Agglomeration economies and productivity in Indian industry

Type Journal Article - Journal of Development Economics
Title Agglomeration economies and productivity in Indian industry
Author(s)
Volume 73
Issue 2
Publication (Day/Month/Year) 2004
Page numbers 643-673
URL https://openknowledge.worldbank.org/bitstream/handle/10986/19562/multi0page.pdf?sequence=1
Abstract
The primary objective of this paper is to examine the extent to which agglomeration economies contribute to economic productivity. We distinguish three sources of agglomeration economies: (1) at the firm level from improved access to market centers, (2) at the industry level from intra-industry localization economies, and (3) at the regional level from inter-industry urbanization economies. There is considerable variation in the sources and magnitudes of agglomeration economies between industrial sectors—in particular, our results indicate that access to markets through improvements in inter-regional infrastructure is an important determinant of firm level productivity, whereas benefits of locating in dense urban areas do not appear to offset associated costs.

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