Effects Of Agglomeration Economies Research Articles

Overcoming the MAUP: impact of agglomeration economies on regional performance in Germany

ABSTRACT This study analyses the impact of agglomeration economies on employment growth at the individual firm and regional levels. The analysis is based on a sample of German firms, comprising a total of 134,081. We put forward a Modifiable Areal Unit Problem-free (MAUP-free) approach for the calculation of individual firm-specific agglomeration and local growth measures based on kernel density estimates. This enables us to examine the impact of agglomeration on firm and local growth within a continuous space framework. The econometric analysis demonstrates that the effects of agglomeration economies on firm and local growth are significantly disparate.

지역화경제와 도시화경제가 지역 산업의 생산성에 미치는 영향

Purpose: Based on Japan’s regional-industries data from 1994 to 2018, we intend to analyze and present Japanese evidence on the productivity-enhancing effects of localization economies(MAR externality) and urbanization economies(Jacobs externality), and to accumulate research evidence for comparative analysis between Korea and Japan on the effect of agglomeration economies on productivity.
 Research design, data, and methodology: In order to empirically analyze the impact of localization economies and urbanization economies on the labor productivity, RIETI’s R-JIP database, which provides high-quality data on 31 industries in 47 prefectures from 1994 to 2018, was used. We implement a panel co-integration test for non-stationary panel data, and estimate panel co-integration vectors.
 Results: As a result of the panel cointegration test, labor productivity by region in Japan has a long-term equilibrium relationship with the industrial specialization index and industrial diversity index. In the estimation result of the panel cointegration vector, In the case of manufacturing, localization economy improves labor productivity, but urbanization economies does not affect labor productivity. On the other hand, in the case of IT manufacturing, both localization and urbanization economies have a significant impact on improving labor productivity.
 Implications: It is necessary to strengthen manufacturing specialization (localization economies) in order to improve the productivity of regional manufacturing. In addition, in order to improve the productivity of the IT manufacturing, a policy to strengthen the localization economies is important, and in addition, a policy to expand the diversity of related industries.

Agglomeration Economies and Capitalization Rates: Evidence from the Dutch Real Estate Office Market

Agglomerations of economic activity result in higher rents for users. However, these benefits do not necessarily carry over to real estate investors because higher rents might also come with higher investment amounts and risks. We address this by testing whether the effects of agglomeration economies, as observed in office rents, carry over to capitalization rates as a theoretically more refined measurement of productivity externalities. Using transaction-based data for the period 1996-2011 in the Netherlands, we show that agglomeration economies result in capitalization rates that are 4.6 percent, or 40 basis points, lower.

NATURE & EFFECTS OF AGGLOMERATION ECONOMIES ON MANUFACTURING FIRMS IN PUNJAB

This paper quantifies the nature and effects of agglomeration economies on manufacturing firms of Punjab, the largest province of Pakistan. Using firm level cross-section data, this research first explains the extent of agglomeration of manufacturing firms in Punjab by calculating the agglomeration indicators i.e., urbanization and localization. We used the firm’s distance from urban center as a proxy for urbanization. We used spatial autocorrelation as a measure to show the localization of firms. We constructed the translog production function to measure the effects of urbanization and localization on firms’ annual turnover. The overall impact of both agglomeration economies is positive on firms’ turnover. However, the effect of urbanization economies is more prevalent than the effects of localization economies in Punjab. At two-digit sector level, thirteen out of twenty-three sectors showed positive effect of urbanization on firm’s turnover. For localization, ten sectors showed positive on firm’s turnover. The results are consistent with the literature and the existing status of manufacturing sector of Punjab. Keywords: Agglomeration, urbanization, localization, spatial autocorrelation, manufacturing, Punjab.

The effect of agglomeration economies and geography on the survival of accommodation businesses in Sicily

ABSTRACT The study explores the geographical pattern of the accommodation industry in the Italian insular region of Sicily, focusing on the determinants of the risk of market exit. We adopt a standard framework of business survival analysis where agglomeration economies play an important role. We then extend the analysis by considering the role of geography to explore whether the risk of market exit depends on nearness to desirable amenities. The geography is here measured by the distance from the coast and the altitude of the place where the firm is located. When we look at the entire population of accommodation firms that started between 2010 and 2014, we find evidence that the risk of failure increases for those which are over 2 km from the coast.

Medium and Small Cities, Culture and the Economy of Culture. A Review of the Approach to the Case of Spain in Light of International Scientific Scholarship

While most published studies on the economy of culture present a clear bias in favor of large cities, a significant international bibliography has emerged in recent years that privileges the perspective of medium and small cities. Unfortunately, the case of Spain has been largely overlooked by these analyses; this text is intended to remedy that oversight. To that end, a bibliographic compilation has been undertaken of studies on the cultural economy and cultural development in small and medium Spanish cities, providing a review of the specific literature as contrasted with the international literature. The main conclusions indicate that the Spanish case is similar to that of other western countries. Thus, clear confirmation is found that the effects of agglomeration economies and the so-called metropolitan bias also prevail in Spain, together with dispersion patterns that, to a certain extent, favor particular small and medium cities. Furthermore, even though the literature on the use of culture for urban renewal is abundant, the same cannot be said for the economics of culture, where considerable research gaps persist, both in the geographical coverage of case studies and in the social or labor impacts of this economic model.

The Effects of Pollution and Business Environment on Firm Productivity in Africa

In this article, we explore the links between city competitiveness and air pollution and business environment. Because competitive cities not only attract more productive firms but also facilitate their business, we choose to look at firm performance as a proxy for city competitiveness. We particularly focus on African firms because this region is developing fast, experiencing increasing pollution levels and the effects of agglomeration economies. We find two interesting results. First, the negative association between air pollution and firm performance can be seen at lower than expected levels of pollution. Second, the effects of capacity agglomeration on labor productivity growth are stronger compared to other regions. These findings suggest that cities in this region should address pollution issues soon, as they continue to grow fast and pollution levels are becoming an increasing concern.

Agglomeration Economies: An Analysis of the Determinants of Employment in the Cities of Ecuador

The objective of this investigation is to study the role of agglomeration economies (manufacturing) in urban employment growth, as a proxy for economic growth, between 1980 and 2010 in Ecuador. The three measures of agglomeration-specialization, diversity, and density-are tested to determine their effect on employment growth in industries. The empirical analysis is based on firm- and city-level data from manufacturing activities. A model is proposed to estimate the effect of agglomeration economies on the growth of employment and a regression is conducted using instrumental variables. In particular, the two-stage least squares (2SLS) estimator is used. We conclude that localization economies measured by a specialization index have a positive impact on the growth of employment in the period analyzed. The results are similar to those obtained by other work carried out both in developed and developing countries.

Economic geography of innovation in India: an empirical investigation

ABSTRACT Theory points toward geographical clustering of economic activity as an important determinant of innovation. A stylized fact about the Indian economy is the geographic concentration of both economic activity and innovation. The paper first analyses the spatial pattern of patent applications across Indian districts. Considering innovation to be a complex and collaborative process, this paper investigates the relevance of economic geography for innovation for all Indian districts. We estimate agglomeration economies by creating Herfindahl index, localization index and Access index for all districts. Using the count data model, we estimate the effect of agglomeration economies, knowledge spillovers along with other variables including R&D expenditure, human capital, institution and infrastructure in creating innovation. The results show a strong and statistically significant effect of the agglomeration variables on innovative activity in a district. R&D expenditures in own district and neighbouring districts also have a positive relationship with the number of patent applications. Moreover, institutions, infrastructure and local socio-economic conditions do matter for innovative activity.

Relatedness economies, absorptive capacity, and economic catch-up: firm-level evidence from China

Abstract This paper examines the effect of agglomeration economies on firm productivity and the role of absorptive capacity in China. Taking into account the transitioning economy context, I further exploit the gradual and spatially uneven implementation of market-oriented reforms to track the relative importance of firms’ absorptive capacity for economic catch-up. The three main results are as follows. First, firms exhibit higher productivity when located in an area with a denser network of related activities, particularly for firms with higher absorptive capacity. Second, the sources of the productivity gains are driven by externalities that arise from better access to inputs, similar workers and technological-related knowledge spillovers. Third, the role of absorptive capacity becomes more important for boosting productivity following more versus less intensive market-oriented economic reforms. These findings have important policy implications for transitioning economies and suggest that market reforms promote efficiency improvements related to performing actual R&D as well as encourage firms to seek out external sources of knowledge in order to attain market competitiveness.

Effects of dynamic and spatial externalities on local growth: Evidence from Brazil

AbstractThis paper analyses the impact of economic externalities on the local growth emphasizing the industrial, geographic, and temporal scope of agglomeration economies. Thus, we estimated a spatial dynamic panel model using GMM associated with the use of data at different levels of sectoral aggregation. Estimation takes into account the endogeneity of agglomeration economies. Our database consists of 558 Brazilian regions for 1995–2015. The main results suggest that while externalities act in a local dimension they also have a regional scale. These externalities are determined by their temporal trajectory. The effects of agglomeration economies on local growth are sensitive to the choice of sectoral aggregation. Local growth exhibits positive specialization effects and negative diversity effects. However, greater industrial diversity of neighbouring regions has a positive impact on local growth.

Agglomeration Economies in the Presence of an Informal Sector: The Colombian Case

This paper analyzes the relationship between agglomeration economies and wages in the context of a developing country, taking into account the marked presence of the informal sector. Using data from Colombia, we investigate the effect of agglomeration economies on formal and informal productivity, inquiring whether the informal sector achieves benefits from agglomeration economies and whether there are differences between the formal and informal sectors in terms of agglomeration returns. We estimate an elasticity of wages with respect to employment density of around -4% for the formal sector, and around 3% for the informal sector. As such, agglomeration has a significantly positive effect on the productivity of the informal sector. The results show that informal workers' productivity in a city twice as dense is 2% greater, implying that wages in denser areas are 14% higher than in less dense areas. In contrast, for the formal sector, the results show that productivity in formal workers in a city twice as dense is of around 3% lower, leading such workers to earn 17% less in denser areas. Factors associated with the constraints relative to the creation of formal jobs, a greater labor supply of formal workers, and des-amenities very common in big cities in developing countries, could explain these lower agglomeration returns in the formal sector.

Agglomeration economies in knowledge production over the industry life cycle: evidence from the ICT industry in the Seoul Capital Area, South Korea

It is well acknowledged that agglomeration economies contribute to knowledge production, which is crucial in the current knowledge-based economy. The literature on evolutionary agglomeration stresses that the effects of agglomeration economies may vary depending on the industry life cycle. But much is not known about what sources of agglomeration economies play an important role in knowledge production at each stage of the life cycle: industrial localization versus diversification, and leadership by large firms versus competition among small firms. This study investigates knowledge production in the Information and Communication Technology (ICT) industry in the capital area around Seoul, South Korea, to answer this question. A panel data set for the patent applications during the period of 2006–2011 is used to model knowledge production in terms of different sources of agglomeration economies. The results show that distinct patterns can be found depending on the industry life cycle. Leadership by large firms has positive effects on knowledge production during the growth stage (2006–2009), while its effects become insignificant during the maturity stage (2009–2011). This is in line with the expectations of evolutionary agglomeration theory. The effects of industrial diversity change from negative to insignificant as the ICT industry enters the maturity stage. In the meantime, competition always has positive effects, while localization always has no significant effects.

Technological Capability, Agglomeration Economies and Firm Location Choice

Jo Y. and Lee C.-Y. Technological capability, agglomeration economies and firm location choice, Regional Studies. This paper argues that a firm's ability to produce and absorb technological knowledge, or technological capability, influences its choice of location among regions characterized by different types of agglomeration. This paper found that geographically bounded knowledge externalities, one of the forces that attract firms into a particular location, have a differential effect on firm location choice across firms depending on the level of their technological capability: for firms with low technological capability knowledge externalities from co-located competitors, or competitive specialization, have a stronger positive effect on their location choice, while for firms with high technological capability knowledge externalities from co-located firms from related and complementary industries, or complementary specialization, more strongly influence their location choice. Furthermore, the differential effect of agglomeration economies between low- and high-capability firms is more pronounced in industries with strong non-legal appropriability, implying that firms can use their location choice as a strategic tool for dealing with the spillovers of tacit knowledge.

The Effect of Effective Tax Rate Differentials and Clustering on Investment in Belgium

This paper looks at the effect of agglomeration economies on the tax sensitivity of investments in Belgian firms using detailed firm-level data. We find a negative effect of taxation on investment. However, this is dampened by the presence of agglomeration externalities. Our results hint to the importance of local labor market and supplying industries for firm investment decisions and follow the more nuanced view on tax competition of the New Economic Geography models.

도시의 형태가 교통혼잡비용에 미치는 영향연구

도시가 점점 거대화가 되어감에 따라 지역경제의 측면에서는 지역의 생산량을 증가시키는 긍정적 결과와 함께 환경오염, 교통혼잡과 같은 부정적인 사회적 문제들을 가져왔다. 이러한 현상에 대하여 Cervero(2000)은 "도시의 물리적인 구조와 형태는 경제적인 성과와 비용을 동시에 내포하고 있다."고 주장하였다. Cervero가 주장한 내용을 살펴보면 '도시가 점점 거대화가 되어감에 따라 경제적인 성과인 지역의 생산량, 규모의 경제, 집적경제의 효과가 증가되는 긍정적인 효과가 나타나지만, 반면에 환경오염, 교통 혼잡과 같은 경제적 비용(손실비용)도 동시에 발생하게 되었다.'라고 언급하고 있다. 이는 경제적 성과 측면의 긍정적 효과뿐만 아니라 이로 인해 발생하는 환경오염 및 교통 혼잡과 같은 경제적 비용에 대한 손실도 감안해야 한다는 것이다. 이에 본 연구에서는 서울과 같은 대도시에서 가장 대표적인 경제적 비용인 교통혼잡비용과 도시의 물리적 구조를 대변하는 형태변수와의 관계를 실증분석하고 시사점을 제시하고자 한다. 실증분석을 위한 영향 모형개발 결과, GRDP(0.604), 인구(0.582), 고용지니계수(0.296), 인구지니계수(0.254)순으로 교통혼잡비용을 발생시키고 있는 것으로 나타났다. GRDP 및 인구와 같은 지역의 규모를 대변하는 요인이 집중할 경우 도시가 혼잡해지며, 지니계수(인구 고용)와 같은 지역간 불균등을 대변하는 요인이 증가할수록 고용관련 이동의 증가로 인해 교통혼잡비용이 증가하는 것으로 분석되었다. 인구와 고용 모두가 지리적으로 특정지역에 편중되면 발생하는 현상으로 판단된다. Since the urbanization process has been taking place, negative outcomes such as environmental pollution and traffic congestion have produced as well. Reflecting the phenomenon, our study assumed that physical structure of urban form were implicit in relation to both economic performance and cost. It can be interpreted that as the urban space has been growing bigger, economic performances such as regional product output, economy of scale and the effect of agglomeration economies are increased. On the contrary, the negative effects such as environmental pollution and traffic congestion were incurred as economic loss and expenses. It means that even though economic performance can help increase regional product output, we should consider the loss on economic expenses which are paid for social problems such as environmental pollution and traffic congestion, which are caused by urbanization. Therefore, this study aims to statistically validate the relationship between traffic congestion as the most representative economy costs and physical characteristics of urban in a large city such as Seoul and to suggest its implications. As a result of model development for empirical analysis, GRDP(0.604), the population(0.582), employment GINI coefficients(0.296), population GINI coefficients(0.254) in order led to congestion cost. We can come to the conclusion that in case of scale factor such as the population, if the population tends to concentrate, urban becomes more crowded and that if GINI coefficients (the population, employment) which are variable on inequality according to region have the disparity with surrounding areas, congestion cost is caused a lot on account of movement related with employment. In addition, this phenomenon was caused if both the population and employment were geographically biased on one side.

Corporate Taxation, Agglomeration and FDI: Firm Level Evidence for Belgium

This paper analyzes the sensitivity of Belgian outbound FDI to corporate taxation rates and economic clustering. Our approach involves detailed balance sheet data of the foreign affiliates as our proxy of FDI and a measure of regional knowledge spillovers as agglomeration variable. The results reveal that investments are sensitive to changes in fiscal policy, with an average tax sensitivity of around -1.5. We also pick up an effect of agglomeration economies: a regional increase in the number of own industry firms dampens tax sensitivity.

Regional determinants of manufacturing start-ups in Greece: evidence on the effect of agglomeration economies

This article analyses the regional determinants of manufacturing start-up ratios in Greece. Emphasis is placed on the effect of agglomeration economies, which are distinguished between urbanization and localization economies. The data refer to the establishments realized in the 51 Greek prefectures (NUTS III level) in 2005. Results indicate that negative urbanization economies prevail. Localization economies in the form of positive Marshallian and negative Jacobian externalities are observed and constitute important determinants of start-up ratios. Results regarding the effect of other factors such as expected demand and profit, cost and human resources factors are as anticipated.

Location and Accessibility Mediated Influences on Office Firm Closure Rates: A Proportional Hazard Model

This paper addresses an exploratory study about the mediated influence of a set of location and accessibility attributes along with firm types and the effect on office firm closures. We use a proportional hazard modeling approach, examining the probability that an office firm will go out of business in any given year, conditional on the fact that it did not go out of business in the years prior. Variables include urbanization levels and regional effects; accessibility to airports, train stations, shopping centers and the roadway network; availability of parking facilities and schools; demographic and economic aspects; effects of agglomeration economies; rent price; and the type of economic activity of the office firm. Most of them presented significant information to assist in the explanation of the firm closure. Also, interaction effects between covariates and firm types brought a better understanding about the firm closure patterns in relation to urban characteristics. Assessing firm closures is an element of a firm demographic approach and overall dynamics. In turn, this is part of a multi-agent system to simulate the co-evolution of firm dynamics and changes in activity-travel patterns.

Which Communities Should Be Afraid of Mobility? The Effects of Agglomeration Economies on the Sensitivity of Firm Location to Local Taxes

Which Communities Should Be Afraid of Mobility? The Effects of Agglomeration Economies on the Sensitivity of Firm Location to Local Taxes