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Disentangling the pattern of geographic concentration in Tunisian manufacturing industries

Mohamed Ayadi () and Wided Mattoussi

No 72, WIDER Working Paper Series from World Institute for Development Economic Research (UNU-WIDER)

Abstract: In this paper, we examine the pattern of spatial concentration of manufacturing industries observed in Tunisia and explore the factors driving firms’ choices of location at the provincial level. We consider specialization and competition indicators as the driving forces and also examine the extent to which location choice is related to centre business districts. We estimate the effect of the location variables on sector growth and productivity. Our results suggest that firms choose to locate in a specific governorate because of high local demand, which brings about transportation cost savings. Moreover, we find a concentration of activity in Greater Tunis where most growth in firms and employment are observed, while locating in littoral governorates enhances the productivity growth of governorate industries. Urbanization economies in Tunisia encourage the emergence of virtuous circles in the transmission of innovative ideas, so firms can benefit from the proximity of other manufacturing units. Geographic concentration in Tunisian manufacturing industries is a kind of commercial relationship between the sectors rather than the division and the exploitation of technological complementarities between sectors.

Keywords: industrial concentration; concentration index; competition index; Tunisia (search for similar items in EconPapers)
New Economics Papers: this item is included in nep-ara, nep-com, nep-cse, nep-geo and nep-ure
Date: 2014
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