Agglomeration Economies, Globalization and Productivity: Firm Level Evidence for Slovenia

Katholieke Universiteit Leuven Discussion Paper No. 21

20 Pages Posted: 6 Aug 2012

See all articles by Jože P. Damijan

Jože P. Damijan

University of Ljubljana, Slovenia - Department of International Economics

Jozef Konings

Catholic University of Leuven (KUL) - LICOS - Centrum voor Transitie-economie; Centre for Economic Policy Research (CEPR); IZA Institute of Labor Economics

Date Written: June 1, 2011

Abstract

This paper analyzes the impact of agglomeration economies on firm level performance measured by total factor productivity for Slovenia. To estimate total factor productivity, we use a control function approach to capture endogenous input choices and self selection. In contrast to most of the literature, we introduce agglomeration economies that are linked to globalization. In particular, we distinguish between knowledge spillovers related to domestic and foreign sources of agglomeration effects and analyze the impact of regional export market exposure, which we call international market access. We find positive effects of regional knowledge spillovers and international market access on firm level total factor productivity. These effects are stronger for micro and small firms and for firms operating in service sectors. We also show that knowledge spillovers are amplified when there are more foreign multinationals in a region.

Keywords: total factor productivity, agglomeration economies, globalization

JEL Classification: R10, R15

Suggested Citation

Damijan, Joze P. and Konings, Jozef, Agglomeration Economies, Globalization and Productivity: Firm Level Evidence for Slovenia (June 1, 2011). Katholieke Universiteit Leuven Discussion Paper No. 21. Available at SSRN: https://ssrn.com/abstract=2125045 or http://dx.doi.org/10.2139/ssrn.2125045

Joze P. Damijan (Contact Author)

University of Ljubljana, Slovenia - Department of International Economics ( email )

Kardeljeva ploscad 17
Ljubljana, 1000
Slovenia
+386 61 189 24 00 (Phone)
+386 61 189 26 98 (Fax)

Jozef Konings

Catholic University of Leuven (KUL) - LICOS - Centrum voor Transitie-economie ( email )

Waaistraat 6 - box 3511
Leuven, 3000
Belgium
+32 16 326 589 (Phone)
+32 16 326 599 (Fax)

Centre for Economic Policy Research (CEPR)

London
United Kingdom

IZA Institute of Labor Economics

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

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