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Concentration, Specialisation and Agglomeration of firms in New Zealand

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  • David C. Maré

    () (Motu Economic and Public Policy Research)

Abstract

To what extent do New Zealand firms choose to locate close to each other, and why? This paper summarises patterns of geographic concentration of firms in New Zealand between 1987 and 2003. We present a range of summary measures of own-industry concentration, and examine between-industry colocation. Overall, New Zealand employment is relatively highly concentrated, although only around 30 percent of employment is in highly concentrated industries. Around 60 percent of employment is in industries that are spread more or less in proportion to total employment. Geographic concentration across 58 Labour Market Areas (LMAs) has increased over the past 18 years, although industries have become more dispersed within LMAs. We find little evidence of a causal effect of geographic concentration of industries, or of diversity of local industry structure on employment growth or job flow rates. Rates of job creation, job destruction, and net employment growth are higher for industries that are more geographically concentrated, but the relationship disappears when we control for area and industry fixed effects. This suggests that it is not the concentration per se that is driving the high flows and employment growth, but other unobserved characteristics of areas and industries.

Suggested Citation

  • David C. Maré, 2005. "Concentration, Specialisation and Agglomeration of firms in New Zealand," Working Papers 05_12, Motu Economic and Public Policy Research.
  • Handle: RePEc:mtu:wpaper:05_12
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    File URL: http://motu-www.motu.org.nz/wpapers/05_12.pdf
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    References listed on IDEAS

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    Cited by:

    1. David C. Maré & Jason Timmins, 2006. "Geographic concentration and firm productivity," Working Papers 06_08, Motu Economic and Public Policy Research.
    2. David Law & Bob Buckle & Dean Hyslop, 2006. "Toward a Model of Firm Productivity Dynamics," Treasury Working Paper Series 06/11, New Zealand Treasury.
    3. David C. Maré, 2008. "Labour Productivity in Auckland Firms," Working Papers 08_12, Motu Economic and Public Policy Research.

    More about this item

    Keywords

    Geographic concentration; agglomeration; business demography;

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location

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