Spatial clustering of sector linked industry in an urban economy
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- Business costs; Industrial location
The influence of economies of agglomeration on location decisions has been debated since it was advanced by Alfred Weber in 1909. Empirical findings at the international, national, and regional levels do not definitely support the efficacy of such economies. No study has been done at a local level, the one inherently appropriate to the Weber premise. Further, most studies have used highly generalized manufacturing groupings. The importance of intra-industry and inter-industry determinants of spatial proximity in the Portland, Oregon metropolitan area was investigated in this study. The data base included 220 industries with 2,111 firms employing 108,295 workers. National input-output transaction tables were used to generate measures of intra-industry and inter-industry technological linkage at the 4 digit Standard Industrial Code classification level. Nearest neighbor statistics were employed to measure the spatial proximity of firms within an industry. A spatial association measure, the local concentration coefficient, was devised to calculate spatial proximity among manufacturing firm pairs in various linkage relationships. Then, multiple linear regression was used to examine the relationships of intra- and inter-industry linkages to spatial proximity. Average firm size, material and market orientations, and transportation and utility cost intensities were treated as covariates in the analysis. A total of 25 models involving the covariates and various combinations of forward and backward linkages were executed. In 23 cases, the models and effects of linkages were insignificant. The observed influence of the covariates was generally insignificant. Clearly, economies of agglomeration have no effect on industrial patterns in this analysis. Further, the poor performance of the covariates suggest that application of existing theory to localized manufacturing plan selection processes may be misplaced. While these factors may function at the regional or national level, they do not on an intrametropolitan level, at least in this case. Seeking the specific factor of manufacturing linkage based economies of agglomeration or external economies may be a rare exception in location behavior in general and particularly inoperative at a local level. Local development policies which are premised on maximizing such economies are, accordingly, not supported by this research.