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Agglomeration Economies in Japan: Technical Efficiency, Growth and Unemployment

Author

Listed:
  • Mitra, Arup
  • Sato, Hajime

Abstract

This paper examines if the effects of agglomeration economies get manifested in technical efficiency and generate faster economic growth and higher (lower) levels of employment (unemployment). Using the prefecture level data for each of the two-digit groups of industries in Japan, the paper estimates region-specific technical efficiency index based on the stochastic frontier production function framework. The results of the factor analysis show that in most of the industry-groups (with a few exceptions) efficiency has a positive association with external scale variable(s). Though the relationship is not seen to be very strong, it would be equally erroneous to ignore the effect of agglomeration economies on efficiency. In the case of some of the light goods industries the agglomeration effect is relatively stronger. Further, economic growth varies positively with external scale variable(s) and unemployment rate tends to fall with respect to growth and concentration. All this tends to suggest that measures against industrial concentration may be counter-productive, particularly in the context of globalisation when countries are in dire need of raising productivity.

Suggested Citation

  • Mitra, Arup & Sato, Hajime, 2006. "Agglomeration Economies in Japan: Technical Efficiency, Growth and Unemployment," IDE Discussion Papers 48, Institute of Developing Economies, Japan External Trade Organization(JETRO).
  • Handle: RePEc:jet:dpaper:dpaper48
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    File URL: https://ir.ide.go.jp/?action=repository_action_common_download&item_id=38118&item_no=1&attribute_id=22&file_no=1
    File Function: First version, 2006
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    References listed on IDEAS

    as
    1. Takashi Kurosaki & Ikuko Okamoto & Kyosuke Kurita & Koichi Fujita, 2004. "Rich Periphery, Poor Center: Myanmar's Rural Economy under Partial Transition to a Market Economy," Hi-Stat Discussion Paper Series d03-23, Institute of Economic Research, Hitotsubashi University.
    Full references (including those not matched with items on IDEAS)

    More about this item

    Keywords

    Agglomeration economies; Technical efficiency; Economic conditions; Economic growth; Manufacturing industries; Unemployment; Japan; 経済事情; 経済成長; 製造業; 失業; 日本;

    JEL classification:

    • J60 - Labor and Demographic Economics - - Mobility, Unemployment, Vacancies, and Immigrant Workers - - - General
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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