What is it about?
Why economic activities have higher growth in certain places and under a certain industrial regime? What are the determinants of such growth? This study aims to resolve the debate on which externality is more dominant for growth and under which regime by analyzing the influence of agglomeration economies on the growth of five-digit manufacturing sectors and firms for Indonesian cities and regencies between 2000 and 2009.
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Why is it important?
Jacobian externalities are commonly measured as general variety without differentiating sectoral linkages, although this incorporates two idiosyncratic economic effects: location resilience to external industry-specific demand shocks and inter-industry knowledge spillovers. This study aims to contribute to the academic debate by assessing the influence of industrial variety decomposed into unrelated and related varieties in order to evaluate more accurately their effects on manufacturing expansion.
Perspectives
This research highlights the importance of industrial relatedness for manufacturing growth, which was not properly captured considering general variety without any sectoral linkages. Thus, the reconceptualization of variety (unrelated and related) can bring new insights for Indonesian policymakers as local economic expansion can be pursued through the identification and promotion of key sectors with large intersectoral linkages reducing the risks of lock-in effect and lack of resilience, which are typical drawbacks of having a location highly specialized.
Dr Roberto Ercole
University of Huddersfield
Read the Original
This page is a summary of: The Influence of Agglomeration Externalities on Manufacturing Growth Within Indonesian Locations, Growth and Change, February 2016, Wiley,
DOI: 10.1111/grow.12145.
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