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Measuring and Explaining Localisation: Evidence from two British Sectors

  • Ugo Fratesi

    (Universitò Bocconi)

The degree of localisation of manufacturing, defined as the excess geographic concentration remaining after correcting for both sectorial concentration and the agglomeration of overall economic activity, has recently gained new techniques of measurement. These techniques are illustrated and theoretically discussed. The paper then investigates the sectorial scale of localisation, using evidence from two British sectors, SIC 244 (pharmaceutical) and 334 (optical and photographic), and respective sub-sectors. Applying the measures, it is evidenced that the individual sub-sectors are very differently localized both in extent and in location, even within the same sector. In addition to this, with survey data the paper shows that localisation is due to different economic explanations in different sub-sectors. This is a proof that the economic factors behind localisation are in this case at 5-digit level, making economically not meaningful the measurement of localisation at a different scale. The study implies that identifying localisation remains a delicate process, since the right sectorial scale has to be detected case by case, the use of more than one technique usually gives additional insights and, finally, the survey confirms that, in field studies, a mix of diferent theoretical models is generally needed to explain the observed patterns.

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File URL: http://econwpa.repec.org/eps/urb/papers/0407/0407003.pdf
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Paper provided by EconWPA in its series Urban/Regional with number 0407003.

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Length: 52 pages
Date of creation: 15 Jul 2004
Date of revision:
Handle: RePEc:wpa:wuwpur:0407003
Note: Type of Document - pdf; pages: 52
Contact details of provider: Web page: http://econwpa.repec.org

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  1. Glenn Ellison & Edward L. Glaeser, 1994. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," NBER Working Papers 4840, National Bureau of Economic Research, Inc.
  2. Gilles Duranton & Henry Overman, 2002. "Testing for Localisation Using Micro-Geographic Data," CEP Discussion Papers dp0540, Centre for Economic Performance, LSE.
  3. Steven Pinch & Nick Henry, 1999. "Paul Krugman's Geographical Economics, Industrial Clustering and the British Motor Sport Industry," Regional Studies, Taylor & Francis Journals, vol. 33(9), pages 815-827.
  4. Devereux, Michael P. & Griffith, Rachel & Simpson, Helen, 2004. "The geographic distribution of production activity in the UK," Regional Science and Urban Economics, Elsevier, vol. 34(5), pages 533-564, September.
  5. 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.
  6. Ottaviano, Gianmarco & Puga, Diego, 1997. "Agglomeration in the Global Economy: A Survey of the 'New Economic Geography'," CEPR Discussion Papers 1699, C.E.P.R. Discussion Papers.
  7. Puga, Diego, 2001. "European Regional Policies in Light of Recent Location Theories," CEPR Discussion Papers 2767, C.E.P.R. Discussion Papers.
  8. Eric Marcon & Florence Puech, 2003. "Evaluating the geographic concentration of industries using distance-based methods," Journal of Economic Geography, Oxford University Press, vol. 3(4), pages 409-428, October.
  9. Griffith, Rachel, 1999. "Using the ARD Establishment Level Data to Look at Foreign Ownership and Productivity in the United Kingdom," Economic Journal, Royal Economic Society, vol. 109(456), pages F416-42, June.
  10. Almeida, Paul & Kogut, Bruce, 1997. " The Exploration of Technological Diversity and the Geographic Localization of Innovation," Small Business Economics, Springer, vol. 9(1), pages 21-31, February.
  11. 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.
  12. Ian R. Gordon & Philip McCann, 2005. "Innovation, agglomeration, and regional development," Journal of Economic Geography, Oxford University Press, vol. 5(5), pages 523-543, October.
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