This study examines the effect of agglomeration economies on productivity growth in Indonesian manufacturing industries during the first decade of this century. Productivity growth is measured at the firm level using the Färe-Primont Productivity Index. Each firm's productivity growth is then regressed against a set of firm and industry characteristics, including three measures of agglomeration representing the effects of specialisation, diversity and competition. The results show evidence of a positive specialisation effect and a negative diversity effect for aggregate manufacturing and sub-sectors. Furthermore, there are mixed effects across industries, suggesting that Porter's competition externalities stimulate firm productivity growth under some conditions but not others.

When firms and people are located near each other in cities and in industrial clusters, they benefit in various ways, including by reducing the costs of exchanging goods and ideas. One might assume that these benefits would become less important as transportation and communication costs fall. Paradoxically, however, cities have become increasingly important, and even within cities industrial clusters remain vital. Agglomeration Economics brings together a group of essays that examine the reasons why economic activity continues to cluster together despite the falling costs of moving goods and transmitting information. The studies cover a wide range of topics and approach the economics of agglomeration from different angles. Together they advance our understanding of agglomeration and its implications for a globalized world.

The new Handbook of Regional and Urban Economics: Cities and Geography reviews, synthesizes and extends the key developments in urban and regional economics and their strong connection to other recent developments in modern economics. Of particular interest is the development of the new economic geography and its incorporation along with innovations in industrial organization, endogenous growth, network theory and applied econometrics into urban and regional economics. The chapters cover theoretical developments concerning the forces of agglomeration, the nature of neighborhoods and human capital externalities, the foundations of systems of cities, the development of local political institutions, regional agglomerations and regional growth. Such massive progress in understanding the theory behind urban and regional phenomenon is consistent with on-going progress in the field since the late 1960's. What is unprecedented are the developments on the empirical side: the development of a wide body of knowledge concerning the nature of urban externalities, city size distributions, urban sprawl, urban and regional trade, and regional convergence, as well as a body of knowledge on specific regions of the world—Europe, Asia and North America, both current and historical. The Handbook is a key reference piece for anyone wishing to understand the developments in the field.

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.

Agglomeration economies have been analyzed in the literature as drivers of economic growth, as these contribute to productivity enhancement. The primary objective of this paper is to ascertain the existence of agglomeration economies, and to examine the extent to which these have contributed to productivity growth in India. Two sources of agglomeration economies are distinguished (i) at the industry level localization economies of intra-industry linkage; and (ii) at the regional level inter-industry urbanization economies. Growth accounting framework is used with agglomeration parameters included in the shift term of a general production function, coefficients of which are estimated through panel data regression. I employ state level data for 25 state economies in India for the period 1980-81 to 2006-07. There is evidence that urbanization economies tend to exist; however, there is considerable variation in the sources and magnitude of agglomeration economies across sectors. Results indicate that for service sector, the economies of urbanization exist on a lower level of urbanization, whereas for manufacturing, these economies are present at higher levels. Results support regional diversity more than localization, even if some differences can be seen across sectors.

The 32nd issue of the International Productivity Monitor is a special issue produced in collaboration with the OECD. All articles published in this issue were selected from papers presented at the First Annual Conference of the OECD Global Forum on Productivity held in Lisbon, Portugal, July ...

"The authors' analysis of manufacturing plants sampled from India's major industrial centers shows large productivity gaps across cities. The gaps partly reflect differences in agglomeration economies and in market access. However, they are also explained to a greater extent by differences in the degree of labor regulation and in the severity of power shortages. This is an indication that governments can help narrow regional disparities in industrial growth by fostering the "right business environment" in locations where industry might otherwise be held back by powerful forces of economic geography. There is indeed a pattern in the data whereby geographically disadvantaged cities seem to compensate partially for their natural disadvantage by having a better business environment than more geographically advantaged locations. "--World Bank web site.