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Agglomeration and Economic Growth: Some Puzzles

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  • Federica Sbergami

    () (IUHEI)

Abstract

Knowledge spillovers and technical externalities play a fundamental role in basically all endogenous growth models. In a context of increasing returns to scale and transportation costs it seems reasonable to assume that regional agglomeration of production and R&D activities is linked to aggregate growth. This work is an empirical investigation of the predictions provided by some theoretical studies according to which agglomeration increases with growth and growth increases with agglomeration (Martin and Ottaviano, 2001, Baldwin and Forslid, 2000 and Fujita and Thisse, 2001). The behaviour of six European countries over twelve years (from 1984 to 1995) is analysed using panel data techniques. In particular, a "traditional" growth equation à la Barro, in which an index of regional agglomeration of industrial activities is added to the "typical" regressors, is estimated. Surprisingly, instead of concentration in a few areas, as theory predicts, equal dispersion of economic activities across regions sems to be good for national aggregate growth. Besides, there is also some evidence that regional dispersion of sectors with a high technological content is growth enhancing.

Suggested Citation

  • Federica Sbergami, 2002. "Agglomeration and Economic Growth: Some Puzzles," IHEID Working Papers 02-2002, Economics Section, The Graduate Institute of International Studies.
  • Handle: RePEc:gii:giihei:heiwp02-2002
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    Cited by:

    1. Johanna Vogel, 2012. "Agglomeration and Growth: Evidence from the Regions of Central and Eastern Europe," ERSA conference papers ersa12p1089, European Regional Science Association.
    2. repec:eco:journ1:2017-04-29 is not listed on IDEAS
    3. Shanzi Ke, 2010. "Agglomeration, productivity, and spatial spillovers across Chinese cities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(1), pages 157-179, August.
    4. Cerina, Fabio & Mureddu, Francesco, 2014. "Is agglomeration really good for growth? Global efficiency, interregional equity and uneven growth," Journal of Urban Economics, Elsevier, vol. 84(C), pages 9-22.
    5. Madalina-Stefania Dirzu & Peter Nijkamp, 2013. "The Dynamics Of Agglomeration Processes And Their Contribution To Regional Development Across The Eu," Romanian Journal of Regional Science, Romanian Regional Science Association, vol. 7(1), pages 17-35, JUNE.
    6. Ron Martin, 2008. "National growth versus spatial equality? A cautionary note on the new ‘trade-off’ thinking in regional policy discourse," Regional Science Policy & Practice, Wiley Blackwell, vol. 1(1), pages 3-13, November.

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    Keywords

    International Economics; Trade; Regional Agglomeration; Growth;

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