How High-Tech Industries Benefit from the Economies of Agglomeration
Economic agents choose to concentrate at discrete locations across space. Industry clusters and cities are good examples of such concentration. The investigation of this behavior has been an important focus of essays in some subdisciplines of economic theory such as new growth theory and economic geography. The general interest is centered around measuring concentration and diversification of economic activity and their effect on regional productivity. We argue that in doing such investigation, we must achieve two critical steps: the first is to find statistically and empirically reasonable measures of these variables, and the second is to disentangle industries in terms of measuring the effect of these variables.
There exist several attempts at developing spatial measures of the concentration and diversification of economic activity. Some of these measures, such as Herfindahl (concentration) and entropy (diversification), are intuitively straightforward and relatively...
KeywordsIndustry Group Agglomeration Economy Productivity Equation Industry Employment Productivity Shifter
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