in all countries studied, but the degree of localization is very uneven across industries in each country. Furthermore, we find that the two indices significantly diverge in predicting the intensity of the forces generating localization within each industry. Finally, we perform a cross-sectoral analysis of localized industries. We show that, in all countries, localized sectors are mainly ``traditional'' sectors (like jewelery, wine, and textiles) and sectors where scale economies are important. However, once one controls for countries' industrial structures science-based sectors turn out to be the most localized ones.

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Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2009-07.

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Date of creation: 2009
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Handle: RePEc:fce:doctra:0907

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  1. Ottaviano, Gianmarco I. P., 1999. "Integration, geography and the burden of history," Regional Science and Urban Economics, Elsevier, vol. 29(2), pages 245-256, March.
  2. Thomas Brenner, 2006. "Identification of Local Industrial Clusters in Germany," Regional Studies, Taylor and Francis Journals, vol. 40(9), pages 991-1004.
  3. Giulio Bottazzi & Giovanni Dosi & Giorgio Fagiolo & Angelo Secchi, 2007. "Modeling Industrial Evolution in Geographical Space," LEM Papers Series 2007/06, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  4. Strauss-Kahn, Vanessa & Vives, Xavier, 2009. "Why and where do headquarters move?," Regional Science and Urban Economics, Elsevier, vol. 39(2), pages 168-186, March.
  5. Barrios, Salvador & Bertinelli, Luisito & Strobl, Eric & Teixeira, Antonio Carlos, 2004. "The dynamics of Agglomeration: Evidence from Ireland and Portugal," MPRA Paper 5706, University Library of Munich, Germany.
  6. Devereux, Michael P & Griffith, Rachel & Simpson, Helen, 2002. "The Geographical Distribution of Production Activity in the UK," CEPR Discussion Papers 3627, C.E.P.R. Discussion Papers.
  7. Davis, James C. & Henderson, J. Vernon, 2008. "The agglomeration of headquarters," Regional Science and Urban Economics, Elsevier, vol. 38(5), pages 445-460, September.
  8. Miren Lafourcade & Giordano Mion, 2005. "Concentration, agglomeration and the size of plants," PSE Working Papers halshs-00590572, HAL.
  9. Haaland, Jan I. & Kind, Hans Jarle & Ulltveit-Moe, Karen-Helene, 1999. "What Determines the Economic Geography of Europe?," CEPR Discussion Papers 2072, C.E.P.R. Discussion Papers.
  10. Guy Dumais & Glenn Ellison & Edward Glaeser, 1997. "Geographic Concentration as a Dynamic Process," NBER Working Papers 6270, National Bureau of Economic Research, Inc.
  11. Gilles Duranton, 2005. "Testing for Localization Using Micro-Geographic Data," Review of Economic Studies, Wiley Blackwell, vol. 72(4), pages 1077-1106, October.
  12. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
  13. Steven Klepper, 2002. "The capabilities of new firms and the evolution of the US automobile industry," Industrial and Corporate Change, Oxford University Press, vol. 11(4), pages 645-666, August.
  14. 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.
  15. Thomas Klier & Daniel P. McMillen, 2008. "Evolving Agglomeration In The U.S. Auto Supplier Industry," Journal of Regional Science, Wiley Blackwell, vol. 48(1), pages 245-267.
  16. repec:ebl:ecbull:v:12:y:2008:i:9:p:1-15 is not listed on IDEAS
  17. 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.
  18. Rosenthal, Stuart S. & Strange, William C., 2001. "The Determinants of Agglomeration," Journal of Urban Economics, Elsevier, vol. 50(2), pages 191-229, September.
  19. Luisito Bertinelli & Jehan Decrop, 2005. "Geographical agglomeration: Ellison and Glaeser's index applied to the case of Belgian manufacturing industry," Regional Studies, Taylor and Francis Journals, vol. 39(5), pages 567-583.
  20. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December.
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Cited by:
  1. Tobias Scholl & Thomas Brenner, 2012. "Detecting Spatial Clustering Using a Firm-Level Cluster Index," Working Papers on Innovation and Space 2012-02, Philipps University Marburg, Department of Geography.
  2. Tobias Scholl & Thomas Brenner, 2011. "Testing for Clustering of Industries - Evidence from micro geographic data," Working Papers on Innovation and Space 2011-02, Philipps University Marburg, Department of Geography.

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