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Spatial Localization in Manufacturing: A Cross-Country Analysis

This paper employs a homogenous firms database to investigate industry localization in European countries. More specifically, we compare, across industries and countries, the predictions of two of the most popular localization indices, i.e., the Ellison and Glaeser index (Ellison and Glaeser, 1997) and the Duranton and Overman index (Duranton and Overman, 2005). We find that, independently from the index used, localization is a pervasive phenomenon in all countries studied, but the degree of localization is very uneven across industries in each country. Furthermore, we find that the two indices significantly diverge in predicting the intensity of the forces generating localization within each industry. Finally, we perform a crosssectoral analysis of localized industries. We show that, in all countries, localized sectors are mainly “traditional” sectors (like jewelery, wine, and textiles) and sectors where scale economies are important. However, once one controls for countries’ industrial structures science-based sectors turn out to be the most localized ones.

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Paper provided by Observatoire Francais des Conjonctures Economiques (OFCE) in its series Documents de Travail de l'OFCE with number 2009-07.

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Date of creation: 2009
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Handle: RePEc:fce:doctra:0907
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  1. Ellison, G. & Glaeser, E.L., 1994. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Working papers 94-27, Massachusetts Institute of Technology (MIT), Department of Economics.
  2. Thomas Brenner, 2006. "Identification of Local Industrial Clusters in Germany," Regional Studies, Taylor & Francis Journals, vol. 40(9), pages 991-1004.
  3. Guy Dumais & Glenn Ellison & Edward L Glaeser, 1998. "Geographic Concentration as a Dynamic Process," Working Papers 98-3, Center for Economic Studies, U.S. Census Bureau.
  4. G. P. I. Ottaviano, 1997. "Integration, Geography and the Burden of History," Working Papers 283, Dipartimento Scienze Economiche, Universita' di Bologna.
  5. Strauss-Kahn, Vanessa & Vives, Xavier, 2005. "Why and Where do Headquarters Move?," CEPR Discussion Papers 5070, C.E.P.R. Discussion Papers.
  6. Rosenthal, Stuart S. & Strange, William C., 2001. "The Determinants of Agglomeration," Journal of Urban Economics, Elsevier, vol. 50(2), pages 191-229, September.
  7. Thomas J. Holmes & John J. Stevens, 2002. "Geographic Concentration and Establishment Scale," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 682-690, November.
  8. Davis, James C. & Henderson, J. Vernon, 2008. "The agglomeration of headquarters," Regional Science and Urban Economics, Elsevier, vol. 38(5), pages 445-460, September.
  9. Miren Lafourcade & Giordano Mion, 2005. "Concentration, agglomeration and the size of plants," PSE Working Papers halshs-00590572, HAL.
  10. Thomas H. Klier & Daniel McMillen, 2006. "Evolving agglomeration in the U.S. auto supplier industry," Working Paper Series WP-06-20, Federal Reserve Bank of Chicago.
  11. 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).
  12. Michael Devereux & Rachel Griffith & Helen Simpson, 1999. "The geographic distribution of production activity in the UK," IFS Working Papers W99/26, Institute for Fiscal Studies.
  13. Giulio Bottazzi & Giovanni Dosi & Giorgio Fagiolo & Angelo Secchi, 2007. "Modeling Industrial Evolution in Geographical Space," LEM Papers Series 2007/06, Laboratory of Economics and Management (LEM), Sant'Anna School of Advanced Studies, Pisa, Italy.
  14. Pierre-Philippe Combes & Henry G. Overman, 2003. "The spatial distribution of economic activities in the European Union," LSE Research Online Documents on Economics 20023, London School of Economics and Political Science, LSE Library.
  15. Luisito Bertinelli & Jehan Decrop, 2005. "Geographical agglomeration: Ellison and Glaeser's index applied to the case of Belgian manufacturing industry," Regional Studies, Taylor & Francis Journals, vol. 39(5), pages 567-583.
  16. Pavitt, Keith, 1984. "Sectoral patterns of technical change: Towards a taxonomy and a theory," Research Policy, Elsevier, vol. 13(6), pages 343-373, December.
  17. Haaland, J.I. & Kind, H.J. & knarvik, K.H.M. & Torstensson, J., 1998. "What Determines the Economic Geography of Europe?," Papers 19/98, Norwegian School of Economics and Business Administration-.
  18. repec:ebl:ecbull:v:12:y:2008:i:9:p:1-15 is not listed on IDEAS
  19. Maurel, Francoise & Sedillot, Beatrice, 1999. "A measure of the geographic concentration in french manufacturing industries," Regional Science and Urban Economics, Elsevier, vol. 29(5), pages 575-604, September.
  20. Steven Klepper, 2002. "The capabilities of new firms and the evolution of the US automobile industry," Industrial and Corporate Change, Oxford University Press, vol. 11(4), pages 645-666, August.
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