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Learning to Compete: Measuring Industry Agglomeration and Identifying the Driving Forces

Carol Newman, Finn Tarp, and Emma Howard


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Abstract:

Understanding industry agglomeration and its driving forces is critical for the formulation of industrial policy in developing countries. Crucial to this process is the definition and measurement of agglomeration. 

We propose a new measure and examine what it reveals about the importance of transport costs, labour market pooling, and technology transfer for agglomeration processes. 

We contrast this analysis with insights from existing measures in the literature and find very different underlying stories at work. An exceptionally rich set of data from Vietnam makes us confident that our measure is superior at least in developing country contexts.

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Authors

C

Carol Newman

Associate Professor at the Department of Economics, Trinity College Dublin; Non-resident Senior Research Fellow at UNU-WIDER

F

Finn Tarp

Director - UNU-WIDER

Professor of Economics - University of Copenhagen

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