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Geographic concentration and the temporal scope of agglomeration economies: An index decomposition

Lookup NU author(s): Professor Colin Wren


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This paper decomposes a geographical concentration index to examine for differences in the temporal scope of natural advantages and spillovers on industrial location. The former are time-invariant location attributes, whereas spillovers may decay due to obsolescence and the spatial diffusion of knowledge. Coupled with a frequency estimator approach, the paper develops an empirical methodology for quantifying these effects. This is tested by numerical simulation and by application to a dataset on the location of manufacturing foreign direct investment across the regions of Great Britain over 1985-2005. The results indicate that spillovers decay and extend for about 5 years on average across industries. Spillovers have the same location effect as natural advantages but only over a 3-year time horizon.

Publication metadata

Author(s): Wren C

Publication type: Article

Publication status: Published

Journal: Regional Science and Urban Economics

Year: 2012

Volume: 42

Issue: 4

Pages: 681-690

Print publication date: 23/03/2012

ISSN (print): 0166-0462

Publisher: Elsevier BV


DOI: 10.1016/j.regsciurbeco.2012.03.004


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