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Measuring industry coagglomeration and identifying the driving forces

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  • Emma Howard
  • Carol Newman
  • Finn Tarp

Abstract

Understanding industry agglomeration and its driving forces is critical for the formulation of industrial policy in developing countries. Crucial to this process is the definition and measurement of agglomeration. We construct a new coagglomeration index based purely on the location of firms. We examine what this index reveals about the importance of transport costs, labour market pooling and technology transfer for agglomeration processes, controlling for overall industry agglomeration. We compare the results based on our new measure to existing measures in the literature and find very different underlying stories at work. We conclude that in conducting analyses of this kind giving consideration to the source of agglomeration economies, employees or entrepreneurs, and finding an appropriate measure for agglomeration, are both crucial to the process of identifying agglomerative forces.

Suggested Citation

  • Emma Howard & Carol Newman & Finn Tarp, 2016. "Measuring industry coagglomeration and identifying the driving forces," Journal of Economic Geography, Oxford University Press, vol. 16(5), pages 1055-1078.
    • Handle: RePEc:oup:jecgeo:v:16:y:2016:i:5:p:1055-1078.
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    Cited by:

    1. Emma Howard, 2017. "Social networks, geographic proximity, and firm performance in Vietnam," WIDER Working Paper Series 069, World Institute for Development Economic Research (UNU-WIDER).
    2. Emma Howard, 2017. "Social networks, geographic proximity, and firm performance in Vietnam," WIDER Working Paper Series wp-2017-69, World Institute for Development Economic Research (UNU-WIDER).
    3. Kristian Behrens, 2016. "Agglomeration and clusters: Tools and insights from coagglomeration patterns," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(4), pages 1293-1339, November.
    4. Thi Bich Tran & Hai Anh La, 2018. "Agglomeration Effects: Productivity of the Informal Sector in Vietnam," Journal of Development Studies, Taylor & Francis Journals, vol. 54(2), pages 292-311, February.
    5. Carol Newman & John Page, 2017. "Industrial clusters: The case for Special Economic Zones in Africa," WIDER Working Paper Series wp-2017-15, World Institute for Development Economic Research (UNU-WIDER).
    6. Haochang Yang & Faming Zhang & Yixin He, 2021. "Exploring the effect of producer services and manufacturing industrial co-agglomeration on the ecological environment pollution control in China," Environment, Development and Sustainability: A Multidisciplinary Approach to the Theory and Practice of Sustainable Development, Springer, vol. 23(11), pages 16119-16144, November.
    7. Rawaa Laajimi & Julie Le Gallo & Saloua Benammou, 2020. "What Geographical Concentration of Industries in the Tunisian Sahel? Empirical Evidence Using Distance‐Based Measures," Tijdschrift voor Economische en Sociale Geografie, Royal Dutch Geographical Society KNAG, vol. 111(5), pages 738-757, December.
    8. Diodato, Dario & Neffke, Frank & O’Clery, Neave, 2018. "Why do industries coagglomerate? How Marshallian externalities differ by industry and have evolved over time," Journal of Urban Economics, Elsevier, vol. 106(C), pages 1-26.
    9. Thomas Wieland, 2020. "REAT: A Regional Economic Analysis Toolbox for R," REGION, European Regional Science Association, vol. 7, pages 1-57.
    10. Shandre Mugan Thangavelu, 2023. "Structural Changes and the Impact of FDI on Singapore's Manufacturing Activities," Working Papers DP-2023-06, Economic Research Institute for ASEAN and East Asia (ERIA).
    11. Lu Zhang & Renyan Mu & Nigatu Mengesha Fentaw & Yuanfang Zhan & Feng Zhang & Jixin Zhang, 2022. "Industrial Coagglomeration, Green Innovation, and Manufacturing Carbon Emissions: Coagglomeration’s Dynamic Evolution Perspective," IJERPH, MDPI, vol. 19(21), pages 1-19, October.
    12. Ping Lu & Jianhui Liu & Yunxuan Wang & Lei Ruan, 2021. "Can industrial agglomeration improve regional green total factor productivity in China? An empirical analysis based on spatial econometrics," Growth and Change, Wiley Blackwell, vol. 52(2), pages 1011-1039, June.
    13. Marco Sanfilippo & Adnan Seric, 2014. "Spillovers from agglomerations and inward FDI. A Multilevel Analysis on SSA domestic firms," RSCAS Working Papers 2014/76, European University Institute.
    14. Gabriel Lang & Eric Marcon & Florence Puech, 2020. "Distance-based measures of spatial concentration: introducing a relative density function," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 64(2), pages 243-265, April.
    15. Marco Sanfilippo & Adnan Seric, 2016. "Spillovers from agglomerations and inward FDI: a multilevel analysis on sub-Saharan African firms," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 152(1), pages 147-176, February.
    16. Gokan, Toshitaka & Kuroiwa, Ikuo & Nakajima, Kentaro, 2019. "Agglomeration economies in Vietnam: A firm-level analysis," Journal of Asian Economics, Elsevier, vol. 62(C), pages 52-64.
    17. Carol Newman & John Page, 2017. "Industrial clusters: The case for Special Economic Zones in Africa," WIDER Working Paper Series 015, World Institute for Development Economic Research (UNU-WIDER).
    18. Shuhei Kainuma & Yukiko U. Saito, 2022. "China's impact on regional employment: Propagation through input–output linkages and co‐location patterns," The World Economy, Wiley Blackwell, vol. 45(11), pages 3559-3601, November.
    19. Finn Tarp, 2018. "Vietnam: The dragon that rose from the ashes," WIDER Working Paper Series wp-2018-126, World Institute for Development Economic Research (UNU-WIDER).
    20. Hoang, Manh Cuong & Schiller, Daniel, 2023. "Which firms benefit the most from agglomeration? New evidence from an emerging country with consistent measure of productivity," Journal of Asian Economics, Elsevier, vol. 86(C).
    21. John Rand & Finn Tarp & Neda Trifković & Helge Zille, 2019. "Industrial agglomeration in Myanmar," WIDER Working Paper Series wp-2019-3, World Institute for Development Economic Research (UNU-WIDER).
    22. Behrens, Kristian & Guillain, Rachel, 2017. "The determinants of coagglomeration: Evidence from functional employment patterns," CEPR Discussion Papers 11884, C.E.P.R. Discussion Papers.
    23. Finn Tarp, 2018. "Vietnam: The dragon that rose from the ashes," WIDER Working Paper Series 126, World Institute for Development Economic Research (UNU-WIDER).
    24. Neave O'Clery & Samuel Heroy & Francois Hulot & Mariano Beguerisse-D'iaz, 2019. "Unravelling the forces underlying urban industrial agglomeration," Papers 1903.09279, arXiv.org, revised Jun 2019.

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