Agglomeration Benefits and Location Choice: Evidence from Japanese Manufacturing Investment in the United States / Keith Head, John Ries, Deborah Swenson.

By:

Head, Keith

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Material type: Text

TextSeries: Working Paper Series (National Bureau of Economic Research) ; no. w4767.Publication details: Cambridge, Mass. National Bureau of Economic Research 1994.Description: 1 online resource: illustrations (black and white)Subject(s):

F21 - International Investment • Long-Term Capital Movements

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Abstract: Recent theories of economic geography suggest that firms in the same industry may be drawn to the same locations because proximity generates positive externalities or 'agglomeration effects.' Under this view, chance events and government inducements can have a lasting influence on the geographical pattern of manufacturing. However, most evidence on the causes and magnitude of industry localization has been based on stories, rather than statistics. This paper examines the location choices of 751 Japanese manufacturing plants built in the U.S. since 1980. Conditional logit estimates support the hypothesis that industry-level agglomeration benefits play an important role in location decisions.

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June 1994.

Recent theories of economic geography suggest that firms in the same industry may be drawn to the same locations because proximity generates positive externalities or 'agglomeration effects.' Under this view, chance events and government inducements can have a lasting influence on the geographical pattern of manufacturing. However, most evidence on the causes and magnitude of industry localization has been based on stories, rather than statistics. This paper examines the location choices of 751 Japanese manufacturing plants built in the U.S. since 1980. Conditional logit estimates support the hypothesis that industry-level agglomeration benefits play an important role in location decisions.