Coagglomeration and Marshallian Externalities: Evidence for Brazilian Industry

Abstract

This study aims to quantify co-glomeration in the manufacturing industry sector between different pairs of industries, in addition to estimating the correlation between co-glomeration and Marshallian factors. The analysis is conducted at the state and micro regional level for industries belonging to the two digit CNAE division. The co-glomeration index proposed by Ellison, Glaeser and Kerr (2010) is used to measure the agglomeration between these pairs of industries. The relationship between co-glomeration and Marshallian externalities is estimated through regression analysis with panel data, controlling for industry fixed effects. This method is based on literature that associates productive advantages, potentially generating agglomeration economies, with industrial co glomeration. The results indicate that most industries are co-clustered with others of the same technological classification, with high-technology industries being more prone to this phenomenon than low technology industries. The results reveal that Marshallian forces, including labor pooling and input linkage, are positively associated with the level of industrial co glomeration. This suggests that greater dependence on worker sharing (labor pooling) and inputs provided by other industries favors co-glomeration. These results contribute to a deeper understanding of co glomeration dynamics in the manufacturing industry.