IDEAS home Printed from https://ideas.repec.org/
MyIDEAS: Login to save this article or follow this journal

Strength in Numbers? The Weak Effect of Manufacturing Clusters on Canadian Productivity

  • Kristian Behrens

    (Université du Québec à Montréal)

In the wake of the recent financial crisis, clusters – the spatial concentration of interrelated industries, specialized services, and customers – have again captured the attention of economists, policymakers, and consultants. Clusters are viewed by many as vital to the national economy, and a possible fix to stagnating productivity and incomes. Economic research has shown, however, that most clusters do not live up to these expectations. There is little solid evidence that clusters make regions – let alone nations – prosperous. Does this also apply to Canada? Using detailed business location data, this Commentary measures the degree of clustering in Canadian manufacturing industries. It then documents changes in the spatial concentration of those industries between 2001 and 2009, and investigates whether those changes are positively associated with aggregate industry performance as measured by value added per employee or wages. Four key results stand out. First, Canada’s manufacturing industries are less strongly clustered than those of other developed countries. High-tech sectors are not, in general, more strongly localized than other sectors. Second, between 2001 and 2009, the spatial concentration of industries became slightly weaker, despite the stability of the overall spatial distribution of manufacturing. Third, there is little evidence that more clustering had significant effects on average productivity or wages in manufacturing industries. The changes in clustering that would be needed to significantly boost productivity and wages nationwide are large and arguably beyond the reach of regional or even national policy. Last, international trade has a much stronger impact on productivity than small changes in the spatial distribution of Canada’s manufacturing industries. The policy message is therefore that looking at trade – and at tax policy – might provide better and cheaper solutions to improving productivity than focusing on clusters, however tempting the latter might be.

If you experience problems downloading a file, check if you have the proper application to view it first. In case of further problems read the IDEAS help page. Note that these files are not on the IDEAS site. Please be patient as the files may be large.

File URL: http://www.cdhowe.org/pdf/Commentary_377.pdf
Download Restriction: no

Article provided by C.D. Howe Institute in its journal C.D. Howe Institute Commentary.

Volume (Year): (2013)
Issue (Month): 377 (April)
Pages:

as
in new window

Handle: RePEc:cdh:commen:377
Contact details of provider: Postal: 67 Yonge St., Suite 300, Toronto, Ontario M5E 1J8
Phone: (416) 865-1904
Fax: (416) 865-1866
Web page: http://www.cdhowe.org
Email:


More information through EDIRC

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:

as in new window
  1. Yasusada Murata & Ryo Nakajima & Ryosuke Okamoto & Ryuichi Tamura, 2014. "Localized Knowledge Spillovers and Patent Citations: A Distance-Based Approach," The Review of Economics and Statistics, MIT Press, vol. 96(5), pages 967-985, December.
  2. Michael Greenstone & Richard Hornbeck & Enrico Moretti, . "Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings," Working Paper 17740, Harvard University OpenScholar.
  3. Jaffe, A.B. & Trajtenberg, M., 1992. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," Papers 14-92, Tel Aviv.
  4. Chiara Criscuolo & Ralf Martin & Henry Overman & John Van Reenen, 2012. "The Causal Effects of an Industrial Policy," NBER Working Papers 17842, National Bureau of Economic Research, Inc.
  5. Eric Marcon & Florence Puech, 2003. "Evaluating the Geographic Concentration of Industries Using Distance-Based Methods," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) halshs-00372646, HAL.
  6. Pamina Koenig & Florian Mayneris & Sandra Poncet, 2009. "Local Export Spillovers in France," Working Papers 2009-18, CEPII research center.
  7. Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2011. "Spatial concentration and plant-level productivity in France," Journal of Urban Economics, Elsevier, vol. 69(2), pages 182-195, March.
  8. Pierre-Philippe Combes & Thierry Mayer & Jacques-François Thisse, 2008. "Economic Geography: The Integration of Regions and Nations," Université Paris1 Panthéon-Sorbonne (Post-Print and Working Papers) hal-00311000, HAL.
  9. Gilles Duranton, 2011. "California Dreamin': The Feeble Case for Cluster Policies," Review of Economic Analysis, Rimini Centre for Economic Analysis, vol. 3(1), pages 3-45, July.
  10. Anthony Briant & Miren Lafourcade & Benoît Schmutz, 2015. "Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience," American Economic Journal: Economic Policy, American Economic Association, vol. 7(2), pages 88-124, May.
  11. Tomoya Mori & Koji Nishikimi & Tony E. Smith, 2005. "A Divergence Statistic for Industrial Localization," The Review of Economics and Statistics, MIT Press, vol. 87(4), pages 635-651, November.
  12. Glenn Ellison & Edward L. Glaeser, 1994. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," NBER Working Papers 4840, National Bureau of Economic Research, Inc.
  13. Mercedes Delgado & Michael E. Porter & Scott Stern, 2012. "Clusters, Convergence, and Economic Performance," NBER Working Papers 18250, National Bureau of Economic Research, Inc.
  14. Mayer,T. & Mayneris, F. & Py, L., 2013. "The impact of Urban Enterprise Zones on establishment location decisions: Evidence from French ZFUs," Working papers 458, Banque de France.
  15. Catherine Armington & Zoltan Acs, 2002. "The Determinants of Regional Variation in New Firm Formation," Regional Studies, Taylor & Francis Journals, vol. 36(1), pages 33-45.
  16. repec:fiu:wpaper:0401 is not listed on IDEAS
  17. Devereux, Michael P. & Griffith, Rachel & Simpson, Helen, 2007. "Firm location decisions, regional grants and agglomeration externalities," Journal of Public Economics, Elsevier, vol. 91(3-4), pages 413-435, April.
  18. Fallah, Belal & Partridge, Mark, 2012. "Geography and high-tech employment growth in U.S. counties," MPRA Paper 38294, University Library of Munich, Germany.
  19. Gregory Spencer & Tara Vinodrai & Meric Gertler & David Wolfe, 2010. "Do Clusters Make a Difference? Defining and Assessing their Economic Performance," Regional Studies, Taylor & Francis Journals, vol. 44(6), pages 697-715.
  20. Eric Marcon & Florence Puech, 2003. "Evaluating the geographic concentration of industries using distance-based methods," Journal of Economic Geography, Oxford University Press, vol. 3(4), pages 409-428, October.
Full references (including those not matched with items on IDEAS)

This item is not listed on Wikipedia, on a reading list or among the top items on IDEAS.

When requesting a correction, please mention this item's handle: RePEc:cdh:commen:377. See general information about how to correct material in RePEc.

For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Kristine Gray)

If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

If references are entirely missing, you can add them using this form.

If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.

If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.

Please note that corrections may take a couple of weeks to filter through the various RePEc services.

This information is provided to you by IDEAS at the Research Division of the Federal Reserve Bank of St. Louis using RePEc data.