Agglomeration Economies in Developing Countries: A Meta-Analysis

Abstract

The Policy Research Working Paper Series disseminates the findings of work in progress to encourage the exchange of ideas about development issues. An objective of the series is to get the findings out quickly, even if the presentations are less than fully polished. The papers carry the names of the authors and should be cited accordingly. The findings, interpretations, and conclusions expressed in this paper are entirely those of the authors. They do not necessarily represent the views of the International Bank for Reconstruction and Development/World Bank and its affiliated organizations, or those of the Executive Directors of the World Bank or the governments they represent.

Regional Wage Differences and Agglomeration Externalities: Micro Evidence from Thai Manufacturing Workers

“…The agglomeration effect in the Netherlands doubled when the unit of analysis was changed from municipalities to NUTS-3 regions (Groot et al 2014). Through meta-analysis, Grover et al (2021) showed a higher gross agglomeration effect in developing countries. However, when the increasing congestion in developing countries is considered, the size of the agglomeration effect dramatically drops to the level seen in developed economies.…”

“…The effect of local density on wages in Thailand was found to be greater than the effect of local density on wages in developed countries such as the Netherlands and France, where the impact of local density on wages was reported to be approximately 4-5% (Combes et al 2008;Groot et al 2014). Nevertheless, numerous factors could affect the degree of agglomeration, including the spatial scale and model specifications (Combes and Gobillon 2015;Grover et al 2021). The agglomeration effect in the Netherlands doubled when the unit of analysis was changed from municipalities to NUTS-3 regions (Groot et al 2014).…”

“…These surveyed empirical studies commonly show that if the city population or density doubles, productivity (measured by wages or total factor productivity) increases by 1-10%. Alternatively, Grover et al (2021) applied the meta-analysis method to the estimated coefficients of 70 studies in 33 countries. The obtained results showed that doubling the city size is associated with a 4-6% increase in productivity for developing economies.…”

The Potential of Industrial Agglomeration to Promote Pharmaceutical Innovation: Analysis of China's “Medicine Valley” Construction Upsurge

“…However, academia has not reached a consensus on the agglomeration effect, the importance of different agglomeration modes, or the transmission mechanism. Similarly, no clear conclusion exists concerning the relationship between agglomeration and innovation (Glaeser and Gottlieb, 2009;De Groot et al, 2015;Grover et al, 2021). The results of some empirical studies suggested that agglomeration could promote innovation (Paci and Usai, 1999;Chatterji et al, 2014;Jang et al, 2017), whereas others found that agglomeration had a negative infl uence or no infl uence on innovation (Boschma and Weterings, 2005;Rigby and Brown, 2015).…”

Proximity without Productivity: Agglomeration Effects with Plant-Level Output and Price Data

“…Later we will exploit the cross-sectional variation to attempt to control imperfectly for firm selection.Both quantity and quality effects described in the previous section can lead to inconsistent estimates. Though previous studies suggest that attempting to remedy this endogeneity does not drastically change the elasticity magnitudes (see meta-analysis byGrover, Lall and Timmis, 2021;Duranton 2016 for Colombia), we follow the literature by: (i) employing geological variables such as land fertility(Combes et al 2010), land suitability for the construction of tall buildings(Rosenthal and Strange 2008;Combes et al 2010) as instruments12 and (ii)…”