Braunerhjelm, Pontus och Johansson, Dan (2003). ”The Determinants of Spatial Concentration: The Manufacturing and Service Sectors in an International Perspective.” Industry and Innovation, 10(1): 41-63. Länk.

Abstract: After being neglected for several decades, the forces and implications of the locational pattern of firms have recently become a focal issue in economic analysis. The questions addressed stretch from general equilibrium effects of alterations in costs of production and costs of market access on the location of production, to issues of a more partial character, such as local network externalities, industrial districts and spillover effects.

Particular attention has been paid to agglomeration forces, i.e. to what extent production is concentrated to geographically well-defined regions. Since concentration of production tends to increase the costs of locally available factors of production, one question concerns the exact nature of the benefits of spatial concentration required to overcome such cost disadvantages. The dominant theoretical rationale for ”agglomeration economies” to occur relies on productivity effects. In particular, spatial concentration of economic activities occurs in order to either exploit economies of scale or reap the benefits of pecuniary (demand and supply linkages) and nonpecuniary (knowledge) spillovers (Ciccone and Hall 1996; Fujita et al. 1999).

Furthermore, these factors interact with trade costs, i.e. the costs of supplying a market from a more distant location.

Despite the considerable theoretical advances made in this field of economics, empirical research is surprisingly scarce. Notable exceptions are studies on the regional dispersion of production in the USA (Ellison and Glaeser 1994, 1997; Kim 1995, 1999; Hanson 1998). There are also a couple of papers studying the effect of the European integration process on concentration of production (Amiti 1998; Haaland et al. 1998; Midelfart-Knarvik et al. 2000), but remarkably few consider spatial concentration within countries. Building on the work by Ellison and Glaeser, Maurel and Sedillot (1999) have recently presented a comparison of regional concentration of the manufacturing sector in France and the USA, however.

The purpose of this paper is to draw on these previous contributions, particularly the studies by Ellison and Glaeser (1997) and Maurel and Sedillot (1999), in order to examine the spatial concentration of Swedish production, and how it compares with that of France and the USA. This will be achieved by implementing a unique Swedish data-set embracing total Swedish production at the four-digit ISIC level for the years 1975 and 1993, which contains detailed information on regional distribution of production, size classes, trade costs and knowledge intensity.

The analysis will be pursued stepwise. First, we will examine the pattern of spatial concentration at an aggregate level, emphasizing the differences between — and the dynamics within — the manufacturing and service industries by calculating Ellison-Glaeser concentration indexes (henceforth denoted EG-indexes) for 1975 and 1993. As an alternative measure of concentration, we will also present results based on locational Gini-coefficients. In addition, a comparison of regional concentration in France, Sweden and the USA will be presented. Second, through regression analysis, we proceed with a detailed analysis of regional concentration in the Swedish manufacturing sector. More precisely, we test to what extent knowledge intensity, production technology, transportation costs, raw material intensity, initial regional concentration and, finally, the size and growth of industries, are capable of explaining geographically concentrated production structures.