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Department of Economics, Aarhus School of Business, University of Aarhus Working Papers, Department of Economics, Aarhus School of Business, University of Aarhus

No 03-26:
Industrial clusters, firm location and productivity – Some empirical evidence for Danish firms

Erik Strøjer Madsen (), Valdemar Smith () and Mogens Dilling-Hansen ()

Abstract: According to the economic literature, industrial clusters are groups of firms on the same

location composing a production system with spillovers that can be vertical and/or

horizontal. This paper focuses on horizontal clusters by exploring the spatial

distribution of industrial clusters in Denmark. The key issue in the theoretical part of the

paper is whether firms located in industrial clusters are more productive than their

counterparts located separately outside industrial agglomerations. Firms located in

clusters are potentially more productive than other firms because of the agglomeration

advantages of e.g. networks, knowledge spillovers, human capital mobility etc. In the

empirical part of the paper, industrial clusters are identified using municipalities as the

spatial dimension. In the first part of the analysis, clusters are identified at the NACE-2

digit industrial level. Next, using firm-level data for the 1990s the relative ‘cluster-firm’

productivity is estimated. The study finds evidence of a significantly higher productivity

in clusters. However, the magnitude of the cluster advantages varies a lot across

industries and is highest in textile.

Keywords: Industrial clusters; productivity; (follow links to similar papers)

JEL-Codes: D24; L60; (follow links to similar papers)

17 pages, May 26, 2003

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