IDEAS home Printed from https://ideas.repec.org/p/wiw/wiwrsa/ersa10p1635.html
   My bibliography  Save this paper

Geographic Concentration, Observational Equivalence and the Source of Industrial Agglomeration

Author

Listed:
  • Colin Wren

Abstract

Ellison and Glaeser's (1997) index of geographical concentration distinguishes between natural advantages and spillovers as a source of industrial agglomeration, but the well-known 'observational equivalence' means little is known about the relative importance of these. This paper uses the difference in the temporal scope of the agglomeration source to decompose the index, and sets out a methodology for measuring each of these using the frequency estimator approach of Maurel and Sèdillot (1999). When applied to a dataset on foreign investment it shows spillovers decay and on average extend over three to five years. An implication is that the geographic concentration index will mainly reflect natural advantages, revealing comparatively little about spillovers.

Suggested Citation

  • Colin Wren, 2011. "Geographic Concentration, Observational Equivalence and the Source of Industrial Agglomeration," ERSA conference papers ersa10p1635, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa10p1635
    as

    Download full text from publisher

    File URL: https://www-sre.wu.ac.at/ersa/ersaconfs/ersa10/ERSA2010finalpaper1635.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Barrios, Salvador & Bertinelli, Luisito & Strobl, E. & Teixeira, Antonio-Carlos, 2005. "The dynamics of agglomeration: evidence from Ireland and Portugal," Journal of Urban Economics, Elsevier, vol. 57(1), pages 170-188, January.
    2. Guy Dumais & Glenn Ellison & Edward L. Glaeser, 2002. "Geographic Concentration As A Dynamic Process," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 193-204, May.
    3. Thomas J. Holmes & John J. Stevens, 2002. "Geographic Concentration and Establishment Scale," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 682-690, November.
    4. Henderson, Vernon & Kuncoro, Ari & Turner, Matt, 1995. "Industrial Development in Cities," Journal of Political Economy, University of Chicago Press, vol. 103(5), pages 1067-1090, October.
    5. Rosenthal, Stuart S. & Strange, William C., 2001. "The Determinants of Agglomeration," Journal of Urban Economics, Elsevier, vol. 50(2), pages 191-229, September.
    6. J.Peter Neary, 2001. "Of Hype and Hyperbolas: Introducing the New Economic Geography," Journal of Economic Literature, American Economic Association, vol. 39(2), pages 536-561, June.
    7. John M. Quigley, 1998. "Urban Diversity and Economic Growth," Journal of Economic Perspectives, American Economic Association, vol. 12(2), pages 127-138, Spring.
    8. Barrios, Salvador & Strobl, Eric, 2004. "Industry mobility and geographic concentration in the European union," Economics Letters, Elsevier, vol. 82(1), pages 71-75, January.
    9. Glaeser, Edward L & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1992. "Growth in Cities," Journal of Political Economy, University of Chicago Press, vol. 100(6), pages 1126-1152, December.
      • Edward L. Glaeser & Hedi D. Kallal & Jose A. Scheinkman & Andrei Shleifer, 1991. "Growth in Cities," NBER Working Papers 3787, National Bureau of Economic Research, Inc.
      • Glaeser, Edward Ludwig & Kallal, Hedi D. & Scheinkman, Jose A. & Shleifer, Andrei, 1992. "Growth in Cities," Scholarly Articles 3451309, Harvard University Department of Economics.
    10. J. Vernon Henderson, 2001. "Marshall's Scale Economies," Working Papers 2001-46, Brown University, Department of Economics.
    11. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
    12. Kim, Sukkoo, 1999. "Regions, resources, and economic geography: Sources of U.S. regional comparative advantage, 1880-1987," Regional Science and Urban Economics, Elsevier, vol. 29(1), pages 1-32, January.
    13. Wren, Colin & Jones, Jonathan, 2009. "Re-investment and the survival of foreign-owned plants," Regional Science and Urban Economics, Elsevier, vol. 39(2), pages 214-223, March.
    14. Thomas Doring & Jan Schnellenbach, 2006. "What do we know about geographical knowledge spillovers and regional growth?: A survey of the literature," Regional Studies, Taylor & Francis Journals, vol. 40(3), pages 375-395.
    15. Henderson, J. Vernon, 2003. "Marshall's scale economies," Journal of Urban Economics, Elsevier, vol. 53(1), pages 1-28, January.
    16. Henderson, Vernon, 1997. "Externalities and Industrial Development," Journal of Urban Economics, Elsevier, vol. 42(3), pages 449-470, November.
    17. Blomstrom, Magnus & Kokko, Ari, 1998. "Multinational Corporations and Spillovers," Journal of Economic Surveys, Wiley Blackwell, vol. 12(3), pages 247-277, July.
    Full references (including those not matched with items on IDEAS)

    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. Wren, Colin, 2012. "Geographic concentration and the temporal scope of agglomeration economies: An index decomposition," Regional Science and Urban Economics, Elsevier, vol. 42(4), pages 681-690.
    2. Edward L. Glaeser & William R. Kerr, 2009. "Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(3), pages 623-663, September.
    3. Wren, Colin, 2011. "Geographic concentration and the temporal scope of agglomeration economics: an index decomposition," LSE Research Online Documents on Economics 58351, London School of Economics and Political Science, LSE Library.
    4. Li, Dongya & Lu, Yi & Wu, Mingqin, 2012. "Industrial agglomeration and firm size: Evidence from China," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 135-143.
    5. Jordi Jofre-Monseny & Raquel Marín-López & Elisabet Viladecans-Marsal, 2012. "What underlies localization and urbanization economies? Evidence from the location of new firms," Working Papers 2012/9, Institut d'Economia de Barcelona (IEB).
    6. Delgado, Mercedes & Porter, Michael E. & Stern, Scott, 2014. "Clusters, convergence, and economic performance," Research Policy, Elsevier, vol. 43(10), pages 1785-1799.
    7. 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.
    8. repec:hal:spmain:info:hdl:2441/1kv8mtgl748r0ahh12air9erdc is not listed on IDEAS
    9. Xiwei Zhu & Ye Liu & Ming He & Deming Luo & Yiyun Wu, 2019. "Entrepreneurship and industrial clusters: evidence from China industrial census," Small Business Economics, Springer, vol. 52(3), pages 595-616, March.
    10. Koen Frenken & Frank G. van Oort & Thijs Verburg & Ron A. Boschma, 2004. "Variety and regional economic growth in the Netherlands," Papers in Evolutionary Economic Geography (PEEG) 0502, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Dec 2004.
    11. Miguel Ángel García & Ivan Muñiz, 2005. "El impacto espacial de las economías de aglomeración y su efecto sobre la estructura urbana.El caso de la industria en Barcelona, 1986-1996," Working Papers wpdea0509, Department of Applied Economics at Universitat Autonoma of Barcelona.
    12. Andrew Perumal, 2017. "42 Years of Urban Growth and Industry Composition," Atlantic Economic Journal, Springer;International Atlantic Economic Society, vol. 45(2), pages 133-147, June.
    13. Shihe Fu & Junjie Hong, 2011. "Testing Urbanization Economies In Manufacturing Industries: Urban Diversity Or Urban Size?," Journal of Regional Science, Wiley Blackwell, vol. 51(3), pages 585-603, August.
    14. Barrios, Salvador & Bertinelli, Luisito & Eric, Strobl & Antonio Carlos, Teixeira, 2003. "Agglomeration Economies and the Location of Industries: A comparison of Three small European Countries," MPRA Paper 5704, University Library of Munich, Germany.
    15. No, Angela, 2008. "Cities and Growth: Knowledge Spillovers in the Adoption of Advanced Manufacturing Technologies," The Canadian Economy in Transition 2008018e, Statistics Canada, Economic Analysis Division.
    16. Hanlon, W. Walker & Miscio, Antonio, 2017. "Agglomeration: A long-run panel data approach," Journal of Urban Economics, Elsevier, vol. 99(C), pages 1-14.
    17. Ge, Ying, 2009. "Globalization and Industry Agglomeration in China," World Development, Elsevier, vol. 37(3), pages 550-559, March.
    18. William C. Strange, 2009. "Viewpoint: Agglomeration research in the age of disaggregation," Canadian Journal of Economics, Canadian Economics Association, vol. 42(1), pages 1-27, February.
    19. 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.
    20. Faberman, R. Jason & Freedman, Matthew, 2016. "The urban density premium across establishments," Journal of Urban Economics, Elsevier, vol. 93(C), pages 71-84.
    21. Wheeler, Christopher H., 2006. "Productivity and the geographic concentration of industry: The role of plant scale," Regional Science and Urban Economics, Elsevier, vol. 36(3), pages 313-330, May.

    More about this item

    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:wiw:wiwrsa:ersa10p1635. 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: Gunther Maier (email available below). General contact details of provider: http://www.ersa.org .

    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.