NATIONAL BUREAU OF ECONOMIC RESEARCH
NATIONAL BUREAU OF ECONOMIC RESEARCH

Agglomeration Benefits and Location Choice: Evidence from Japanese Manufacturing Investment in the United States

Keith Head, John Ries, Deborah Swenson

NBER Working Paper No. 4767
Issued in June 1994
NBER Program(s):   ITI

Recent theories of economic geography suggest that firms in the same industry may be drawn to the same locations because proximity generates positive externalities or 'agglomeration effects.' Under this view, chance events and government inducements can have a lasting influence on the geographical pattern of manufacturing. However, most evidence on the causes and magnitude of industry localization has been based on stories, rather than statistics. This paper examines the location choices of 751 Japanese manufacturing plants built in the U.S. since 1980. Conditional logit estimates support the hypothesis that industry-level agglomeration benefits play an important role in location decisions.

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Document Object Identifier (DOI): 10.3386/w4767

Published: Head, Keith, John Ries and Deborah Swenson. "Agglomeration Benefits And Location Choice: Evidence From Japanese Manufacturing Investments In The United States," Journal of International Economics, 1995, v38(3/4,May), 223-247.

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