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A Divergence Statistic for Industrial Localization

Author

Listed:
  • Tomoya Mori

    (Institute of Economic Research, Kyoto University)

  • Koji Nishikimi

    (Institute of Developing Economies. JETRO)

  • Tony E. Smith

    (University of Pennsylvania)

Abstract

We propose a statistical index of industrial localization based on the Kullback-Leibler divergence. This index is particularly well suited to cases where industrial data are available only at the regional level. Unlike existing regional-level indices, our index can be employed to test the significance of industrial localization relative to a hypothesized reference distribution of probable locations across regions. In addition, one can test relative degrees of localization among industries. Finally, as with all Kullback-Leibler divergence indices, our index can be decomposed into components representing localization at various levels of spatial aggregation. © 2005 President and Fellows of Harvard College and the Massachusetts Institute of Technology.

Suggested Citation

  • 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.
  • Handle: RePEc:tpr:restat:v:87:y:2005:i:4:p:635-651
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    More about this item

    JEL classification:

    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • 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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