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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.

Suggested Citation

  • Ugo Fratesi, 2004. "Measuring and Explaining Localisation: Evidence from two British Sectors," Urban/Regional 0407003, EconWPA.
  • Handle: RePEc:wpa:wuwpur:0407003
    Note: Type of Document - pdf; pages: 52

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    References listed on IDEAS

    1. Gilles Duranton & Henry G. Overman, 2005. "Testing for Localization Using Micro-Geographic Data," Review of Economic Studies, Oxford University Press, vol. 72(4), pages 1077-1106.
    2. 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 416-442, June.
    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. 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. Gianmarco I. P. Ottaviano & Diego Puga, 1998. "Agglomeration in the Global Economy: A Survey of the 'New Economic Geography'," The World Economy, Wiley Blackwell, vol. 21(6), pages 707-731, August.
    6. Diego Puga, 2002. "European regional policies in light of recent location theories," Journal of Economic Geography, Oxford University Press, vol. 2(4), pages 373-406, October.
    7. 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.
    8. 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.
    9. 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.
    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. 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.
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    Cited by:

    1. Jenifer Ruiz-Valenzuela & Rosina Moreno-Serrano & Esther Vaya-Valcarce, 2006. "Concentration of the Economic Activity: Comparing Methodologies and Geographic Units," ERSA conference papers ersa06p197, European Regional Science Association.

    More about this item

    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)
    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • C19 - Mathematical and Quantitative Methods - - Econometric and Statistical Methods and Methodology: General - - - Other

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