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Concentration, Specialisation and Agglomeration of firms in New Zealand

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Abstract

To what extent do New Zealand firms choose to locate close to each other, and why? This paper summarises patterns of geographic concentration of firms in New Zealand between 1987 and 2003. We present a range of summary measures of own-industry concentration, and examine between-industry colocation. Overall, New Zealand employment is relatively highly concentrated, although only around 30 percent of employment is in highly concentrated industries. Around 60 percent of employment is in industries that are spread more or less in proportion to total employment. Geographic concentration across 58 Labour Market Areas (LMAs) has increased over the past 18 years, although industries have become more dispersed within LMAs. We find little evidence of a causal effect of geographic concentration of industries, or of diversity of local industry structure on employment growth or job flow rates. Rates of job creation, job destruction, and net employment growth are higher for industries that are more geographically concentrated, but the relationship disappears when we control for area and industry fixed effects. This suggests that it is not the concentration per se that is driving the high flows and employment growth, but other unobserved characteristics of areas and industries.

Suggested Citation

  • Mare, David, 2005. "Concentration, Specialisation and Agglomeration of firms in New Zealand," Motu Working Papers 292889, Motu Economic and Public Policy Research.
    • Handle: RePEc:ags:motuwp:292889
    DOI: 10.22004/ag.econ.292889
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    2. Mare, David & Timmins, Jason, 2006. "Geographic concentration and firm productivity," Motu Working Papers 292860, Motu Economic and Public Policy Research.
    3. David Law & Bob Buckle & Dean Hyslop, 2006. "Toward a Model of Firm Productivity Dynamics," Treasury Working Paper Series 06/11, New Zealand Treasury.
    4. David Maré, 2008. "Labour Productivity in Auckland Firms," Occasional Papers 08/9, Ministry of Economic Development, New Zealand.
    5. Arribas-Bel, Daniel & Nijkamp, Peter & Poot, Jacques, 2014. "How Diverse Can Spatial Measures of Cultural Diversity Be? Results from Monte Carlo Simulations of an Agent-Based Model," IZA Discussion Papers 8251, Institute of Labor Economics (IZA).
    6. Long Thanh Giang & Cuong Viet Nguyen & Tuyen Quang Tran, 2016. "Firm agglomeration and local poverty reduction: evidence from an economy in transition," Asian-Pacific Economic Literature, The Crawford School, The Australian National University, vol. 30(1), pages 80-98, May.
    7. Long Thanh Giang & Cuong Viet Nguyen & Tuyen Quang Tran, 2015. "A Linkage between Firm Agglomeration and Poverty Reduction First evidence in Vietnam," Working Papers 2015-617, Department of Research, Ipag Business School.
    8. Anne Leahy & Alfons Palangkaraya & Jongsay Yong, 2010. "Geographical Agglomeration in Australian Manufacturing," Regional Studies, Taylor & Francis Journals, vol. 44(3), pages 299-314.

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    Keywords

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    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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