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How important is geographical agglomeration to factory efficiency in Japan’s manufacturing sector?

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  • Kyoji Fukao
  • Victoria Kravtsova
  • Kentaro Nakajima

Abstract

In this paper, the productivity spillovers from efficient factories have been investigated using factory-level data of Japan’s Census of Manufactures. The following three steps have been performed by estimating: first, efficiency of each factory using a nonparametric data envelopment analysis model for each industry, second, geographical distances to the most efficient factory in the prefecture and Japan overall are third, determinants of factories’ performance. Results suggest that clustering occurs in each industry and efficient factories concentrate in certain regions. The share of efficient firms in total firms is particularly high in the Chubu and Tohoku regions. For many industries closeness to the most efficient factories plays a statistically significant positive role in the efficiency of manufacturing factories in Japan. However, this is not the case in high-tech industries. Copyright Springer-Verlag Berlin Heidelberg 2014

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  • Kyoji Fukao & Victoria Kravtsova & Kentaro Nakajima, 2014. "How important is geographical agglomeration to factory efficiency in Japan’s manufacturing sector?," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 52(3), pages 659-696, May.
    • Handle: RePEc:spr:anresc:v:52:y:2014:i:3:p:659-696
    DOI: 10.1007/s00168-014-0601-9
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