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Concentration, Specialisation and Agglomeration of firms in New Zealand

  • David C. Maré

    ()

    (Motu Economic and Public Policy Research)

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.

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File URL: http://motu-www.motu.org.nz/wpapers/05_12.pdf
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Paper provided by Motu Economic and Public Policy Research in its series Working Papers with number 05_12.

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Length: 115 pages
Date of creation: Aug 2005
Date of revision:
Handle: RePEc:mtu:wpaper:05_12
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  1. Gilles Duranton & Henry Overman, 2002. "Testing for Localisation Using Micro-Geographic Data," CEP Discussion Papers dp0540, Centre for Economic Performance, LSE.
  2. Ottaviano, Gianmarco & Thisse, Jacques-Francois, 2004. "Agglomeration and economic geography," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 58, pages 2563-2608 Elsevier.
  3. Giles Duranton & Diego Puga, 2003. "Micro-Foundations of Urban Agglomeration Economies," NBER Working Papers 9931, National Bureau of Economic Research, Inc.
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  8. Guy Dumais & Glenn Ellison & Edward L Glaeser, 1998. "Geographic Concentration as a Dynamic Process," Working Papers 98-3, Center for Economic Studies, U.S. Census Bureau.
  9. Steven J. Davis & John C. Haltiwanger & Scott Schuh, 1998. "Job Creation and Destruction," MIT Press Books, The MIT Press, edition 1, volume 1, number 0262540932, June.
  10. Feldman, Maryann P. & Audretsch, David B., 1999. "Innovation in cities:: Science-based diversity, specialization and localized competition," European Economic Review, Elsevier, vol. 43(2), pages 409-429, February.
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  12. Henderson, J. Vernon, 2003. "Marshall's scale economies," Journal of Urban Economics, Elsevier, vol. 53(1), pages 1-28, January.
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  14. Thomas J. Holmes, 1999. "Scale of Local Production and City Size," American Economic Review, American Economic Association, vol. 89(2), pages 317-320, May.
  15. Maurel, Francoise & Sedillot, Beatrice, 1999. "A measure of the geographic concentration in french manufacturing industries," Regional Science and Urban Economics, Elsevier, vol. 29(5), pages 575-604, September.
  16. Audretsch, David B & Feldman, Maryann P, 1996. "R&D Spillovers and the Geography of Innovation and Production," American Economic Review, American Economic Association, vol. 86(3), pages 630-40, June.
  17. Michael Porter, 2003. "The Economic Performance of Regions," Regional Studies, Taylor & Francis Journals, vol. 37(6-7), pages 549-578.
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