Assessing Agglomeration Economies in a Spatial Framework with Endogenous Regressors

32 Pages Posted: 19 May 2009  

Michael J. Artis

University of Manchester - Institute for Political & Economic Governance (IPEG)

Ernest Miguélez

University of Barcelona - Department of Econometrics

Rosina Moreno

University of Barcelona - Department of Econometrics

Date Written: April 2009

Abstract

This paper is concerned with the influence of agglomeration economies on economic outcomes across British regions. The concentration of economic activity in one place can foster economic performance due to the reduction in transportation costs, the ready availability of customers and suppliers, and knowledge spillovers. However, the concentration of several types of intangible assets can boost productivity as well. Thus, using an interesting dataset which proxies regional productivity, we will assess the relative importance of agglomeration and other assets, controlling both for endogeneity and for spatial autocorrelation at the same time. Our results suggest that agglomeration has a definite positive influence on productivity, although our estimates of its effect are dramatically reduced when spatial dependence and other hitherto omitted variables proxying intangible assets are controlled for.

Keywords: agglomeration economies, endogeneity, intangible assets, spatial autocorrelation

JEL Classification: C21, J34, R10, R11, R12

Suggested Citation

Artis, Michael J. and Miguélez, Ernest and Moreno, Rosina, Assessing Agglomeration Economies in a Spatial Framework with Endogenous Regressors (April 2009). CEPR Discussion Paper No. DP7267. Available at SSRN: https://ssrn.com/abstract=1405064

Michael J. Artis (Contact Author)

University of Manchester - Institute for Political & Economic Governance (IPEG) ( email )

Oxford Road
Manchester, M13 9PL
United Kingdom

Ernest Miguélez

University of Barcelona - Department of Econometrics ( email )

Av. Diagonal 690
Barcelona, E-08034
Spain

Rosina Moreno

University of Barcelona - Department of Econometrics ( email )

Analisi Quantitativa Regional Research Group
08007 Barcelona
Spain

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