Global culture and economy increasingly stem from what three regions and what three cities1/29/2024 It summarizes research on how agglomeration provides these benefits and why firms and industries continue to agglomerate today by providing real-life examples of different regional experiences across the United States. This article is a practical guide for economic developers to make sense of agglomeration and its benefits to a region’s firms, residents and workers. 1 But the question for economic developers is why firms continue to agglomerate when movement of goods, labor and knowledge across space has never been easier or cheaper to do. Glaeser, in the introduction of his seminal volume on agglomeration economies, insists that the benefits ultimately come from transport cost savings. In a nutshell, the forces of agglomeration contribute to the formation of industry clusters, but one should refrain from using the terms interchangeably.Įdward L. Agglomeration is closely related to, but distinct from, industry clusters-which are familiar to many due in part to Michael Porter and others’ work on the U.S. It’s the reason why there are so many tech companies in the San Francisco Bay Area, wine producers in California, financial services firms in New York and auto manufacturers in Detroit. In the economic development sense, it refers to the economic benefits that come when firms locate near each other. What is agglomeration?Įconomic developers may or may not be familiar with the term “agglomeration economies” but, more than likely, intuitively understand it. Agglomeration helps us understand why there are so many wine producers in California, financial services firms in New York and auto manufacturers in Detroit.
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