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Über dieses Buch

This book describes various methods of analysis for ascertaining the effects of agglomeration economies, which are important for formulating regional economic policies. Specifically, it describes new analytical approaches using productivity and productive efficiency analyses as methods for understanding agglomeration economies. Additionally, the book provides application results for Japanese regions and proposes desirable regional policies. According to the new analytical methods advocated in this book, agglomeration economies are larger in major metropolitan areas than in local regions, and in the manufacturing sector than in the non-manufacturing sector. These results are consistent with general knowledge. Moreover, the majority of productivity growth pertaining to regional economies is explainable by improvements to accessibility. Improving accessibility for regions reduces transportation costs between them and strengthens agglomeration economies, which, in turn, enable the sustainable development of regional economies. Therefore, this book highlights the need not only to reinforce existing agglomeration areas, but also to form a network between these agglomerations and to strengthen it, so as to realize regional economic growth despite a decreasing population.



Chapter 1. Introduction and Summary

This chapter describes the research background three objectives of this book. The first objective is to clarify from multiple perspectives how industrial agglomeration influenced the growth of the regional economy in Japan during the 1980s and 1990s, when globalization of economic activity and the hollowing-out of industries were in progress. The second is to shed light on the industrial agglomeration effects from a dynamic perspective by looking at industrial development. The third objective is to propose a new analytical approach using the techniques of productive efficiency analysis. This book is comprised of ten chapters. A summary of each chapter is described in this chapter.
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Chapter 2. Empirical Knowledge of Agglomeration Economies

This chapter details the role of industrial agglomeration in regional economies, and discusses the issues found in existing empirical studies. The role industrial agglomeration plays in regional economies has been discussed and empirically studied for a long time. Agglomerations include several related industries, and an abundance of specialized workers. Therefore, it is possible for firms to achieve high productivity through input sharing, labor market pooling, and knowledge spillovers. Such effects can generally be found in two cases: The first case is where an agglomeration of similar industries results in an increase in productivity. The second case is where an agglomeration of different industries results in an increase in productivity. Traditionally, these effects have been measured by external economies of scale, but an analytical approach has recently been proposed that uses spatial density to seek the source of external economies. This chapter reviews these research trends.

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Chapter 3. A Traditional Approach to Agglomeration Economies

This chapter sheds empirical light on the relationship between agglomeration economies and regional economic growth and the impact of that relationship on the convergence of regional disparities in productivity, using a traditional approach to agglomeration economies. Based on Japanese prefectural data, an empirical analysis indicates that agglomeration economies have significant effects on regional economic growth. Furthermore, agglomeration economies contribute to economic convergence in the manufacturing industry, while they contribute to increasing disparities across regions in the non-manufacturing industry. These results suggest that an increase in the proportion of non-manufacturing industries has the potential to create regional disparities.
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Chapter 4. A New Approach to Agglomeration Economies

This chapter proposes a new approach to measure agglomeration economies in Japan. Specifically, this study employs the Solow residual to confirm whether agglomeration economies exist in both manufacturing and non-manufacturing industries. This study also shows that social overhead capital has a positive effect on agglomeration economies. Currently, such economies are robust only in large metropolitan areas; however, they are present throughout Japan because of the disproportionate allocation of social overhead capital within the country.

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Chapter 5. Dynamic Externalities: Theory and Empirical Analysis

This chapter focuses on dynamic externalities that are a source of competitive advantages, and reviews the related empirical studies. Research on technical-knowledge spillover, the core of dynamic externalities, is being widely conducted, mainly in the field of industrial organization theory. However, there are few empirical studies that have considered technical-knowledge spillover from the viewpoint of industrial agglomeration. Some studies estimate the extent and type of dynamic externalities, and find evidence consistent with dynamic externalities. Despite the different data sources used, methodologies are similar. This chapter reviews the main methodologies of dynamic externalities, and discusses empirical analysis issues of previous studies.
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Chapter 6. A New Approach to Dynamic Externalities (I)

This chapter investigates how dynamic externalities promote industrial growth in Japanese manufacturing industries. In contrast to previous studies, this study characterizes dynamic externalities by total factor productivity. Using panel data of Japanese prefectures from 1985 through 2000, this study finds evidence of localization (MAR) externalities and urbanization (Jacobs) externalities. However, this study does not find clear evidence that dynamic externalities play the role of centripetal forces for industrial location.

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Chapter 7. A New Approach to Dynamic Externalities (II)

This chapter examines the effects of industrial agglomeration on productivity growth in emerging industries. The analysis employs four-digit data of Japanese manufacturing industries, and shows that (1) ceramic, stone, and clay products, general machinery, and precision instruments and machinery enjoy the advantage generated by proximity to other industries; (2) new manufacturing technology sectors, such as industrial robots, tend to receive agglomeration effects, although information technology sectors do not; and (3) most emerging industries do not profit from economies of scale. These findings reveal that emerging industries benefit from agglomeration effects and face market competition.

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Chapter 8. Market Access, Agglomeration Economies, and Productive Efficiency (I)

This chapter examines whether agglomeration economies, market access, and public fiscal transfer have a positive or negative influence on the productive efficiency of Japanese regional industries. To accomplish the research objective, this chapter applies stochastic frontier analysis to a prefecture level Japanese data set that consists of estimated spatial and industrial economic activities. An empirical result obtained in this chapter indicates that both agglomeration economies and the improvement of market access have a positive influence on the productive efficiency of Japanese manufacturing and non-manufacturing industries. In contrast, public fiscal transfer has a negative impact on productive efficiency. These findings indicate that many prefectures that are characterized by weak market access and/or high dependence on public fiscal transfer are often associated with low productive efficiency.
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Chapter 9. Market Access, Agglomeration Economies, and Productive Efficiency (II)

This chapter examines the impacts of agglomeration economies and fiscal transfer on productive efficiency in Japanese regional industries. Two popular methodologies, stochastic frontier analysis and data envelopment analysis, are applied to measure productive efficiency. The empirical findings are summarized as follows: (1) Agglomeration economies improve productive efficiency. (2) Fiscal transfer negatively influences productive efficiency. (3) Those two findings are observed for aggregated manufacturing and non-manufacturing industries, and for sectors in manufacturing industries. (4) The importance of agglomeration economies for regional industries has increased in recent years. Based on these results, this chapter discusses effective regional policy for Japan.

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Chapter 10. Market Access, Agglomeration Economies, and New Firm Formation

This chapter analyzes the determinants of regional variations in new firm formation by industry, using the data of 47 prefectures in Japan. The results of this study reveal the following findings: (1) market access is the factor that promotes new firm formation in all industries, although the impact on new firm formation is greater in the service industry than in the manufacturing industry; (2) industrial agglomeration contributes to stimulating new firm formation in the manufacturing industry; and (3) while average wage is an important factor in the manufacturing industry, it is not significant in the service industry.

Akihiro Otsuka
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