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Agglomeration Benefits and Location Choice: Evidence from Japanese Manufacturing Investment in the United States

  • Keith Head
  • John Ries
  • Deborah Swenson

Recent theories of economic geography suggest that firms in the same industry may be drawn to the same locations because proximity generates positive externalities or 'agglomeration effects.' Under this view, chance events and government inducements can have a lasting influence on the geographical pattern of manufacturing. However, most evidence on the causes and magnitude of industry localization has been based on stories, rather than statistics. This paper examines the location choices of 751 Japanese manufacturing plants built in the U.S. since 1980. Conditional logit estimates support the hypothesis that industry-level agglomeration benefits play an important role in location decisions.

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Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 4767.

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Date of creation: Jun 1994
Date of revision:
Publication status: published as Head, Keith, John Ries and Deborah Swenson. "Agglomeration Benefits And Location Choice: Evidence From Japanese Manufacturing Investments In The United States," Journal of International Economics, 1995, v38(3/4,May), 223-247.
Handle: RePEc:nbr:nberwo:4767
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