Concentration of Economic Activity: An Analytical Framework

Abstract

International audienceThe goal of this paper is to offer an analytical framework within which relative concentration, including both the concentration of each sector and aggregate concentration, can be analyzed. By borrowing properties from the literature on income inequality and segregation and adapting them to a location context, this paper characterizes the generalized entropy family of concentration indexes proposed by Brülhart and Traeger (2005) and the L-index proposed by Cutrini (2009). In addition, it offers other measures taken from the segregation literature. All these measures are used to analyze the spatial patterns of manufacturing industries in Spain from 1977 to 2008, paying special attention to their technological intensity

Long‐run processes of geographical concentration and dispersion: Evidence from Germany

“…As a consequence, patterns of geographical concentration change over time as well, with important implications for the organization of inter‐regional production and transport processes, the framework of regional supporting schemes for firms and industries, or for the future prospects of regional economies. This fact, however, has so far only been sparsely documented, with the few existing long‐term studies encompassing merely a subset of economic sectors (e.g., Drucker ; Alonso‐Villar and Del Río ).…”

New evidence on measuring the geographical concentration of economic activities

“…Popular measures of geographical concentration of economic activities derive their properties from the literature on income inequality and segregation (Alonso-Villar, 2011;Alonso-Villar & del Río, 2013;Hutchens, 1991Hutchens, , 2004Massey & Denton, 1988). Concentration measures that have been derived from the income inequality measures, such as the Gini index and generalized entropy measures, satisfy basic requirements corresponding to symmetry in location, movement between locations, scale invariance, and insensitivity to proportional subdivisions of locations (Alonso-Villar, 2011).…”

A stochastic independence approach for measuring regional specialization and concentration

“…In their search for desirable properties, Combes and Overman () emphasize the analysis of the deviation from a benchmark distribution. Alonso‐Villar and del Río () mentioned some of the main properties we also meet when using discrepancies measures.…”

“…Conversely, the properly weighted average of the relative sectorial specializations or of the relative regional concentrations provide the same measure of overall localization. 'Overall' localization is used for instance by Alonso‐Villar and del Río () but Bickenbach and Bode call d ω ( N ) a measure of polarization in 2006 but of localization in 2008 and Bickenbach et al () also use localization.…”

“…Brülhart and Traeger () call d K L ( N ) the ‘relative Theil index’ (Theil, ) and also propose generalizations by supplementing the original form with a so‐called sensitivity parameter α . Aiginger and Davies (), Mulligan and Schmidt (), Bickenbach and Bode (), Cutrini (), Alonso‐Villar and del Río () and many others have made use of the case α =1. Under the heading of ‘industrial localization’ of sectors, Mori et al () have proposed an absolute measure of regional concentration of sectors, based on KL‐divergence, where the benchmark is given by the distribution of the areas of the regions rather than by the corresponding marginal distribution.…”