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Assessing Agglomeration Economies in a Spatial Framework with Endogenous Regressors

  • Michael Artis
  • Ernest Miguélez
  • Rosina Moreno

This paper is concerned with the influence of agglomeration economies on economicoutcomes across British regions. The concentration of economic activity in one place canfoster economic performance due to the reduction in transportation costs, the readyavailability of customers and suppliers, and knowledge spillovers. However, theconcentration of several types of intangible assets can boost productivity as well. Thus, usingan interesting dataset which proxies regional productivity, we will assess the relativeimportance of agglomeration and other assets, controlling both for endogeneity and forspatial autocorrelation at the same time. Our results suggest that agglomeration has a definitepositive influence on productivity, although our estimates of its effect are dramaticallyreduced when spatial dependence and other hitherto omitted variables proxying intangibleassets are controlled for.

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File URL: http://www.spatialeconomics.ac.uk/textonly/SERC/publications/download/sercdp0023.pdf
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Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0023.

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Date of creation: Jun 2009
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Handle: RePEc:cep:sercdp:0023
Contact details of provider: Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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