The analysis of Industrial Location, Employment and Productivity of Manufacturing using Geographical Information System tools

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Previous studies on Industrial Agglomeration find (i) concentration of the same industry could gain productivity rise through technological spillover and/or pooling specific suppliers or specific skilled workers, and (ii) concentration of different industries could gain the merit of scope through complementarily on industrial linkages. These studies, however, have in common a serious shortage that they only observe the industrial agglomeration as the concentration of industrial establishments and pay little attention on the firm, the organization of establishments within which skills and information diffuse much faster than among inter firm establishments. In this study, we focus on whether a remote establishment could enjoy technological spillover that is acquired by an establishment of the same company located on industrial agglomeration of another area. We pick up the pharmaceutical industry as an example that is driven by the research and development and whose R&D activity could receive the merit of agglomeration of the activities of other firms of the same industry. We find that the productivity of a pharmaceutical manufacturing establishment measured by its wage level is significantly higher when its company has a research laboratory in Tsukuba city, the R&D Mecca of this industry.