Assessing Dynamic Externalities from a Cluster Perspective: The Case of the Motor Metropolis in Japan

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In this paper, we first apply the methods of exploratory spatial data analysis (ESDA) and investigate the geographic concentration of interrelated growing industries, or "growth clusters," by using data from the Nagoya metropolitan area in Japan over the period 1986–2006. Second, by applying econometric models, we examine whether and which type of knowledge externalities contribute to region– industry dynamics and to the formulation of the detected growth cluster. As a methodological contribution, spatial dependence caused by the geographical proximity between regions and the technological proximity between industries is incorporated into the empirical models. Combining the information obtained from the ESDA and econometric analysis enables us to assess the role of knowledge externalities for regional growth from a cluster perspective. The empirical results identify the presence of a growth cluster mainly driven by the automobile and associated industries. We find that intra-industry externalities help the substantial growth of the automobile industry and diffuse over a broader area in the cluster. In the core of the cluster, the diversified interrelated structure also contributes to the growth of both the auto-related and non-auto-related manufacturing sectors.


  • Economic Research Center Discussion Paper

    Economic Research Center Discussion Paper (E13-7), 2013-08



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