Examination of dynamic externalities with a focus on spatial autocorrelation and heterogeneity and evaluation of industrial location policies

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This research project, based on the theories of dynamic externalities, explores the spatial pattern of industry dynamics in the counties in the Nagoya metropolitan area, Japan. The methods of exploratory spatial data analysis(ESDA) are applied to the long-term sustained growth rates of the manufacturing and service sectors. As a methodological contribution, the spatial weight matrix that reflects both geographical and technological proximity between regional industries is introduced into ESDA. Applying the two-dimensional spatial structure allows one to give proper statistical identification to the sectoral composition and geographical bounds of growth clusters. The descriptive results show that industrial specialization would act as the driving force for growth in a relatively broad area, whereas industrial diversity would promote innovation and growth in a relatively small area.