At the low range, the economic cost of unrealized agglomeration economies
2009: A meta-analysis of estimates of urban agglomeration economies
In sum, at the onset of World War II most of America's great industrial firms which, thanks to agglomeration economies
were concentrated in cities throughout the East and upper Midwest--now faced labor cartels.
In particular, one economy, namely Australia, exhibits both relatively larger agglomeration economies
and also a larger home-market effect than the relatively smaller economy, New Zealand.
However, given prior literature on optimal city size with respect to cost of living one would hardly expect a population size of 250,000 to fully realise the potential benefits of agglomeration economies
as a 'medium sized' city in Pakistan will have a population far greater than 250,000.
I perform this more detailed analysis since theory and empirical evidence suggest that agglomeration economies
function at a local level.
Simply, economic activity clusters in space (as is evident within cities and regionally both intra- and inter-nationally) and this suggests that agglomeration economies
persist in this era of the Internet, teleconferencing and the like.
They also suggest that government activities and announcements can serve as valuable coordination tools in the presence of agglomeration economies
More recently, scholars of strategic management have extended the ideas underlying theories of economic geography that explain firm activities and have applied them to examine intra-country differences in the relative abundance of resources and the importance of agglomeration economies
in explaining the location patterns of foreign firms (Porter 1998, Enright 1998, Nachum 2000).
2] is associated with the proportion of the capital stock operated by foreign-owned plants in local authority area r, (14) and covers all manufacturing industries to try to capture any spatial agglomeration economies
In particular, FDI flows at the provincial level are expected to be affected by China's FDI regime, local market size, labor costs, labor quality, agglomeration economies
, transportation costs, FDI incentives, and cultural links with investors.
Empirical work in general supports the hypothesis that agglomeration economies
are decisive location factors (Head, Ries, and Swenson, 1995; Guimaraes, Figueiredo, and Woodward, 2000).