geographical industry concentration in europe compared to usa
DESCRIPTION
A presentation by Göran Lindqvist at a course in Economic Geography. Utrecht University, Netherlands. 10 September, 2008.TRANSCRIPT
Geographical industry concentration in Europe compared
to USAGöran Lindqvist
Stockholm School of Economics
Is industry concentration higherin the US than in Europe?
A stylised fact, since Krugman’s study in 1991
Implications: What shifts in industry localisation can we expect
as European integration proceeds? Can increased industry concentration be one
answer to the Lisbon agenda?
10 September 20082 Economic Geography - Utrecht
Two types of data
10 September 2008Economic Geography - Utrecht3
23
2
8 3
7
11
21
4
12
16
7
8
4
12
7
Geocoded datapoints(firms, plants or persons)
Regional totals
10
4
7
19
6
Concentration and specialisation
10 September 2008Economic Geography - Utrecht4
Region 1
Region 2
…Region
N
Ind. group 1
Ind. group 2
…
Ind. group J
industry concentration
regionalspecialisati
on
polarization
Number of cells: J· N
The analytical problems
10 September 2008Economic Geography - Utrecht5
Region 1
Region 2
…Region
N
Ind. group 1
Ind. group 2
…
Ind. group J
industry aggregation ?
industry coverage?
regional
aggregation ?
The analytical problems
10 September 2008Economic Geography - Utrecht6
Rega 1 Rega 2 …Rega
NRegb 1 Regb 2 …
Regb M
Ind. grp 1
Ind. grp 2
…
Ind. grp J
comparing two
continents ?(polarisation)
Previous studies
10 September 2008Economic Geography - Utrecht7
Study Comparison Regions Industries Measure Consolidated valueEUR USA groups coverage
Krugman (1991)
employment 4 (nat) 4 not reported manufacturing Krugman index none
auto production 4 (nat) 4 1 single sector CR not applicableBayoumi and Prasad (1997)
"real output" 8 (nat) 8 8 manufacturing and services CV none
Braunerhjelm et al., 2000
not reportednot
reportednot
reported 8 manufacturing Krugman index none
GDP, GDP per capita 50 49 1 not applicable CV not applicable
Midelfart-Knarvik et al., 2000
production 14 (nat) 51 21 manufacturing Giniunweighted
averagevehicle
production 14 (nat) 51 1 single sector CR not applicable
production 14 (nat) 49 21 manufacturing spatial separation
unweighted average
WIFO (2002)
VA 70 49 1 manufacturing CR10%, CR30%, CV, Gini not applicable
employment 76 49 1 manufacturing CR10%, CR30%, CV, Gini not applicable
VA 70 49 10 manufacturing CR10%, CR30%, CV, Gini none
employment 76 49 10 manufacturing CR10%, CR30%, CV, Gini none
The current study
Regions: Europe: 259 NUTS2 regions USA: 179 Economic Areas
Industry groups: 38 industry groups, based on co-location patterns Manufacturing and services, based on concentration
tendency Total number of cells in the matrix:
16.600 cells in this study, compared to… …1.400 cells in the most detailed previous study
Comparison: I calculate the polarisation value for each continent
10 September 20088 Economic Geography - Utrecht
Results: Industry by industry (Gini)
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Instruments
Apparel
Footwear
TextilesAerospace
Oil & Gas
Tobacco
Leather
Bus. Services
Forest
Construction
Transport
0.00
0.25
0.50
0.75
1.00
0.00 0.25 0.50 0.75 1.00
Gini, EUR
Gini
, USA
= 2 mn employees
Results: Polarisation
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Polarisation value No. of cluster categories
Measure EUR USA EUR higher USA higher
Gini 0.504 0.587 6 32
Krugman 0.709 0.844 7 31
Theil 0.502 0.719 7 31
GE(2) 0.985 1.824 6 32
GE(3) 5.352 15.357 10 28
SLQ(2) 0.207 0.206 16 22
CR(10%)* 0.391 0.568 1 37
Herfindahl * 0.011 0.033 1 37
* Averages weighted by employment in traded industries.
* Averages weighted by employment in traded industries.
Results: GE variations
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0
1
10
100
1 2 3 4
% o
f em
ploy
men
t in
regi
ons w
ith
LQ>λ
λ
Automotive
EU US
Results: SLQ variations
10 September 2008Economic Geography - Utrecht12
0%
20%
40%
60%
80%
100%
0 1 2 3 4
% o
f em
ploy
men
t in
regi
ons w
ith
LQ>λ
λ
Automotive
EU US
0%
20%
40%
60%
80%
100%
0 1 2 3 4
% o
f em
ploy
men
t in
regi
ons w
ith
LQ>λ
λ
Financial servicesEU US
Conclusion
More detailed data, … highly increased geographical granularity highly increased industrial granularity
… more sophisticated aggregations… improved industry coverage selection methodology industry grouping based on actual co-location
patterns … and more rigorous mathematical comparisons
… polarization calculations
… support the conclusion that industry concentration is higher in USA than in Europe
10 September 200813 Economic Geography - Utrecht
10 September 2008Economic Geography - Utrecht14
Cluster category Examples of industries EUR empl. (th.) USA empl (th.)
Aerospace Aerospace industry, aerospace engines 365 445Agricultural Products Sugar, agricultural services, alcoholic drinks 853 349Analytical Instruments Measurement instruments, process control 532 677Apparel Clothes 1 872 411Automotive Motor vehicles, components 2 667 1 351Biopharmaceuticals Pharmaceuticals 825 290Building Fixtures, Equipment & Services Kitchen furnishing, plaster 2 373 714Business Services Management consultancy, rental of office machinery 3 983 5 352Chemical Products Chemicals, nuclear fuels, industrial gases 971 458Communications Equipment TVs, Cable, telephony equipment 790 358Construction Materials Scrap, ceramic sanity fixtures 588 213Distribution Services Mail order, wholesale trading 1 643 1 816Education & Knowledge Creation Universities, libraries 3 493 2 504Entertainment Video- and music recording, sport events 2 168 1 151Financial Services Banks, insurance companies 7 119 2 789Fishing & Fishing Products Fishing, hunting 355 56Footwear Shoes 488 25Products Paper machines, pulp 1 717 444Furniture Furniture, laminated boards 1 165 396Heavy Construction Services Construction businesses, rental of construction machineries 6 447 1 598Heavy Machinery machinery, tractors, locomotives 830 359Hospitality & Tourism Hotels, taxies, amusement parks 3 628 2 530Information Technology Electronic components, computer manufacturing 1 991 964Jewellery & Precious Metals Jewellery, cutleries 315 127Leather Products Bags, furs 182 117Lighting & Electrical Equipment Lamps, electricity distribution's equipment 531 298Medical Devices Medical equipment, wheelchairs 440 397Metal Manufacturing Rolling mills, casting, tools, screws 3 934 1 315Oil & Gas Products and Services Refineries 359 403Plastics Plastics, colours 822 834Power Generation and Transmission Generators, isolators 517 78Processed Food Beer, dairies, glass packages/wrapping 5 032 1 520Production Technology Bearings, tanks, machine tools 2 240 652Publishing & Printing Publishing services, printing 1 674 996Sporting, Recreational & Children's Goods Bicycles, toys 196 107Textiles Fabrics 1 887 428Tobacco Cigarettes, snuff 76 33Transportation & Logistics Inventories, air transports 6 062 1 550
Polarisation formulas
Gini
Krugman
GE(α)
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concentration
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