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Location Modelling and the Localization of Portuguese Manufacturing Industries

Author

Listed:
  • Paulo Guimarães
  • Octávio Figueiredo
  • Douglas Woodward
Abstract
The recent index proposed in Ellison & Glaeser (1997) is now well established as the preferred method for measuring localization of economic activity. We critically review this index and build on the McFaddenÂ’s Random Utility (Profit) Maximization framework to develop an alternative measure that is more consistent with the theoretical construct underlying the original work of Ellison and Glaeser. Given that our method is regression based it goes beyond the descriptive nature of the EG index and allows us to evaluate how the localization measure behaves with changes in the systematic forces that drive firmsÂ’ location decisions. JEL classification: C25, R12, R39

Suggested Citation

  • Paulo Guimarães & Octávio Figueiredo & Douglas Woodward, 2004. "Location Modelling and the Localization of Portuguese Manufacturing Industries," ERSA conference papers ersa04p28, European Regional Science Association.
    • Handle: RePEc:wiw:wiwrsa:ersa04p28
    as

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    References listed on IDEAS

    as
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    6. Gilles Duranton & Henry G. Overman, 2005. "Testing for Localization Using Micro-Geographic Data," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 72(4), pages 1077-1106.
    7. Thomas J. Holmes & John J. Stevens, 2002. "Geographic Concentration and Establishment Scale," The Review of Economics and Statistics, MIT Press, vol. 84(4), pages 682-690, November.
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    14. Figueiredo, Octavio & Guimaraes, Paulo & Woodward, Douglas, 2002. "Home-field advantage: location decisions of Portuguese entrepreneurs," Journal of Urban Economics, Elsevier, vol. 52(2), pages 341-361, September.
    15. Coughlin, Cletus C & Terza, Joseph V & Arromdee, Vachira, 1991. "State Characteristics and the Location of Foreign Direct Investment within the United States," The Review of Economics and Statistics, MIT Press, vol. 73(4), pages 675-683, November.
    16. Jehan Decrop, 2002. "Working Paper 14-02 - Geographical Agglomeration: the Case of Belgian Manufacturing Industry," Working Papers 0214, Federal Planning Bureau, Belgium.
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    Cited by:

    1. Jenifer Ruiz-Valenzuela & Rosina Moreno-Serrano & Esther Vaya-Valcarce, 2006. "Concentration of the Economic Activity: Comparing Methodologies and Geographic Units," ERSA conference papers ersa06p197, European Regional Science Association.

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    More about this item

    JEL classification:

    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R39 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other

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