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Spatial Localization in Manufacturing: A Cross-Country Analysis

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V itali S., N apoletano M. and F agiolo G. Spatial localization in manufacturing: a cross-country analysis, Regional Studies . This paper employs a homogeneous-firm database to investigate industry localization in European countries. More specifically, it compares, across industries and countries, the predictions of two of the most popular localization indexes, that is, the Ellison and Glaeser index of 1997 and the Duranton and Overman index of 2005. Independently from the index used, it is found that localization is a pervasive phenomenon in all countries studied; and the degree of localization is very unevenly distributed across industries in each country. Furthermore, it is shown that in all countries localized sectors are mainly 'traditional' sectors or, if one controls for country industrial structures, science-based sectors. Moreover, it is found that the two indexes significantly diverge in predicting the intensity of localization of the same industry both across and within countries. In turn, these differences point to the different role played by pecuniary versus non-pecuniary externalities in driving firms' location decisions.

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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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Cited by:
  1. Tobias Scholl & Thomas Brenner, 2013. "Detecting Spatial Clustering Using a Firm-Level Index," Working Papers on Innovation and Space 2012-02, Philipps University Marburg, Department of Geography.
  2. Tobias Scholl & Thomas Brenner, 2013. "Optimizing Distance-Based Methods for Big Data Analysis," Working Papers on Innovation and Space 2013-09, Philipps University Marburg, Department of Geography.
  3. 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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