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Co-Location Of Manufacturing & Producer Services – A Simultaneous Equation Approach

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  • Andersson, Martin

    (CESIS - Centre of Excellence for Science and Innovation Studies, Royal Institute of Technology)

Abstract

This paper investigates the tendencies of co-location between producer services and manufacturing across Swedish functional regions. The employment in these industries is modeled as being determined simultaneously, i.e. the location of producer services is a function of the location of manufacturing and vice versa. The rationale for the simultaneous approach comes from an assumption of a supplier-customer relation between the two categories of industries. Manufacturing firms benefit from short-distance supply of producer services. The service suppliers benefit from accessibility to customers among the manufacturing firms. Accessibility based on time distances is incorporated into the analysis to allow for inter-regional effects. Controlling for the availability of a skilled workforce and the size of the private sector for producer services and the average wage-level and the size of the private sector for manufacturing, the empirical results suggest that the location manufacturing employment can be explained by its accessibility to producer services. However, accessibility to manufacturing is not a statistically significant explanatory factor for the location of producer services. The interpretation is that many producer services are produced for other service industries, which is consistent with previous empirical results. Also, the results indicate that the elasticity of knowledge intensive manufacturing with respect to (w.r.t) accessibility to producer services is smaller than the elasticity of non-knowledge intensive manufacturing w.r.t accessibility to producer services.

Suggested Citation

  • Andersson, Martin, 2004. "Co-Location Of Manufacturing & Producer Services – A Simultaneous Equation Approach," Working Paper Series in Economics and Institutions of Innovation 8, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    • Handle: RePEc:hhs:cesisp:0008
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    Citations

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    Cited by:

    1. Martin Andersson & Florian Noseleit, 2011. "Start-ups and employment dynamics within and across sectors," Small Business Economics, Springer, vol. 36(4), pages 461-483, May.
    2. Michael Wyrwich, 2011. "Knowledge intensive Entrepreneurship across regions: Makes being a new industry a difference?," ERSA conference papers ersa11p1711, European Regional Science Association.
    3. Gloria O. Pasadilla & Christine Marie M. Liao, 2007. "Has Liberalization Strengthened the Link between Services and Manufacturing?," Microeconomics Working Papers 22047, East Asian Bureau of Economic Research.
    4. Lanaspa, Luis & Sanz-Gracia, Fernando & Vera-Cabello, María, 2016. "The (strong) interdependence between intermediate producer services' attributes and manufacturing location," Economic Modelling, Elsevier, vol. 57(C), pages 1-12.
    5. Andersson, Martin & Noseleit, Florian, 2008. "Start-Ups and Employment Growth - Evidence from Sweden," Working Paper Series in Economics and Institutions of Innovation 155, Royal Institute of Technology, CESIS - Centre of Excellence for Science and Innovation Studies.
    6. Ping Lu & Jianhui Liu & Yunxuan Wang & Lei Ruan, 2021. "Can industrial agglomeration improve regional green total factor productivity in China? An empirical analysis based on spatial econometrics," Growth and Change, Wiley Blackwell, vol. 52(2), pages 1011-1039, June.
    7. Börje Johansson & Johan Klaesson, 2011. "Agglomeration dynamics of business services," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 47(2), pages 373-391, October.

    More about this item

    Keywords

    co-location; manufacturing; producer services; accessibility;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • L80 - Industrial Organization - - Industry Studies: Services - - - General
    • 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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