Which firms benefit the most from agglomeration? New evidence from an emerging country with consistent measure of productivity

Manh Cuong Hoang and Daniel Schiller

Journal of Asian Economics, 2023, vol. 86, issue C

Abstract: Productivity influences of agglomeration for developed countries has been well documented so far, however, the studies are still rare for emerging and developing countries, especially ones focusing on firm heterogeneity. This article empirically investigates the effects of agglomeration on productivity using firm-level data from Vietnam – a typical emerging country. Firstly, the consistent productivity measure of each individual firm is yielded using the control function approach along with the instrumental variable procedure. Next, it is regressed on proxies of agglomeration, controlling firm and regional characteristics. Potential issues of self-selection and endogeneity are dealt with using the fixed effects technique and taking advantage of micro data. Findings show the productivity-enhancing influences of employment density and industrial diversity but no clear evidence on the productivity gains from specialization for a general firm. In addition, the most advantaged firms in highly agglomerated regions are proved to be foreign-owned, small-sized, or young. Finally, several sensitivity checks demonstrate that the estimated results are robust across various productivity measures, industrial levels, and samples.

Keywords: Agglomeration; Urbanization; Specialization; Concentration; Productivity; Developing countries; Vietnam (search for similar items in EconPapers)
JEL-codes: D24 O18 R R10 R11 R12 (search for similar items in EconPapers)
Date: 2023
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:asieco:v:86:y:2023:i:c:s1049007823000404

DOI: 10.1016/j.asieco.2023.101620

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