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Industrial Location and Space: New Insights

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  • Liviano Solís, Daniel
  • Arauzo Carod, Josep Maria

Abstract

This paper tries to resolve some of the main shortcomings in the empirical literature of location decisions for new plants, i.e. spatial effects and overdispersion. Spatial effects are omnipresent, being a source of overdispersion in the data as well as a factor shaping the functional relationship between the variables that explain a firm’s location decisions. Using Count Data models, empirical researchers have dealt with overdispersion and excess zeros by developments of the Poisson regression model. This study aims to take this a step further, by adopting Bayesian methods and models in order to tackle the excess of zeros, spatial and non-spatial overdispersion and spatial dependence simultaneously. Data for Catalonia is used and location determinants are analysed to that end. The results show that spatial effects are determinant. Additionally, overdispersion is descomposed into an unstructured iid effect and a spatially structured effect. Keywords: Bayesian Analysis, Spatial Models, Firm Location. JEL Classification: C11, C21, R30.

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Bibliographic Info

Paper provided by Universitat Rovira i Virgili, Department of Economics in its series Working Papers with number 2072/152137.

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Date of creation: 2011
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Handle: RePEc:urv:wpaper:2072/152137

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Keywords: Localització industrial; Anàlisi espacial (Estadística); Estadística bayesiana; 332 - Economia regional i territorial. Economia del sòl i de la vivenda;

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  1. Roberto Basile & Luigi Benfratello & Davide Castellani, 2010. "Location Determinants of Greenfield Foreign Investments in the Enlarged Europe: Evidence from a Spatial Autoregressive Negative Binomial Additive Model," Working papers 10, Former Department of Economics and Public Finance "G. Prato", University of Torino.
  2. Josep-Maria Arauzo-Carod & Elisabet Viladecans-Marsal, 2009. "Industrial Location at the Intra-Metropolitan Level: The Role of Agglomeration Economies," Regional Studies, Taylor & Francis Journals, vol. 43(4), pages 545-558.
  3. Susanne Gschlößl & Claudia Czado, 2008. "Modelling count data with overdispersion and spatial effects," Statistical Papers, Springer, vol. 49(3), pages 531-552, July.
  4. Josep Arauzo Carod & Daniel Liviano Solís & Mònica Martín Bofarull, 2008. "New business formation and employment growth: some evidence for the Spanish manufacturing industry," Small Business Economics, Springer, vol. 30(1), pages 73-84, January.
  5. Arauzo Carod, Josep Maria & Liviano Solís, Daniel & Manjón Antolín, Miguel C., 2008. "Empirical studies in industrial location: an assessment of their methods and results," Working Papers 2072/9257, Universitat Rovira i Virgili, Department of Economics.
  6. Roberto Basile, 2002. "Acquisition versus greenfield investment: the location of foreign manufacturers in Italy," ISAE Working Papers 27, ISTAT - Italian National Institute of Statistics - (Rome, ITALY).
  7. Smith Jr. , Donald F. & Florida Richard, 1994. "Agglomeration and Industrial Location: An Econometric Analysis of Japanese-Affiliated Manufacturing Establishments in Automotive-Related Industries," Journal of Urban Economics, Elsevier, vol. 36(1), pages 23-41, July.
  8. Josep Maria Arauzo Carod, 2005. "Determinants of industrial location: An application for Catalan municipalities," Papers in Regional Science, Wiley Blackwell, vol. 84(1), pages 105-120, 03.
  9. Arauzo Carod, Josep Maria & Manjón Antolín, Miguel C., 2001. "Firm Size and Geographical Aggregation: An Empirical Appraisal in Industrial Location," Working Papers 2072/1772, Universitat Rovira i Virgili, Department of Economics.
  10. Josep-Maria Arauzo-Carod & Miguel Manjón-Antolín, 2012. "(Optimal) spatial aggregation in the determinants of industrial location," Small Business Economics, Springer, vol. 39(3), pages 645-658, October.
  11. C. Autant-Bernard & V. Mangematin & N. Massard, 2006. "Creation of Biotech SMEs in France," Small Business Economics, Springer, vol. 26(2), pages 173-187, 03.
  12. Arauzo Carod, Josep Maria & Manjón Antolín, Miguel C., 2007. "Locations and Relocations:Modelling, Determinants, and Interrelations," Working Papers 2072/5316, Universitat Rovira i Virgili, Department of Economics.
  13. Miguel Manjón-Antolín & Josep-Maria Arauzo-Carod, 2011. "Locations and relocations: determinants, modelling, and interrelations," The Annals of Regional Science, Springer, vol. 47(1), pages 131-146, August.
  14. H�vard Rue & Sara Martino & Nicolas Chopin, 2009. "Approximate Bayesian inference for latent Gaussian models by using integrated nested Laplace approximations," Journal of the Royal Statistical Society Series B, Royal Statistical Society, vol. 71(2), pages 319-392.
  15. Lambert, Dayton M. & McNamara, Kevin T. & Garrett, Megan I., 2006. "An Application of Spatial Poisson Models to Manufacturing Investment Location Analysis," Journal of Agricultural and Applied Economics, Southern Agricultural Economics Association, vol. 38(01), April.
  16. Natalia Barbosa & Paulo Guimaraes & Douglas Woodward, 2004. "Foreign firm entry in an open economy: the case of Portugal," Applied Economics, Taylor & Francis Journals, vol. 36(5), pages 465-472.
  17. Craig Brett & Joris Pinkse, 1997. "Those Taxes are all over the Map! A Test for Spatial Independence of Municipal Tax Rates in British Columbia," International Regional Science Review, , vol. 20(1-2), pages 131-151, April.
  18. Blonigen, Bruce A. & Davies, Ronald B. & Waddell, Glen R. & Naughton, Helen T., 2007. "FDI in space: Spatial autoregressive relationships in foreign direct investment," European Economic Review, Elsevier, vol. 51(5), pages 1303-1325, July.
  19. Todd M. Gabe & Kathleen P. Bell, 2004. "Tradeoffs between Local Taxes and Government Spending as Determinants of Business Location," Journal of Regional Science, Wiley Blackwell, vol. 44(1), pages 21-41.
  20. Philip Mccann & Stephen Sheppard, 2003. "The Rise, Fall and Rise Again of Industrial Location Theory," Regional Studies, Taylor & Francis Journals, vol. 37(6-7), pages 649-663.
  21. Todd Gabe, 2003. "Local Industry Agglomeration and New Business Activity," Growth and Change, Gatton College of Business and Economics, University of Kentucky, vol. 34(1), pages 17-39.
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