Chapter

Market Size, Linkages, and Productivity: A Study of Japanese Regions

Ravi Kanbur and Anthony J. Venables

in Spatial Inequality and Development

Published in print February 2005 | ISBN: 9780199278633
Published online April 2005 | e-ISBN: 9780191602191 | DOI: http://dx.doi.org/10.1093/0199278636.003.0006

Series: WIDER Studies in Development Economics

 Market Size, Linkages, and Productivity: A Study of Japanese Regions

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One account of spatial concentration focuses on productivity advantages arising from market size. The authors investigate this for 40 regions of Japan. Their results identify important effects of a region’s own size, as well as cost linkages between producers and suppliers of inputs. Productivity links to a more general form of ‘market potential’ or Marshall-Arrow-Romer externalities do not appear to be robust in our data. The effects they identify are economically quite important, accounting for a substantial portion of cross-regional productivity differences. A simple counterfactual shows that if economic activity were spread evenly over the 40 regions of Japan, aggregate output would fall by 5%.

Keywords: markets; productivity; regions

Chapter.  6080 words.  Illustrated.

Subjects: Economic Development and Growth

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