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Measuring Economic Localization: Evidence from Japanese Firm-level Data

Author

Listed:
  • Nakajima, Kentaro
  • 中島, 賢太郎
  • ナカジマ, ケンタロウ
  • Saito, Yukiko Umeno
  • 齊藤, 有希子
  • サイトウ、ユキコウメノ
  • Uesugi, Iichiro
  • 植杉, 威一郎
  • ウエスギ, イチロウ

Abstract

This paper examines location patterns of Japan’s manufacturing industries using a unique firm-level dataset on the geographic location of firms. Following the point-pattern approach proposed by Duranton and Overman (2005), we find the following. First, about half of Japan’s manufacturing industries can be classified as localized and the number of localized industries is largest for a distance level of 40 km or less. Second, several industries in the textile mill products sector are among the most localized, which is similar to findings for the UK, suggesting that there exist common factors across countries determining the concentration of industrial activities. Third, the distribution of distances between entrant (exiting) firms and remaining firms is, in most industries, not significantly different from a random distribution. These results suggest that most industries in Japan neither become more localized nor more dispersed over time and are in line with similar findings by Duranton and Overman (2008) for the UK. Fourth, a comparison with the service sector indicates that the share of localized industries is higher in manufacturing than in services, although the extent of localization among the most localized manufacturing industries is smaller than that among the most localized service industries, including financial service industries

Suggested Citation

  • Nakajima, Kentaro & 中島, 賢太郎 & ナカジマ, ケンタロウ & Saito, Yukiko Umeno & 齊藤, 有希子 & サイトウ、ユキコウメノ & Uesugi, Iichiro & 植杉, 威一郎 & ウエスギ, イチロウ, 2011. "Measuring Economic Localization: Evidence from Japanese Firm-level Data," Working Paper Series 10, Center for Interfirm Network, Institute of Economic Research, Hitotsubashi University.
    • Handle: RePEc:hit:cinwps:10
    Note: 40778
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    References listed on IDEAS

    as
    1. Guy Dumais & Glenn Ellison & Edward L. Glaeser, 2002. "Geographic Concentration As A Dynamic Process," The Review of Economics and Statistics, MIT Press, vol. 84(2), pages 193-204, May.
    2. Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117, Elsevier.
    3. Gilles Duranton & Henry G. Overman, 2005. "Testing for Localization Using Micro-Geographic Data," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(4), pages 1077-1106.
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    More about this item

    Keywords

    Micro-geographic data; Economic geography;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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