The growth of an industry in a city has been explained by dynamic externality theories such as those by Marshall, Arrow and Romer, Porter, Jacobs and Storper. Each of these views describes a different mechanism by which the initial conditions for a particular industry in a city facilitate knowledge spillover extensive enough to promote productivity growth. This paper develops a model that distinguishes among these and applies it to Korean manufacturing industries. The empirical analysis concludes that productivity growth in Korea is more rapid when small firms from different industries compete, supporting theories by Jacobs and Storper. However, the impacts of specialisation and diversification vary substantially across major manufacturing industry sub-categories. Land use regulations such as greenbelt rates and excessive concentration control districts generally show significant negative effects on productivity growth.
Get full access to this article
View all access options for this article.
References
1.
Arrow, K.J. (1962) The economic implications of learning by doing , Review of Economic Studies, 29(June), pp. 155-173.
2.
Bernard, A.B. and Jones, C.I. (1996) Technology and convergence, The Economic Journal, 106(July), pp. 1037-1044.
3.
Black, D. and Henderson, J.V. (1998) Urban evolution in the USA. Working Paper No. 98-21, Brown University.
4.
Black, D. and Henderson, J.V. (1999) Spatial evolution of population and industry in the United States, AEA Papers and Proceedings, 89(2), pp. 321-327.
5.
Duranton G. and Puga, D. (2000) Diversity and specialisation in cities: why, where and when does it matter?, Urban Studies37(3), pp. 533-555.
6.
Durlauf, S.N. (1996) Controversy on the convergence and divergence of growth rates, The Economic Journal, 106(July), pp. 1016-1018.
7.
Glaeser, E.L., Kallal, H.D., Scheinkman, J.A. and Shleifer, A. (1992) Growth in cities, Journal of Political Economy, 100(6), pp. 1126-1152.
8.
Glaeser, E.L., Scheinkman, J.A. and Shleifer, A. (1995) Economic growth in a cross-section of cities, Journal of Monetary Economics, 36(1), pp. 117-143.
9.
Henderson, J.V. (1986) Efficiency of resource usage and city size, Journal of Urban Economics, 19, pp. 47-70.
10.
Henderson, J.V. (2003) Marshall's scale economies, Journal of Urban Economics, 53(1), pp. 1-28.
11.
Henderson, J.V., Kuncoro, A. and Turner, M. (1995) Industrial development in cities, Journal of Political Economy, 103(5), pp. 1067-1090.
12.
Jacobs, J. (1969) The Economy of Cities. New York : Vintage.
13.
Jacobs, J. (1984) Cities and the Wealth of Nations: Principles of Economic Life. New York: Vintage .
14.
Jaffe, A., Trajtenberg, M. and Henderson, R. (1993) Geographic localization of knowledge spillovers as evidenced by patent citations, Quarterly Journal of Economics , 108(3), pp. 577-598.
15.
Malmberg, A. (2003) Beyond the clusters-local milieus and global connections , in: J. Peck and H. W. Yeung (Eds) Remaking the Global Economy, pp. 145-159. London : SAGE Publications .
16.
Marshall, A. (1890) Principles of Economics. London : Macmillan.
17.
O'Huallachain, B. and Satterthwaite, M.A. (1992) Sectoral growth patterns at the metropolitan level, Journal of Urban Economics, 31(1), pp. 25-58.
18.
Porter, M.E. (1990) The Competitive Advantage of Nations. New York: Free Press.
19.
Porter, M.E. (1998) Clusters and the new economics of competition, Harvard Business Review, November/December, pp. 77-90.
20.
Rauch, J.E. (1993) Productivity gains from geographic concentration of human capital: evidence from cities, Journal of Urban Economics , 34(November), pp. 380-400.
21.
Romer, P.M. (1986) Increasing Returns and Long-Run Growth, Journal of Political Economy, 94, (October), pp. 1002-1037.
22.
Romer, P.M. (1990) Endogenous technological change, Journal of Political Economy, 98(5), pp. 71-102.
23.
Storper, M. (1995a) The emergence of regional economics, ten years later, European Urban and Regional Studies, 3, pp. 191-221.
24.
Stopper, M. (1995b) Territorial development in the global learning economy: the challenge to developing countries, Review of International Political Economy, 2(3), pp. 394-424.
25.
Storper, M. (1997) The Regional World. New York : Guilford.
