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Agglomeration Economies In Japan: Technical Efficiency, Growth And Unemployment

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  • Arup Mitra
  • Hajime Sato

Abstract

This paper examines if the effects of agglomeration economies are manifested in technical efficiency and generate faster economic growth and higher (lower) levels of employment (unemployment). Using the prefecture level data for each of the two†digit groups of industries in Japan, it estimates a region†specific technical efficiency index based on the stochastic frontier production function framework. The factor analysis shows that in most of the industry†groups, efficiency has a positive association with external scale variable(s). Though the relationship is not very strong, it would be erroneous to ignore the effect of agglomeration economies on efficiency. For some light goods industries, the agglomeration effect is relatively stronger. Economic growth varies positively with external scale variable(s) and the unemployment rate tends to fall with respect to growth and concentration. This suggests that measures against industrial concentration may be counter†productive, particularly in the context of globalization when countries greatly need to raise productivity.

Suggested Citation

  • Arup Mitra & Hajime Sato, 2007. "Agglomeration Economies In Japan: Technical Efficiency, Growth And Unemployment," Review of Urban & Regional Development Studies, Wiley Blackwell, vol. 19(3), pages 197-209, November.
    • Handle: RePEc:bla:revurb:v:19:y:2007:i:3:p:197-209
    DOI: 10.1111/j.1467-940X.2007.00136.x
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    Cited by:

    1. Chloé Duvivier, 2013. "Does Urban Proximity Enhance Technical Efficiency? Evidence From Chinese Agriculture," Journal of Regional Science, Wiley Blackwell, vol. 53(5), pages 923-943, December.
    2. Zhao, Hongli & Lin, Boqiang, 2019. "Will agglomeration improve the energy efficiency in China’s textile industry: Evidence and policy implications," Applied Energy, Elsevier, vol. 237(C), pages 326-337.
    3. Kurt A. Hafner, 2020. "Diversity of industrial structure and economic stability: evidence from Asian gross value added," Asia-Pacific Journal of Regional Science, Springer, vol. 4(2), pages 413-441, June.
    4. Joseph Junior Aduba & Behrooz Asgari, 2020. "Productivity and technological progress of the Japanese manufacturing industries, 2000–2014: estimation with data envelopment analysis and log-linear learning model," Asia-Pacific Journal of Regional Science, Springer, vol. 4(2), pages 343-387, June.
    5. Akihiro Otsuka & Mika Goto, 2015. "Regional Policy and the Productive Efficiency of Japanese Industries," Regional Studies, Taylor & Francis Journals, vol. 49(4), pages 518-531, April.
    6. Mitra, Arup & Tsujita, Yuko, 2014. "Dimensions and determinants of upward mobility : a study based on longitudinal data from Delhi slums," IDE Discussion Papers 448, Institute of Developing Economies, Japan External Trade Organization(JETRO).

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