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Closing the gap between absolute and relative measures of localization, concentration or specialization

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  • Bickenbach, Frank
  • Bode, Eckhardt
  • Krieger-Boden, Christiane

Abstract

This paper solves one of the puzzles in the analysis of regional and industrial distributions of economic activity, the discrepancy between absolute and relative measures. It shows that the difference between an absolute and a relative Theil index of localization can be expressed in terms of absolute and relative concentration and specialization measures. This helps understand and explore why absolute and relative measures frequently evolve in opposite directions. The paper shows for the EU-15 and for UK manufacturing that this divergence originates mainly from the industrial dimension and is largely a statistical artifact inherited from the characteristics of industry classifications.

Suggested Citation

  • Bickenbach, Frank & Bode, Eckhardt & Krieger-Boden, Christiane, 2010. "Closing the gap between absolute and relative measures of localization, concentration or specialization," Kiel Working Papers 1660, Kiel Institute for the World Economy (IfW Kiel).
    • Handle: RePEc:zbw:ifwkwp:1660
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    1. Karl Aiginger & Stephen W. Davies, 2004. "Industrial specialisation and geographic concentration: Two sides of the same coin? Not for the European Union," Journal of Applied Economics, Universidad del CEMA, vol. 7, pages 231-248, November.
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    8. Glenn Ellison & Edward L. Glaeser & William R. Kerr, 2010. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," American Economic Review, American Economic Association, vol. 100(3), pages 1195-1213, June.
    9. 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.
    10. Karl Aiginger & Esteban Rossi-Hansberg, 2006. "Specialization and concentration: a note on theory and evidence," Empirica, Springer;Austrian Institute for Economic Research;Austrian Economic Association, vol. 33(4), pages 255-266, September.
    11. Frank Bickenbach & Eckhardt Bode, 2008. "Disproportionality Measures of Concentration, Specialization, and Localization," International Regional Science Review, , vol. 31(4), pages 359-388, October.
    12. Traistaru, Iulia & Iara, Anna & Pauna, Carmen, 2002. "Regional structural change and growth in Romania," ERSA conference papers ersa02p330, European Regional Science Association.
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    Cited by:

    1. Elena Lasarte & Miguel Angel Marquez Paniagua, 2014. "Decomposition of Regional Income Inequality and Neighborhood Component: A Spatial Theil Index," Working Papers. Serie EC 2014-03, Instituto Valenciano de Investigaciones Económicas, S.A. (Ivie).
    2. Chris van Egeraat & Edgar Morgenroth & Rutger Kroes & Declan Curran & Justin Gleeson, 2018. "A measure for identifying substantial geographic concentrations," Papers in Regional Science, Wiley Blackwell, vol. 97(2), pages 281-300, June.
    3. Nicole Palan, 2015. "Konzentrations- und Ungleichheitsindizes – ein Überblick am Beispiel der Textilindustrie," Working Paper Series, Social and Economic Sciences 2015-02, Faculty of Social and Economic Sciences, Karl-Franzens-University Graz.
    4. Parteka, Aleksandra & Tamberi, Massimo, 2013. "Product diversification, relative specialisation and economic development: Import–export analysis," Journal of Macroeconomics, Elsevier, vol. 38(PA), pages 121-135.
    5. Christian Haedo & Michel Mouchart, 2022. "Two-mode clustering through profiles of regions and sectors," Empirical Economics, Springer, vol. 63(4), pages 1971-1996, October.
    6. Viviana Fernandez, 2021. "Cross-country concentration and specialization of mining inventions," Scientometrics, Springer;Akadémiai Kiadó, vol. 126(8), pages 6715-6759, August.
    7. Bickenbach, Frank & Bode, Eckhardt & Krieger-Boden, Christiane, 2010. "Structural cohesion in Europe: Stylized facts," Kiel Working Papers 1669, Kiel Institute for the World Economy (IfW Kiel).
    8. HAEDO, Christian & MOUCHART, Michel, 2012. "A stochastic independence approach for different measures of concentration and specialization," LIDAM Discussion Papers CORE 2012025, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    9. HAEDO , Christian & Mouchart, Michel, 2011. "A Stochastic Independence Approach for different Measures of Global Specialization," LIDAM Discussion Papers ISBA 2011006, Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA).
    10. Aleksandra Parteka, 2012. "Trade Diversity and Stages of Development–Evidence on EU Countries," Ekonomia journal, Faculty of Economic Sciences, University of Warsaw, vol. 30.
    11. Haedo, Christian & Mouchart, Michel, 2018. "Automatic biclustering of regions and sectors," LIDAM Discussion Papers ISBA 2018026, Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA).
    12. Haedo, Christian & Mouchart, Michel, 2019. "Two-mode clustering through profiles of regions and sectors," LIDAM Discussion Papers ISBA 2019014, Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA).
    13. Haedo, Christian & Mouchart, Michel, 2016. "Automatic biclustering of regions and sectors," LIDAM Discussion Papers ISBA 2016042, Université catholique de Louvain, Institute of Statistics, Biostatistics and Actuarial Sciences (ISBA).
    14. Federico Pablo-Martí & Josep-Maria Arauzo-Carod, 2020. "Spatial distribution of economic activities: a network approach," Journal of Economic Interaction and Coordination, Springer;Society for Economic Science with Heterogeneous Interacting Agents, vol. 15(2), pages 441-470, April.
    15. Lengyel, Imre & Lengyel, Balázs & Vas, Zsófia & Szakálné Kanó, Izabella, 2016. "Az újraiparosodás térbeli kérdőjelei Magyarországon [Territorial questions of reindustrialization in Hungary]," Közgazdasági Szemle (Economic Review - monthly of the Hungarian Academy of Sciences), Közgazdasági Szemle Alapítvány (Economic Review Foundation), vol. 0(6), pages 615-646.
    16. repec:gdk:wpaper:8 is not listed on IDEAS

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    More about this item

    Keywords

    Localization; Concentration; Specialization; Theil index;
    All these keywords.

    JEL classification:

    • C43 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods: Special Topics - - - Index Numbers and Aggregation
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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