External economies as a mechanism of agglomeration in EU manufacturing

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Abstract:

Productive externalities are significant determinants of agglomeration, not deeply studied at the industry and international level. We analyse the impact on productivity growth of technological externalities, both inter- and intraindustry, national or international, at the industry level for the EU countries and the period 1995–2002. The results confirm the advisability of considering international externalities when countries are taken as regions, whose omission underestimates national spillovers. Together with national endowments and a central geographical position, the growth of productivity is encouraged by national and international specialization as a general result; moreover, it is fuelled by stronger interindustry spillovers and productive diversification, a result more evident for high technology industries, while lower technology industries are more sensitive to the omission of international externalities. Economic integration seems to be relevant, because supranational regions with less friction for goods and factor movements are more likely to take advantage of external economies as a mechanism of productivity growth and agglomeration.

Keywords: EU countries; F14; O14; O47; R12; economies of agglomeration; external economies; geography; productivity

Document Type: Research Article

DOI: http://dx.doi.org/10.1080/00036846.2011.589824

Affiliations: 1: Department of Structure and Economic History and Public Economy, University of Zaragoza, Plaza de la Constitución s/n 22001 Huesca, España 2: Department of Structure and Economic History and Public Economy, University of Zaragoza, Gran Vía 2 50005 Zaragoza, Spain 3: Department of Economic Analysis, University of Zaragoza, Gran Vía 2 50005 Zaragoza, Spain

Publication date: December 1, 2012

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