Abstract
The chapter offers a systemisation of the relationship between the three economic terms: agglomeration, concentration and specialisation. Focusing on economics, economic geography and regional science, the chapter draws attention to a much-needed panoramic reflection over agglomeration economies and concentration economies. Case studies of regional specialisation allow to look at the complex ways in which it is born. The chapter concludes with the mechanisms of regional specialisation, exploring various notions of competitiveness, innovation and territorial development.
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Notes
- 1.
In this book, we use the term “spatial agglomeration” rather than spatial concentration. The differences are explained in the next paragraph of the book.
- 2.
…regional specialisations are an important factor in the determination of economic growth, in addition to being themselves influenced by the development level. These structural relationships can normally change only in the long-run and may explain, for instance, the persistence of interregional (and international) income disparities… Marelli (2004, s. 38)
- 3.
More on indicators of specialisation and inequalities in Chapter 2.
- 4.
More on the entropy indicator in Chapter 2.
- 5.
More on the MAUP problem, using cluster-based indicators in Chapter 2.
- 6.
It is important to remember that in the literature, models explaining specialisation originated mainly in trade theory, while models explaining concentration came from location theory. Traditional trade theory predicts that countries specialise in products using intensively the relatively abundant input factor. Location theory discusses the reasons for agglomeration and dispersion. While economies of scale, as well as forward and backward linkages, favour concentration, congestion, low costs of immobile factors in the periphery and transport costs, favour dispersion. The theoretical strands are converging in the “new trade theory” and in the “new economic geography”, both emphasising economies of scales and imperfectly competitive markets. Particular interest has been raised by a purported inverted U-shaped relationship in specialisation and concentration in the “new economic geography”: Where a surprising number of models predict that declining transport costs would first foster specialisation and concentration, but then for very low transport costs lead to dispersion. In the policy debate, increasing specialisation has been welcomed, for example, in the European or North American integration process, since it increases productivity. Rising concentration on the other hand, specifically concentration of economic activities in the core or in the North, has been more controversial as it may aggravate asymmetries or differences in per capita income. This danger has been widely discussed in the course of European integration, where some economists expressed the fear that activities in the core may increase at the cost of the periphery… (Aiginger and Rossi-Hansberg. 2006, p. 255–256)
- 7.
…in particular, agglomeration aims to measure the total regional industrial mass (i.e. all sectors are included) or, in other words, the geographic concentration of all industries in a specific region; concentration tries to measure the industrial concentration of a specific industry in a given region. Finally, specialisation measures how specialised (or diversified) is the economy of a specific region, by measuring how an industrial sector is important for the economy of that region (i.e. it measures the specialisation of a specific region in a given industry)… (Franceschi et al. 2009, p. 2)
- 8.
More about the systematization of the following indicators: agglomeration, concentration and specialisation; used in hitherto achievements of literature, see, inter alia, Franceschi et al. 2009.
- 9.
- 10.
In the same sense, Bruelhart and Traeger (2005) interpret the agglomeration as considered in discontinuous space (discrete), also calling it the relative concentration.
- 11.
- 12.
- 13.
- 14.
There is an ongoing discussion in the literature on the relationship existing between regional specialisation and geographical concentration of economic activity. Dalum et al. (1998) claim that regional specialisation and geographical concentration do not have to develop in the same direction, and the dynamics of their changes can vary significantly. Aiginger (1999) indicates significant correlations between regional specialisation and geographical concentration of economic activity. Aiginger and Davies (2004, p. 237)argue that specialisation and concentration are often seen as two sides of the same coin. However, Rossi-Hansberg and Wright (2005) argue directly that these are processes of opposing vectors, as evidenced by, among others, Moga and Constantin (2011) t-test results (even a low level of concentration, yet from a different perspective interpretation, can be the basis for the identification of regional specialisation). It should be underlined that Hallet (2000) draws attention to the fact that these relationships cannot be explained basing solely on theoretical grounds and should be studied empirically, which would bring new information about these regularities.
- 15.
We recommend considering concentration of economic activity in the identification of regional specialisation primarily in terms of its sector and in the context of the related consequences (economies of scale) for socio-economic processes. The geographic approach of economic activity concentration is treated in the identification of regional specialisation as complementary and being only important in clarifying the degree of concentration in relation to other individuals’ reference systems. Due to the application of the continuous space (continuous space) to identify the agglomeration of economic activities, we depart from using geographic concentration for determining the spatial distribution of the analysed activity, which takes place in the literature.
- 16.
As evidenced by, among others, Midelfart-Knarvik et al. (2000) noting that the specialisation is the result of both competitive advantages and the agglomeration of economic activity. The test results indicate the movements that at the EU wide level, specialisation according to comparative advantage and the forces identified by new economic geography are beneficial. That is, the specialisation driver by these forces increases aggregate welfare. Our results suggest that comparative advantage and new economic geography forces are becoming increasingly significant in explaining location patterns of industries (Midelfart-Knarvik et al. 2000, p. 38).
- 17.
The importance of taking into account the relative and the absolute measurement is indicated, among others by Aiginger and Davies (2004).
- 18.
Mathematical assumptions of distance and overlap and their interpretation on the basis of the SPAG indicator are presented in Chapter 4.
- 19.
The basis of this matrix construction is regularities notified by, a.o. Aiginger and Davies (2004, p. 237), who are examining the relationship between concentration (in our approach, the geographical focus) and specialisation (in our approach, sector concentration), and claim: to put the same point statistically, specialisation and concentration are two perspectives to be derived from a matrix with the columns referring to countries, and the rows to industries. Specialisation is observed by reading down each column, while concentration is observed by reading along each row. One might expect that if inequalities tend to increase down the columns, so they should also increase along the rows. We now explore this intuition, first in the hypothetical symmetric case, and then allowing for asymmetries.
- 20.
Tests of these indicators leading to an assessment of their usefulness in regional specialisation identification can be found in Chapter 2.
- 21.
This fact justifies the need for the formulation of this type of agglomeration measures of economic activities and their use in the identification of regional specialisation, which as it seems is not sufficient interest in previous achievements of the literature (Marcon and Puech 2003, 2009, 2014; Duranton and Overman 2005, 2008; Arbia et al. 2010; Mori and Smith 2014).
- 22.
A similar two-dimensional taxonomic attempt is taken by Brakman, Garretsen and Van Marrewijk in the development of An Introduction to Geographical Economics. Trade, Location and Growth (Cambridge University Press, 2001, p. 129–132); however, the concept of concentration relates to individual industries, and the agglomeration to a spatial clustering/polarisation of entire sectors. It is a different perspective, because concentration is treated as a geographical phenomenon (geographic concentration).
- 23.
Actually, it does not exclude the spillover effect, innovation diffusion or other great effects for which the impact is global.
- 24.
Relatively high as compared to other units of reference, i.e. NUTS3 or NUTS2.
- 25.
Most often a large city or metropolitan urban agglomeration is indicated here; see e.g. Combes et al. (2012).
- 26.
- 27.
- 28.
Similar approach can be found in Martin (2005) and Capello (2014)
- 29.
In a broader sense, this is often referred to as the creative class (Florida 2002).
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Ochojski, A., Polko, A., Churski, P. (2017). Theoretical Foundations of Specialisation, Agglomeration and Concentration. In: Measuring Regional Specialisation. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-319-51505-2_1
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