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Industrial clusters, firm location and productivity – Some empirical evidence for Danish firms

Author

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  • Strøjer Madsen, Erik

    (Department of Economics, Aarhus School of Business)

  • Smith, Valdemar

    (Department of Economics, Aarhus School of Business)

  • Dilling-Hansen, Mogens

    (University of Aarhus)

Abstract

According to the economic literature, industrial clusters are groups of firms on the same location composing a production system with spillovers that can be vertical and/or horizontal. This paper focuses on horizontal clusters by exploring the spatial distribution of industrial clusters in Denmark. The key issue in the theoretical part of the paper is whether firms located in industrial clusters are more productive than their counterparts located separately outside industrial agglomerations. Firms located in clusters are potentially more productive than other firms because of the agglomeration advantages of e.g. networks, knowledge spillovers, human capital mobility etc. In the empirical part of the paper, industrial clusters are identified using municipalities as the spatial dimension. In the first part of the analysis, clusters are identified at the NACE-2 digit industrial level. Next, using firm-level data for the 1990s the relative ‘cluster-firm’ productivity is estimated. The study finds evidence of a significantly higher productivity in clusters. However, the magnitude of the cluster advantages varies a lot across industries and is highest in textile.

Suggested Citation

  • Strøjer Madsen, Erik & Smith, Valdemar & Dilling-Hansen, Mogens, 2003. "Industrial clusters, firm location and productivity – Some empirical evidence for Danish firms," Working Papers 03-26, University of Aarhus, Aarhus School of Business, Department of Economics.
    • Handle: RePEc:hhs:aareco:2003_026
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    File URL: http://www.hha.dk/nat/wper/03-26_esmvs.pdf
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    References listed on IDEAS

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    1. Edward L. Glaeser & Glenn Ellison, 1999. "The Geographic Concentration of Industry: Does Natural Advantage Explain Agglomeration?," American Economic Review, American Economic Association, vol. 89(2), pages 311-316, May.
    2. Henderson, Vernon & Kuncoro, Ari & Turner, Matt, 1995. "Industrial Development in Cities," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 1067-1090, October.
    3. 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 1126-1152, 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.
    Full references (including those not matched with items on IDEAS)

    Citations

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    Cited by:

    1. Stojčić, Nebojša & Anić, Ivan-Damir & Aralica, Zoran, 2019. "Do firms in clusters perform better? Lessons from wood-processing industries in new EU member states," Forest Policy and Economics, Elsevier, vol. 109(C).
    2. Acheampong, Vera & Owusu, Nana Yaw Agyeman & Kupzig, Nina, 2023. "Special Economic Zones in Ghana: A case study of enclaves in Tema, Dawa and Sekondi," KCG Working Papers 26, Kiel Centre for Globalization (KCG).
    3. Békés, Gábor & Harasztosi, Péter, 2013. "Agglomeration premium and trading activity of firms," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 51-64.
    4. Andrés Camacho Murillo & Hector Ríos Hernández, 2011. "Competencia intra-industria, aglomeraciones regionales y crecimiento económico: caso industria de alimentos," Revista Facultad de Ciencias Económicas, Universidad Militar Nueva Granada, June.
    5. Ali, Hoda Abd El Hamid, 2011. "Universities, Industrial Clusters, and Economic Development in Egypt," MPRA Paper 60111, University Library of Munich, Germany, revised 2012.
    6. Churen Sun & Zhihao Yu & Tao Zhang, 2012. "Agglomeration, Productivity, and Firms¡® Exports: Evidence from Chinese Firm-level Data," ERSA conference papers ersa12p882, European Regional Science Association.
    7. Bjørner, Thomas Bue & Mackenhauer, Janne, 2013. "Spillover from private energy research," Resource and Energy Economics, Elsevier, vol. 35(2), pages 171-190.
    8. Irina-Elena Gentimir, 2013. "The Role Of The Private Sector In Developing And Supporting International Competitiveness," CES Working Papers, Centre for European Studies, Alexandru Ioan Cuza University, vol. 5(2), pages 205-215.
    9. Sun, Churen & Yu, Zhihao & Zhang, Tao, 2012. "Agglomeration and Trade with Heterogeneous Firms," MPRA Paper 49001, University Library of Munich, Germany, revised 17 Aug 2013.

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    More about this item

    Keywords

    Industrial clusters; productivity;

    JEL classification:

    • D24 - Microeconomics - - Production and Organizations - - - Production; Cost; Capital; Capital, Total Factor, and Multifactor Productivity; Capacity
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General

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