IDEAS home Printed from https://ideas.repec.org/p/mcr/wpaper/wpaper00039.html
   My bibliography  Save this paper

Spatial fragmentation of industries by functions

Author

Listed:
  • Franz-Josef Bade

    (University of Dortmund)

  • Eckhardt Bode

    (Kiel Institute for the World Economy)

  • Eleonora Cutrini

    (University of Macerata)

Abstract

We explore to what extent key functions in manufacturing are spatially clustered with, or dispersed from,each other within industries, and how these clustering or dispersion patterns have changed during recent decades. Estimating the levels and changes (1992–2007) of localizations and colocalizations of selected functions (production, headquarter services, R&D) within 27 West German industries by means of K densities, we identify two broad groups of industries. In “fragmenting” industries,which account for one half of manufacturing employment, functions were more clustered with each other than the industry as a whole after the fall of the Iron Curtain but have, in accordance with regional theories of spatial fragmentation, been unbundled spatially from each other subsequently. In “integrating” industries, by contrast, which account for one third of manufacturing employment, functions were initially dispersed from each other but have subsequently been rebundled spatially with each other. We hypothesize that this spatial rebundling is a consequence of offshoring, i.e., international fragmentation.

Suggested Citation

  • Franz-Josef Bade & Eckhardt Bode & Eleonora Cutrini, 2012. "Spatial fragmentation of industries by functions," Working Papers 39-2012, Macerata University, Department of Studies on Economic Development (DiSSE), revised Feb 2012.
  • Handle: RePEc:mcr:wpaper:wpaper00039
    as

    Download full text from publisher

    File URL: http://www.unimc.it/sviluppoeconomico/wpaper/wpaper00039/filePaper
    Download Restriction: no
    ---><---

    Other versions of this item:

    References listed on IDEAS

    as
    1. Ota, Mitsuru & Fujita, Masahisa, 1993. "Communication technologies and spatial organization of multi-unit firms in metropolitan areas," Regional Science and Urban Economics, Elsevier, vol. 23(6), pages 695-729, December.
    2. Mayer, T. & Mejean, I. & Nefussi, B., 2010. "The location of domestic and foreign production affiliates by French multinational firms," Journal of Urban Economics, Elsevier, vol. 68(2), pages 115-128, September.
    3. Baumgarten, Daniel & Geishecker, Ingo & Görg, Holger, 2013. "Offshoring, tasks, and the skill-wage pattern," European Economic Review, Elsevier, vol. 61(C), pages 132-152.
    4. Strauss-Kahn, Vanessa & Vives, Xavier, 2009. "Why and where do headquarters move?," Regional Science and Urban Economics, Elsevier, vol. 39(2), pages 168-186, March.
    5. Elhanan Helpman, 2006. "Trade, FDI, and the Organization of Firms," Journal of Economic Literature, American Economic Association, vol. 44(3), pages 589-630, September.
    6. Dermot Leahy & Catia Montagna, 2006. "'Make-or-Buy' in International Oligopoly and the Role of Competitive Pressure," Dundee Discussion Papers in Economics 197, Economic Studies, University of Dundee.
    7. Ingo Geishecker, 2006. "Does Outsourcing to Central and Eastern Europe Really Threaten Manual Workers’ Jobs in Germany?," The World Economy, Wiley Blackwell, vol. 29(5), pages 559-583, May.
    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. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 247-348, Elsevier.
    10. Florent Bonneu & Christine Thomas-Agnan, 2015. "Measuring and Testing Spatial Mass Concentration with Micro-geographic Data," Spatial Economic Analysis, Taylor & Francis Journals, vol. 10(3), pages 289-316, September.
    11. Desmet, Klaus & Henderson, J. Vernon, 2015. "The Geography of Development Within Countries," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 1457-1517, Elsevier.
    12. Fabrice Defever, 2012. "The spatial organization of multinational firms," Canadian Journal of Economics, Canadian Economics Association, vol. 45(2), pages 672-697, May.
    13. Feenstra, Robert C & Hanson, Gordon H, 1996. "Globalization, Outsourcing, and Wage Inequality," American Economic Review, American Economic Association, vol. 86(2), pages 240-245, May.
    14. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8mcgcdbi is not listed on IDEAS
    15. Mary E. Lovely & Stuart S. Rosenthal & Shalini Sharma, 2017. "Information, agglomeration, and the headquarters of U.S. Exporters," World Scientific Book Chapters, in: Mary E Lovely (ed.), International Economic Integration and Domestic Performance, chapter 6, pages 93-117, World Scientific Publishing Co. Pte. Ltd..
    16. Björn Alecke & Christoph Alsleben & Frank Scharr & Gerhard Untiedt, 2006. "Are there really high-tech clusters? The geographic concentration of German manufacturing industries and its determinants," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 40(1), pages 19-42, March.
    17. Adam B. Jaffe & Manuel Trajtenberg & Rebecca Henderson, 1993. "Geographic Localization of Knowledge Spillovers as Evidenced by Patent Citations," The Quarterly Journal of Economics, Oxford University Press, vol. 108(3), pages 577-598.
    18. Gilles Duranton & Henry G. Overman, 2005. "Testing for Localization Using Micro-Geographic Data," Review of Economic Studies, Oxford University Press, vol. 72(4), pages 1077-1106.
    19. Gilles Duranton & Henry G. Overman, 2008. "Exploring The Detailed Location Patterns Of U.K. Manufacturing Industries Using Microgeographic Data," Journal of Regional Science, Wiley Blackwell, vol. 48(1), pages 213-243, February.
    20. Jofre-Monseny, Jordi & Marín-López, Raquel & Viladecans-Marsal, Elisabet, 2011. "The mechanisms of agglomeration: Evidence from the effect of inter-industry relations on the location of new firms," Journal of Urban Economics, Elsevier, vol. 70(2-3), pages 61-74, September.
    21. Guillaume Daudin & Christine Rifflart & Danielle Schweisguth, 2011. "Who produces for whom in the world economy?," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 44(4), pages 1403-1437, November.
    22. Enghin Atalay & Ali Horta?su & Chad Syverson, 2014. "Vertical Integration and Input Flows," American Economic Review, American Economic Association, vol. 104(4), pages 1120-1148, April.
    23. Pierre-Philippe Combes & Miren Lafourcade, 2005. "Transport costs: measures, determinants, and regional policy implications for France," Journal of Economic Geography, Oxford University Press, vol. 5(3), pages 319-349, June.
    24. Duranton, Gilles & Puga, Diego, 2005. "From sectoral to functional urban specialisation," Journal of Urban Economics, Elsevier, vol. 57(2), pages 343-370, March.
    25. repec:zbw:bofrdp:2015_027 is not listed on IDEAS
    26. Holger Görg & Aoife Hanley, 2011. "Services Outsourcing And Innovation: An Empirical Investigation," Economic Inquiry, Western Economic Association International, vol. 49(2), pages 321-333, April.
    27. Gerald A. Carlino & Jake Carr & Robert M. Hunt & Tony E. Smith, 2010. "The agglomeration of R&D labs," Working Papers 10-33, Federal Reserve Bank of Philadelphia.
    28. Frank Bickenbach & Eckhardt Bode, 2013. "New Economic Geography and Reunified Germany at Twenty: A Fruitful Match?," Spatial Economic Analysis, Taylor & Francis Journals, vol. 8(2), pages 120-153, June.
    29. Rosenthal, Stuart S. & Strange, William C., 2001. "The Determinants of Agglomeration," Journal of Urban Economics, Elsevier, vol. 50(2), pages 191-229, September.
    30. Esteban Rossi-Hansberg & Pierre-Daniel Sarte & Raymond Owens iii, 2009. "Firm Fragmentation And Urban Patterns," International Economic Review, Department of Economics, University of Pennsylvania and Osaka University Institute of Social and Economic Research Association, vol. 50(1), pages 143-186, February.
    31. Bickenbach, Frank & Bode, Eckhardt & Krieger-Boden, Christiane, 2010. "Structural cohesion in Europe: Stylized facts," Kiel Working Papers 1669, Kiel Institute for the World Economy (IfW Kiel).
    32. Carlino, Gerald & Kerr, William R., 2015. "Agglomeration and Innovation," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 349-404, Elsevier.
    33. Peter K. Schott, 2004. "Across-Product Versus Within-Product Specialization in International Trade," The Quarterly Journal of Economics, Oxford University Press, vol. 119(2), pages 647-678.
    34. Jakob Munch & Jan Skaksen, 2009. "Specialization, outsourcing and wages," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 145(1), pages 57-73, April.
    35. David L. Hummels & Dana Rapoport & Kei-Mu Yi, 1998. "Vertical specialization and the changing nature of world trade," Economic Policy Review, Federal Reserve Bank of New York, vol. 4(Jun), pages 79-99.
    36. Henderson, J. Vernon & Ono, Yukako, 2008. "Where do manufacturing firms locate their headquarters?," Journal of Urban Economics, Elsevier, vol. 63(2), pages 431-450, March.
    37. Frank Bickenbach & Eckhardt Bode, 2008. "Disproportionality Measures of Concentration, Specialization, and Localization," International Regional Science Review, , vol. 31(4), pages 359-388, October.
    38. Hortaçsu, Ali & Syverson, Chad, 2009. "Why Do Firms Own Production Chains?," Working Papers 227, The University of Chicago Booth School of Business, George J. Stigler Center for the Study of the Economy and the State.
    39. repec:zbw:bofrdp:urn:nbn:fi:bof-201512111472 is not listed on IDEAS
    40. repec:hal:wpspec:info:hdl:2441/c8dmi8nm4pdjkuc9g8mcgcdbi is not listed on IDEAS
    41. Teresa C. Fort, 2017. "Technology and Production Fragmentation: Domestic versus Foreign Sourcing," Review of Economic Studies, Oxford University Press, vol. 84(2), pages 650-687.
    42. Kristin Aarland & James C. Davis & J. Vernon Henderson & Yukako Ono, 2007. "Spatial organization of firms: the decision to split production and administration," RAND Journal of Economics, RAND Corporation, vol. 38(2), pages 480-494, June.
    43. Mills, Jeffrey A & Zandvakili, Sourushe, 1997. "Statistical Inference via Bootstrapping for Measures of Inequality," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 12(2), pages 133-150, March-Apr.
    44. Thomas Klier & Daniel P. McMillen, 2008. "Evolving Agglomeration In The U.S. Auto Supplier Industry," Journal of Regional Science, Wiley Blackwell, vol. 48(1), pages 245-267, February.
    45. Thomas H. Klier, 1999. "Agglomeration in the U.S. auto supplier industry," Economic Perspectives, Federal Reserve Bank of Chicago, vol. 23(Q I), pages 18-34.
    46. Gilles Duranton & J. V. Henderson & William C. Strange (ed.), 2015. "Handbook of Regional and Urban Economics," Handbook of Regional and Urban Economics, Elsevier, edition 1, volume 5, number 5.
    47. Arbia, Giuseppe & Espa, Giuseppe & Giuliani, Diego & Mazzitelli, Andrea, 2010. "Detecting the existence of space-time clustering of firms," Regional Science and Urban Economics, Elsevier, vol. 40(5), pages 311-323, September.
    48. Khalid Nadvi & Gerhard Halder, 2005. "Local clusters in global value chains: exploring dynamic linkages between Germany and Pakistan," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 17(5), pages 339-363, September.
    49. Dalia Marin, 2011. "The Opening Up of Eastern Europe at 20: Jobs, Skills and Reverse Maquiladoras in Austria and Germany," Chapters, in: Miroslav N. Jovanović (ed.), International Handbook on the Economics of Integration, Volume II, chapter 13, Edward Elgar Publishing.
    50. Bade, Franz-Josef & Laaser, Claus-Friedrich & Soltwedel, Rüdiger, 2004. "Urban specialization in the internet age: Empirical findings for Germany," Kiel Working Papers 1215, Kiel Institute for the World Economy (IfW Kiel).
    51. Defever, Fabrice, 2006. "Functional fragmentation and the location of multinational firms in the enlarged Europe," Regional Science and Urban Economics, Elsevier, vol. 36(5), pages 658-677, September.
    52. Kuemmerle, Walter, 1999. "Foreign direct investment in industrial research in the pharmaceutical and electronics industries--results from a survey of multinational firms," Research Policy, Elsevier, vol. 28(2-3), pages 179-193, March.
    53. Baldwin, Richard & Robert-Nicoud, Frédéric, 2014. "Trade-in-goods and trade-in-tasks: An integrating framework," Journal of International Economics, Elsevier, vol. 92(1), pages 51-62.
    54. Glenn Ellison & Edward L. Glaeser & William R. Kerr, 2010. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," American Economic Review, American Economic Association, vol. 100(3), pages 1195-1213, June.
    55. Hummels, David & Ishii, Jun & Yi, Kei-Mu, 2001. "The nature and growth of vertical specialization in world trade," Journal of International Economics, Elsevier, vol. 54(1), pages 75-96, June.
    56. Markusen, James R. & Venables, Anthony J., 2007. "Interacting factor endowments and trade costs: A multi-country, multi-good approach to trade theory," Journal of International Economics, Elsevier, vol. 73(2), pages 333-354, November.
    57. Eckhardt Bode, 2004. "The spatial pattern of localized R&D spillovers: an empirical investigation for Germany," Journal of Economic Geography, Oxford University Press, vol. 4(1), pages 43-64, January.
    58. Jed Kolko, 2010. "Urbanization, Agglomeration, and Coagglomeration of Service Industries," NBER Chapters, in: Agglomeration Economics, pages 151-180, National Bureau of Economic Research, Inc.
    59. Eric Marcon & Florence Puech, 2010. "Measures of the geographic concentration of industries: improving distance-based methods," Journal of Economic Geography, Oxford University Press, vol. 10(5), pages 745-762, September.
    60. repec:lmu:muench:19230 is not listed on IDEAS
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Olner, Dan & Mitchell, Gordon & Heppenstall, Alison & Pryce, Gwilym, 2020. "The spatial economics of energy justice: modelling the trade impacts of increased transport costs in a low carbon transition and the implications for UK regional inequality," Energy Policy, Elsevier, vol. 140(C).
    2. Gabriel Lang & Eric Marcon & Florence Puech, 2020. "Distance-based measures of spatial concentration: introducing a relative density function," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 64(2), pages 243-265, April.
    3. Diego Puga, 2017. "The changing distribution of firms and workers across cities," Development Working Papers 418, Centro Studi Luca d'Agliano, University of Milano.
    4. Gabriel Lang & Eric Marcon & Florence Puech, 2020. "Distance-based measures of spatial concentration: Introducing a relative density function," Post-Print hal-01082178, HAL.
    5. Behrens, Kristian & Guillain, Rachel, 2017. "The determinants of coagglomeration: Evidence from functional employment patterns," CEPR Discussion Papers 11884, C.E.P.R. Discussion Papers.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Eckhardt Bode & Franz-Josef Bade Bade & Eleonora Cutrini Cutrini, 2011. "Domestic and International Offshoring of Tasks," ERSA conference papers ersa11p1840, European Regional Science Association.
    2. Bade, Franz-Josef & Bode, Eckhardt & Cutrini, Eleonora, 2011. "Does domestic offshoring precede international offshoring? Industry-level evidence," Kiel Working Papers 1699, Kiel Institute for the World Economy (IfW Kiel).
    3. Acosta, Camilo & Lyngemark, Ditte Håkonsson, 2021. "The internal spatial organization of firms: Evidence from Denmark," Journal of Urban Economics, Elsevier, vol. 124(C).
    4. Toshihiro Okubo & Eiichi Tomiura, 2016. "Multi-plant operation and corporate headquarters separation: Evidence from Japanese plant-level," Keio-IES Discussion Paper Series 2016-016, Institute for Economics Studies, Keio University.
    5. Marcon, Eric & Puech, Florence, 2017. "A typology of distance-based measures of spatial concentration," Regional Science and Urban Economics, Elsevier, vol. 62(C), pages 56-67.
    6. OKUBO Toshihiro & TOMIURA Eiichi, 2016. "Multi-plant Operation and Corporate Headquarters Separation: Evidence from Japanese plant-level panel data," Discussion papers 16002, Research Institute of Economy, Trade and Industry (RIETI).
    7. Okubo, Toshihiro & Tomiura, Eiichi, 2016. "Multi-plant operation and headquarters separation: Evidence from Japanese plant-level panel data," Japan and the World Economy, Elsevier, vol. 39(C), pages 12-22.
    8. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 247-348, Elsevier.
    9. Gokan, Toshitaka & Kichko, Sergey & Thisse, Jacques-François, 2019. "How do trade and communication costs shape the spatial organization of firms?," Journal of Urban Economics, Elsevier, vol. 113(C).
    10. João Amador & Sónia Cabral, 2014. "Global Value Chains: Surveying Drivers, Measures and Impacts," Working Papers w201403, Banco de Portugal, Economics and Research Department.
    11. Martin Borowiecki & Bernhard Dachs & Doris Hanzl-Weiss & Steffen Kinkel & Johannes Pöschl & Magdolna Sass & Thomas Christian Schmall & Robert Stehrer & Andrea Szalavetz, 2012. "Global Value Chains and the EU Industry," wiiw Research Reports 383, The Vienna Institute for International Economic Studies, wiiw.
    12. repec:hal:spmain:info:hdl:2441/1kv8mtgl748r0ahh12air9erdc is not listed on IDEAS
    13. Behrens, Kristian & Robert-Nicoud, Frédéric, 2015. "Agglomeration Theory with Heterogeneous Agents," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 171-245, Elsevier.
    14. Liao, Wen-Chi, 2012. "Inshoring: The geographic fragmentation of production and inequality," Journal of Urban Economics, Elsevier, vol. 72(1), pages 1-16.
    15. Aurélie LALANNE & Guillaume POUYANNE, 2012. "Ten years of metropolization in economics: a bibliometric approach (In French)," Cahiers du GREThA (2007-2019) 2012-11, Groupe de Recherche en Economie Théorique et Appliquée (GREThA).
    16. Gilles Duranton & William R. Kerr, 2015. "The Logic of Agglomeration," Harvard Business School Working Papers 16-037, Harvard Business School.
    17. Peter Mayerhofer & Oliver Fritz, 2013. "Wiens Stadtwirtschaft. Internationale Spezialisierungschancen, zentrale Wirtschaftsbereiche," WIFO Studies, WIFO, number 57933, February.
    18. Fabrice Defever, 2012. "The spatial organization of multinational firms," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 45(2), pages 672-697, May.
    19. William R. Kerr & Frederic Robert-Nicoud, 2020. "Tech Clusters," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 50-76, Summer.
    20. Kristian Behrens, 2016. "Agglomeration and clusters: Tools and insights from coagglomeration patterns," Canadian Journal of Economics/Revue canadienne d'économique, John Wiley & Sons, vol. 49(4), pages 1293-1339, November.
    21. Behrens, Kristian & Sharunova, Vera, 2015. "Inter- and intra-firm linkages: Evidence from microgeographic location patterns," CEPR Discussion Papers 10921, C.E.P.R. Discussion Papers.

    More about this item

    Keywords

    fragmentation; localization; colocalization; functions; offshoring; Germany; K density; manufacturing;
    All these keywords.

    JEL classification:

    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:mcr:wpaper:wpaper00039. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Carlo Sampaoli (email available below). General contact details of provider: https://edirc.repec.org/data/dsmacit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.