Geographical Agglomeration in Australian Manufacturing

Melbourne Institute Working Paper No. 11/07

Date: March 2007

Author(s):

Anne Leahy
Alfons Palangkaraya
Jongsay Yong

Abstract

This paper investigates the geographic agglomeration of establishments in the Australian manufacturing industries during the period of 1994–1997. We find that although the agglomeration of Australian manufacturing has doubled during the period, it is still not as agglomerated as those in other developed economies such as the United States, the United Kingdom, France and Ireland. We also find that industries which receive higher assistance tend to be more agglomerated. However, there is no statistically significant evidence that the extent of the reduction in assistance due to trade liberalisation between 1994 and 1997 was associated with a further decrease in agglomeration. In terms of establishment dynamics, we find a significant increase in agglomeration but no evidence that establishment entry-exit patterns are correlated with agglomeration.

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