Agglomeration economies, spatial dependence and local industry growth

Abstract

The main objective of this paper is to analyse the determinants of employment growth at the local industry level. We estimate an empirical model in order to assess the role of different types of agglomeration economies to local growth controlling also for the presence of spatial dependence. The empirical analysis is applied to the case of Italy and refers to 784 Local Labour Systems and 34 industries (21 manufacturing and 13 services) over the period 1991-2001. Econometric results show that local growth is marked by significant differences across sectors. The positive influence of diversity externalities, human and social capital and the negative influence of specialisation externalities and competition are worth a particular mention. Spatial association is also detected signalling that the growth process in a specific area benefits from the positive performance of the surrounding regions.

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