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Co-Location Of Manufacturing & Producer Services – A Simultaneous Equation Approach


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  • Andersson, Martin

    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)


This paper investigates the tendencies of co-location between producer services and manufacturing across Swedish functional regions. The employment in these industries is modeled as being determined simultaneously, i.e. the location of producer services is a function of the location of manufacturing and vice versa. The rationale for the simultaneous approach comes from an assumption of a supplier-customer relation between the two categories of industries. Manufacturing firms benefit from short-distance supply of producer services. The service suppliers benefit from accessibility to customers among the manufacturing firms. Accessibility based on time distances is incorporated into the analysis to allow for inter-regional effects. Controlling for the availability of a skilled workforce and the size of the private sector for producer services and the average wage-level and the size of the private sector for manufacturing, the empirical results suggest that the location manufacturing employment can be explained by its accessibility to producer services. However, accessibility to manufacturing is not a statistically significant explanatory factor for the location of producer services. The interpretation is that many producer services are produced for other service industries, which is consistent with previous empirical results. Also, the results indicate that the elasticity of knowledge intensive manufacturing with respect to (w.r.t) accessibility to producer services is smaller than the elasticity of non-knowledge intensive manufacturing w.r.t accessibility to producer services.

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Bibliographic Info

Paper provided by Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies in its series Working Paper Series in Economics and Institutions of Innovation with number 8.

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Length: 24 pages
Date of creation: 23 Nov 2004
Date of revision:
Handle: RePEc:hhs:cesisp:0008

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Postal: CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology, SE-100 44 Stockholm, Sweden
Phone: +46 8 790 95 63
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Keywords: co-location; manufacturing; producer services; accessibility;

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Cited by:
  1. Martin Andersson & Florian Noseleit, 2011. "Start-ups and employment dynamics within and across sectors," Small Business Economics, Springer, vol. 36(4), pages 461-483, May.
  2. Gloria O. Pasadilla & Christine Marie M. Liao, 2007. "Has Liberalization Strengthened the Link between Services and Manufacturing?," Microeconomics Working Papers 22047, East Asian Bureau of Economic Research.
  3. Börje Johansson & Johan Klaesson, 2011. "Agglomeration dynamics of business services," The Annals of Regional Science, Springer, vol. 47(2), pages 373-391, October.
  4. Martin Andersson & Florian Noseleit, 2008. "Start-Ups and Employment Growth - Evidence from Sweden," Jena Economic Research Papers 2008-091, Friedrich-Schiller-University Jena, Max-Planck-Institute of Economics.
  5. Michael Wyrwich, 2011. "Knowledge intensive Entrepreneurship across regions: Makes being a new industry a difference?," ERSA conference papers ersa11p1711, European Regional Science Association.


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