Agglomeration, Innovation and Regional Development: Theoretical Perspectives and Meta-Analysis

Tinbergen Institute Discussion Paper No. 07-079/3

37 Pages Posted: 16 Oct 2007

See all articles by Henri L. F. de Groot

Henri L. F. de Groot

VU University Amsterdam - Department of Spatial Economics; Tinbergen Institute

Jacques Poot

Vrije Universiteit Amsterdam, Department of Spatial Economics; University of Waikato - National Institute of Demographic and Economic Analysis; Motu Economic and Public Policy Research; IZA Institute of Labor Economics

Martijn Smit

Utrecht University - Department of Economic Geography; VU University Amsterdam - Department of Spatial Economics

Date Written: October 2007

Abstract

Innovation and technological change are central to the quest for regional development. In the globally-connected knowledge-driven economy, the relevance of agglomeration forces that rely on proximity continues to increase, paradoxically despite declining real costs of information, communication and transportation. Globally, the proportion of the population living in cities continues to grow and sprawling cities remain the engines of regional economic transformation. The growth of cities results from a complex chain that starts with scale, density and geography, which then combines with industrial structure characterised by its extent of specialisation, competition and diversity, to yield innovation and productivity growth that encourages employment expansion, and further urban growth through inward migration. This paper revisits the central part of this virtuous circle, namely the Marshall-Arrow-Romer externalities (specialisation), Jacobs externalities (diversity) and Porter externalities (competition) that have provided alternative explanations for innovation and urban growth. The paper evaluates the statistical robustness of evidence for such externalities presented in 31 scientific articles, all building on the seminal work of Glaeser et al. (1992). These articles yield 393 estimates of those externalities, which are characterized by their sign and statistical significance. We aim to explain variation in estimation results using study characteristics by means of ordered probit analysis. The evidence in the literature on the role of the specific externalities is rather mixed, although for each type of externality we can identify how various aspects of primary study design, such as the adopted proxy for growth, the data used, and the choice of covariates influence the outcomes.

Keywords: innovation, regional development, agglomeration, urban externalities, meta-analysis

JEL Classification: C52, O18, O31, R11

Suggested Citation

de Groot, Henri L.F. and Poot, Jacques and Smit, Martijn J., Agglomeration, Innovation and Regional Development: Theoretical Perspectives and Meta-Analysis (October 2007). Tinbergen Institute Discussion Paper No. 07-079/3, Available at SSRN: https://ssrn.com/abstract=1021942 or http://dx.doi.org/10.2139/ssrn.1021942

Henri L.F. De Groot (Contact Author)

VU University Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
Amsterdam, 1081 HV
Netherlands
+31 20 598 6168 (Phone)
+31 20 598 6004 (Fax)

Tinbergen Institute

Gustav Mahlerplein 17
Amsterdam, 1082 MS
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Jacques Poot

Vrije Universiteit Amsterdam, Department of Spatial Economics ( email )

De Boelelaan 1105
1081HV Amsterdam
Netherlands

University of Waikato - National Institute of Demographic and Economic Analysis ( email )

Te Raupapa
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Hamilton, 3240
New Zealand

Motu Economic and Public Policy Research

Level 1, 93 Cuba Street
P.O. Box 24390
Wellington, 6142
New Zealand

IZA Institute of Labor Economics

P.O. Box 7240
Bonn, D-53072
Germany

Martijn J. Smit

Utrecht University - Department of Economic Geography ( email )

Heidelberglaan 2
Utrecht
Netherlands

VU University Amsterdam - Department of Spatial Economics ( email )

De Boelelaan 1105
Amsterdam, 1081 HV
Netherlands
+31-20-5983964 (Phone)

HOME PAGE: http://staff.feweb.vu.nl/mjsmit/

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