Therefore, substantial localization or spatial concentration of economic activity may be seen as sign of agglomeration economies
Historically, economists relied on agglomeration economies
to explain how the high concentrations of people and jobs in cities led to efficiency gains and cost savings for firms.
First, output appears to be subject to agglomeration economies
, whereby people become more productive when they work in densely populated areas surrounded by other people.
of Urban Agglomeration Economies
, in 4 HANDBOOK OF REGIONAL AND URBAN
Agro-processing, horticulture, tourism and ICT-based services benefit from agglomeration economies
, just as manufacturing does.
The frequently observed clustering of similar (or dissimilar) retail outlets may be a reflection of all sorts of influences besides agglomeration economies
, uncertainty reduction through comparison shopping, or multipurpose shopping behavior.
A distance-weighted income measure (MKT) is a proxy for the size of the total potential market available to firms and may proxy additional agglomeration economies
. For a given state, i, MKT is the sum of the real income in each of the 50 states (j) divided by the square of the road-mile distance between the principal cities of state i and state j.(8) MKT is superior to simply measuring the level of income in a state since it reflects the fact that the demand for the space of a particular site is not confined to the boundaries of the state in which it is located.
Despite the fact that a process of concentration of economic activity took place around Santiago and Valparaiso, neither industry nor services benefited excessively from the emergence of agglomeration economies
in these leading regions.
and firm performance: the case of industry clusters.
Their topics include agglomeration economies
and smart cities, the multi-actor analysis of metropolitan performance indicators, cities as seedbeds of responsible innovation, an accessibility index for the metropolitan region of Sao Paulo, and theory and practice of how cities should manage economic development.
While spatial concentration may be necessary and desirable initially to achieve agglomeration economies
, it can become excessive and costly if left to plain market forces.
But African cities are currently not delivering agglomeration economies
or reaping urban productivity benefits.