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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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    File URL: http://hdl.handle.net/10.1093/jeg/lbv037
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    Cited by:

    1. Emma Howard, 2017. "Social networks, geographic proximity, and firm performance in Viet Nam," WIDER Working Paper Series 069, World Institute for Development Economic Research (UNU-WIDER).
    2. 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.
    3. Gokan, Toshitaka & Kuroiwa, Ikuo & Nakajima, Kentaro, 2017. "Agglomeration economies in Vietnam : a firm-level analysis," IDE Discussion Papers 636, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. 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).
    5. Dario Diodato & Frank Neffke & Neave O'Clery, 2018. "Why do industries coagglomerate? How Marshallian externalities differ by industry and have evolved over time," Papers in Evolutionary Economic Geography (PEEG) 1814, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Mar 2018.
    6. Howard, Emma & Newman, Carol & Rand, John & Tarp, Finn, 2014. "Productivity-enhancing manufacturing clusters: Evidence from Vietnam," WIDER Working Paper Series 071, World Institute for Development Economic Research (UNU-WIDER).
    7. Behrens, Kristian & Guillain, Rachel, 2017. "The determinants of coagglomeration: Evidence from functional employment patterns," CEPR Discussion Papers 11884, C.E.P.R. Discussion Papers.
    8. 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.

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