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Geographic Concentration and the Temporal Scope of Agglomeration Economics: An Index Decomposition

  • Colin Wren
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    The paper decomposes a geographical concentration index to examine the temporal scope of a spillover, which is the period of time over which one firm's activity directly affects the location of other firms' activities. Natural advantages are fixed over reasonably long time periods, but if spillovers have a limited temporal scope then this can be used to identify these agglomeration economies. To operationalize the index decomposition the paper proposes an empirical methodology that is based on frequency estimator approach, which is applied across time periods. The approach is tested by numerical simulation and by application to a dataset on the location of new economic activity across British regions in the form of investment by foreign-owned plants. Overall, the results support the approach and indicate that the temporal scope of a spillover is on average about five years.

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    File URL: http://www.spatialeconomics.ac.uk/textonly/SERC/publications/download/sercdp0094.pdf
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    Paper provided by Spatial Economics Research Centre, LSE in its series SERC Discussion Papers with number 0094.

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    Date of creation: Nov 2011
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    Handle: RePEc:cep:sercdp:0094
    Contact details of provider: Web page: http://www.spatialeconomics.ac.uk/SERC/publications/default.asp

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    1. Crozet, M. & Mayer, T. & Micchielli, J.L., 2000. "How Do Firms Agglomerate? A Study of FDI in France?," Papiers d'Economie Mathématique et Applications 2000.50, Université Panthéon-Sorbonne (Paris 1).
    2. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
    3. BARRIOS, Salvador & BERTINELLI, Luisito & STROBL, Eric & TEIXEIRA, Antonio Carlos, 2004. "The dynamics of agglomeration : evidence from Ireland and Portugal," CORE Discussion Papers 2004010, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
    4. Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-52, December.
      • Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
      • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
    5. Miren Lafourcade & Giordano Mion, 2005. "Concentration, agglomeration and the size of plants," PSE Working Papers halshs-00590572, HAL.
    6. Keith Head & John Ries & Deborah Swenson, 1994. "Agglomeration Benefits and Location Choice: Evidence from Japanese Manufacturing Investment in the United States," NBER Working Papers 4767, National Bureau of Economic Research, Inc.
    7. Roberto Basile & Davide Castellani & Antonello Zanfei, 2007. "Location choices of multinational firms in Europe: the role of EU cohesion policy," Quaderni del Dipartimento di Economia, Finanza e Statistica 32/2007, Università di Perugia, Dipartimento Economia.
    8. Jonathan Jones & Colin Wren, 2011. "On the Relative Importance of Agglomeration Economies in the Location of FDI Across British Regions," SERC Discussion Papers 0089, Spatial Economics Research Centre, LSE.
    9. Döring, Thomas & Schnellenbach, Jan, 2004. "What Do We Know About Geographical Knowledge Spillovers and Regional Growth? A Survey of the Literature," Research Notes 14, Deutsche Bank Research.
    10. Karlsson, Charlie & Johansson, Börje, 2006. "Regional Development and Knowledge," Working Paper Series in Economics and Institutions of Innovation 76, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    11. Sergio Mariotti & Lucia Piscitello & Stefano Elia, 2010. "Spatial agglomeration of multinational enterprises: the role of information externalities and knowledge spillovers," Journal of Economic Geography, Oxford University Press, vol. 10(4), pages 519-538, July.
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