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Testing for Localisation Using Micro-Geographic Data
TL;DR: In this article, distance-based tests of localisation were developed to assess the statistical significance of departures from randomness, and the authors applied these tests to an exhaustive UK data set and found that only 51% of the industries were localised at a 5% confidence level.
Abstract: To study the detailed location patterns of industries, and particularly the tendency for industries to cluster relative to overall manufacturing, we develop distance-based tests of localisation. In contrast to previous studies, our approach allows us to assess the statistical significance of departures from randomness. In addition, we treat space as continuous instead of using an arbitrary collection of geographical units. This avoids problems relating to scale and borders. We apply these tests to an exhaustive UK data set. For four-digit industries, we find that (i) only 51% of them are localised at a 5% confidence level, (ii) localisation takes place mostly at small scales below 50 kilometres, (iii) the degree of localisation is very skewed, and (iv) industries follow broad sectoral patterns with respect to localisation. Depending on the industry, smaller establishments can be the main drivers of both localisation and dispersion. Three-digit sectors show similar patterns of localisation at small scales as well as a tendency to localise at medium scales.
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6,278 citations
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TL;DR: In this article, the authors consider the empirical literature on the nature and sources of urban increasing returns, also known as agglomeration economies, and show that the effects of aggoglomeration extend over at least three different dimensions.
Abstract: This paper considers the empirical literature on the nature and sources of urban increasing returns, also known as agglomeration economies. An important aspect of these externalities that has not been previously emphasized is that the effects of agglomeration extend over at least three different dimensions. These are the industrial, geographic, and temporal scope of economic agglomeration economies. In each case, the literature suggests that agglomeration economies attenuate with distance. Recently, the literature has also begun to provide evidence on the microfoundations of external economies of scale. The best known of these sources are those attributed to Marshall (1920): labor market pooling, input sharing, and knowledge spillovers. Evidence to date supports the presence of all three of these forces. In addition, there is also evidence that natural advantage, home market effects, consumption opportunities, and rent-seeking all contribute to agglomeration.
2,004 citations
TL;DR: In this article, the authors discuss the measurement of coagglomeration and use data from the Census Bureau's Longitudinal Research Database from 1972 to 1997 to compute pairwise coagglomeration measurements for U.S. manufacturing industries.
Abstract: Many industries are geographically concentrated. Many mechanisms that could account for such agglomeration have been proposed. We note that these theories make different predictions about which pairs of industries should be coagglomerated. We discuss the measurement of coagglomeration and use data from the Census Bureau's Longitudinal Research Database from 1972 to 1997 to compute pairwise coagglomeration measurements for U.S. manufacturing industries. Industry attributes are used to construct measures of the relevance of each of Marshall's three theories of industry agglomeration to each industry pair: (1) agglomeration saves transport costs by proximity to input suppliers or final consumers, (2) agglomeration allows for labor market pooling, and (3) agglomeration facilitates intellectual spillovers. We assess the importance of the theories via regressions of coagglomeration indices on these measures. Data on characteristics of corresponding industries in the United Kingdom are used as instruments. We find evidence to support each mechanism. Our results suggest that input-output dependencies are the most important factor, followed by labor pooling.
1,142 citations
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TL;DR: This paper developed a general framework showing that technology and product market spillovers have testable implications for a range of performance indicators, and exploited these using distinct measures of a firm's position in the technology space and the product market space.
Abstract: Support for many R&D and technology policies relies on empirical evidence that R&D ‘spills over’ between firms. But there are two countervailing R&D spillovers: positive effects from technology spillovers and negative effects from business stealing by product market rivals. We develop a general framework showing that technology and product market spillovers have testable implications for a range of performance indicators, and exploit these using distinct measures of a firm’s position in technology space and product market space. We show using panel data on US firms between 1981 and 2001 that both technology and product market spillovers operate, but that net social returns are several times larger than private returns. The spillover effects are also revealed when we analyze three high-tech sectors in detail - pharmaceuticals, computer hardware and telecommunication equipment. Using the model we evaluate three R&D subsidy policies and show that the typical focus of support for small and medium firms may be misplaced.
905 citations
TL;DR: For example, this article argued that research on cities is different from research on countries, and that work on places within countries needs to consider population, income, and housing prices simultaneously.
Abstract: *Empirical research on cities starts with a spatial equilibrium condition: workers and fi rms are assumed to be indifferent across space. This condition implies that research on cities is different from research on countries, and that work on places within countries needs to consider population, income, and housing prices simultaneously. Housing supply elasticity will determine whether urban success reveals itself in the form of more people or higher incomes. Urban economists generally accept the existence of agglomeration economies, which exist when productivity rises with density, but estimating the magnitude of those economies is diffi cult. Some manufacturing fi rms cluster to reduce the costs of moving goods, but this force no longer appears to be important in driving urban success. Instead, modern cities are far more dependent on the role that density can play in speeding the fl ow of ideas. Finally, urban economics has some insights to offer related topics such as growth theory, national income accounts, public economics, and housing prices. (JEL R11, R23, R31, R32)
837 citations
References
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TL;DR: Cressie et al. as discussed by the authors presented the Statistics for Spatial Data (SDS) for the first time in 1991, and used it for the purpose of statistical analysis of spatial data.
Abstract: 5. Statistics for Spatial Data. By N. Cressie. ISBN 0 471 84336 9. Wiley, Chichester, 1991. 900 pp. £71.00.
5,555 citations
TL;DR: This chapter discusses how to make practical use of spatial statistics in day-to-day analytical work, and some examples from the scientific literature suggest a straightforward and efficient way to do this.
Abstract: Spatial statistics — analyzing spatial data through statistical models — has proven exceptionally versatile, encompassing problems ranging from the microscopic to the astronomic. However, for the scientist and engineer faced only with scattered and uneven treatments of the subject in the scientific literature, learning how to make practical use of spatial statistics in day-to-day analytical work is very difficult.
2,238 citations
TL;DR: In this paper, the authors provide a rigorous foundation for the second-order analysis of stationary point processes on general spaces, including the line and hyperplane processes of Davidson and Krickeberg.
Abstract: This paper provides a rigorous foundation for the second-order analysis of stationary point processes on general spaces. It illuminates the results of Bartlett on spatial point processes, and covers the point processes of stochastic geometry, including the line and hyperplane processes of Davidson and Krickeberg. The main tool is the decomposition of moment measures pioneered by Krickeberg and Vere-Jones. Finally some practical aspects of the analysis of point processes are discussed.
1,803 citations
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TL;DR: The authors discusses the prevalence of Silicon Valley-style localizations of individual manufacturing industries in the United States Several models in which firms choose locations by throwing darts at a map are used to test whether the degree of localization is greater than would be expected to arise randomly and to motivate a new index of geographic concentration.
Abstract: This paper discusses the prevalence of Silicon Valley-style localizations of individual manufacturing industries in the United States Several models in which firms choose locations by throwing darts at a map are used to test whether the degree of localization is greater than would be expected to arise randomly and to motivate a new index of geographic concentration The proposed index controls for differences in the size distribution of plants and for differences in the size of the geographic areas for which data is available As a consequence, comparisons of the degree of geographic concentration across industries can be made with more confidence We reaffirm previous observations in finding that almost all industries are localized, although the degree of localization appears to be slight in about half of the industries in our sample We explore the nature of agglomerative forces in describing patterns of concentration, the geographic scope of localization, and the extent to which agglomerations involve plants in similar as opposed to identical industries
1,601 citations
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TL;DR: This paper studied cross-country patterns of economic growth from the viewpoint of income distribution dynamics and found that the profound empirical regularity is an "emerging twin peaks" in the cross-sectional distribution, not simple patterns of convergence or divergence.
Abstract: This paper studies cross-country patterns of economic growth from the viewpoint of income distribution dynamics. Such a perspective raises new empirical and theoretical issues in growth analysis: the profound empirical regularity is an "emerging twin peaks" in the cross-sectional distribution, not simple patterns of convergence or divergence. The theoretical problems raised concern for interaction patterns among sub-groups of economies, not only problems of a single economy's accumulating factor inputs and technology growth.
1,247 citations