Agglomeration Economies and Small and Medium Enterprises' Location in Urban Area

Abstract

This paper analyzes small and medium enterprises' location behavior as the role of small and medium enterprises increases in production and employment. Also this paper provides with an answer to the question: Does localization economies have more effects on enterprises' location regardless of their size. Recent studies report that localization economies are more important than urbanization economies in Korean manufacturing industry. Then they conclude that decentralization policies are successful in view of productivity. This paper acquires quite interesting results. The location behavior of large enterprises is consistent with previous studies. However, small and medium enterprises show different location pattern. Especially, urbanization economies are superior in small enterprises' location. These results indicate that current Korean government's efforts for decentralization have little effects and therefore special consideration is needed for small and medium enterprises' location.