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Agglomeration economies in Vietnam: A firm-level analysis

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  • Gokan, Toshitaka
  • Kuroiwa, Ikuo
  • Nakajima, Kentaro

Abstract

This study examines the effects of agglomeration economies on firm-level productivity in Vietnam. We develop new measures of localization and urbanization economies using the cluster detection technique proposed by Mori and Smith (2014) and estimate the effects of localization and urbanization economies by firm type—state-owned, private, and foreign-owned. Furthermore, we decompose the effects of agglomeration economies into three sources: inter-industry transaction relationships, knowledge spillovers, and labor pooling. We show that localization economies improve firm-level productivity in Vietnam, with firms in clustered areas having higher productivity. However, such economies do not improve the productivity of state-owned enterprises. We also find that urbanization economies improve productivity only for foreign-owned firms, but do not benefit state-owned and private firms. On the other hand, decomposition of agglomeration economies suggests that transactions are effective only for private firms, while knowledge spillovers and labor pooling are effective for foreign-owned firms.

Suggested Citation

  • Gokan, Toshitaka & Kuroiwa, Ikuo & Nakajima, Kentaro, 2019. "Agglomeration economies in Vietnam: A firm-level analysis," Journal of Asian Economics, Elsevier, vol. 62(C), pages 52-64.
    • Handle: RePEc:eee:asieco:v:62:y:2019:i:c:p:52-64
    DOI: 10.1016/j.asieco.2019.03.002
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    Cited by:

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    2. Hoang, Manh Cuong & Schiller, Daniel, 2023. "Which firms benefit the most from agglomeration? New evidence from an emerging country with consistent measure of productivity," Journal of Asian Economics, Elsevier, vol. 86(C).

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    More about this item

    Keywords

    Agglomeration economies; Economic geography; Productivity; Vietnam;
    All these keywords.

    JEL classification:

    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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