Does Agglomeration Affect Exports? Evidence from Italian Local Labour Markets

Abstract

This paper analyses whether and how agglomeration economies – related variety, specialisation and urbanisation – affect the export performance of Italian local labour markets (LLM). Adopting spatial econometric techniques, and controlling for potential non‐linear effects, we find that related variety has a negligible effect on LLMs’ export intensity, while the effect of specialisation economies is negative. On the contrary, urbanisation economies positively affect export intensity. The robustness of these results is tested and confirmed using an alternative (institutional‐based) spatial weights matrix.

The Spatial Footprint of the Knowledge Economy: The Role of Intangible Investment in Shaping Regional Inequalities in Great Britain

“…It is difficult to pinpoint the causes of such trends. They may be the outcome of local rivalry and competition (see for instance, Cainelli et al ) on the counterintuitive negative effect of specialisation economies on the export performance of Italian local labour markets). Nonetheless, one thing is certain.…”

The role of firm location and agglomeration economies on export propensity: the case of Portuguese SMEs

“…Second-nature geography factors thus include agglomeration economies. Cainelli et al (2017) also highlight the role of agglomeration economies in reinforcing firms' capability to penetrate foreign markets. Indeed, through intra and/or inter-industry knowledge spillovers, agglomeration forces can contribute to reducing the sunk costs firms need to incur to entry into foreign markets.…”

“…These costs are generally related to the costs of gathering information about the markets with regard to consumer preferences, distribution channels, among others (Greenaway and Kneller, 2008). Firms can get this information (unintentionally) from firms belonging to the same sector or to related sectors (intra-industry or inter-industry knowledge spillovers, respectively) (Cainelli et al, 2017). Also Diez-Vial and Fern andez-Olmos (2014) emphasize that geographical concentration can lead to greater international competitiveness as there are local externalities (e.g.…”

“…According to Cainelli et al (2017), three different types of agglomeration economies can be identified: specialization, diversification and urbanization economies. On the one hand, when a geographical area specializes in a certain industry, competitive advantages may arise from this local specialization (Malmberg et al, 2000) [3].…”

“…On the one hand, when a geographical area specializes in a certain industry, competitive advantages may arise from this local specialization (Malmberg et al, 2000) [3]. Specialization economies reflect intraindustry spillovers arising from location in the same geographical area of firms from the same industry (Cainelli et al, 2017). These economies that emerge from spatial concentration of activity within a given industry are also known as localization economies (Malmberg et al, 2000;Strange, 2001, 2004).…”