Transport costs fell precipitously during the last century leading many observers to posit that the world has ‘become flat’. If this were true, the costs of transporting goods should no longer have much bearing on firms’ location choices and the spatial structure of economic activity. This column, using manufacturing data for Canada from 1990 to 2008, argues that despite a decline in geographical concentration of industries, location patterns still change with fluctuations in transport costs.
Kristian Behrens, Théophile Bougna, Mark Brown, Thursday, March 5, 2015
Hongyong Zhang, Monday, July 21, 2014
The Chinese government has been actively promoting innovation via policies such as R&D subsidies, tax relief, and location policies. Since 1995, central and local governments have established more than 100 clusters in over 60 cities. This column presents new evidence on the effect of the concentration of firms on product innovation (new products) in the manufacturing industries.
William Kerr, Oliver Falck, Christina Günther, Stephan Heblich, Monday, February 11, 2013
Governments around the world are fostering industrial ‘clusters’, hoping to create agglomeration economies. Using the political division of Germany in 1949, this column argues that heightened firm density can raise costs for incumbent firms in addition to the often-cited agglomeration benefits. This is important for policymakers contemplating efforts to promote their local areas by targeted cluster initiatives and bidding to attract large firms. Policy efforts that are neutral in orientation – such as physical infrastructure investments or improving the generation and dissemination of knowledge – may be more effective alternatives.
Marius Brülhart, Wednesday, January 7, 2009
Paul Krugman suggests that his Nobel-prize-winning “core-periphery” model was perhaps more relevant a century ago than today. This appears to be true in terms of overall manufacturing concentrations in Europe and North America, which are unravelling. Large-scale agglomeration forces, however, are alive and well in the developing world, as are localised sectoral clustering phenomena in industrialised countries.
Philippe Martin, Thierry Mayer, Florian Mayneris, Friday, July 4, 2008
Governments spend heavily on industrial clusters. They are wasting their money if firms naturally cluster to reap agglomeration gains. This column presents evidence from France that questions policymakers’ enthusiasm for promoting clusters.
Philippe Martin, Thierry Mayer, Florian Mayneris, Monday, June 16, 2008
The analysis of agglomeration economies focuses around two separate important questions: how large the gains from agglomeration are and how much firms internalize these gains when deciding where to locate. In order to provide answers, the authors of CEPR DP6858 focus on agglomeration externalities and distinguish between urbanization economies, which refer to the cross fertilization of different industries on a given territory and localization economies, which group the concepts of externalities on inputs market, on the labour market and knowledge.