Industrial Agglomeration and Transportation Networks

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Abstract: Since Marshall's pioneering work in 1890, industrial clustering has been a favorite theme in economic geography. Many studies have tried to find the hidden mechanisms and benefits of industrial agglomeration. This study lies in that same tradition, but it takes a different approach by focusing on the role of transportation infrastructure in industrial agglomeration. In the first study, time trends of industrial agglomeration in the U.S. are revealed using three different concentration measures. These measures indicated that industrial clustering has occurred over the last 30 years in all study industries. The concentration measures are used in a time series analysis to examine causal relations with transport networks. The major hypothesis of a causal relation from transport network to agglomeration is confirmed for several industries, supporting the results of "new economic geography" models. The second study aims to identify industrial clusters on the map and measure the economic benefit from industrial clustering. To locate industrial clusters, LISA (Local Indicator of Spatial Association) analysis is applied, and this spatial statistical tool is successful in identifying clusters for various industrial specializations. The cluster results are used in a spatially-lagged regression model that investigates the impacts of clustering on wage levels. The results indicate that both agglomeration and transport network access have positive effects on wage levels. The third study, which is based on data for Seoul, Korea, focuses on two types of transport network: subway and road network. Comprehensive patterns of accessibility on both networks are obtained and clusters for 11 industries are located utilizing the same technique as in the second study. Finally, the relation between transport accessibility and industrial clustering is studied using logit and probit models. In general, industrial clustering is significantly related to subway accessibility and population distribution, while road accessibility has no significant association in Greater Seoul. The role of the transport network in agglomeration processes has been mentioned frequently in the literature, but evidence is scarce. This study provides empirical evidence of this role at two geographical levels. The results will be useful to policy makers who seek to promote industrial agglomeration for regional economic development.

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