NATURE & EFFECTS OF AGGLOMERATION ECONOMIES ON MANUFACTURING FIRMS IN PUNJAB

Authors

  • Mutee ul Rehman School of Economics, Quaid-i-Azam University, Islamabad, Pakistan
  • Muhammad Tariq Majeed School of Economics, Quaid-i-Azam University, Islamabad, Pakistan

DOI:

https://doi.org/10.52567/pjsr.v3i3.405

Abstract

This paper quantifies the nature and effects of agglomeration economies on manufacturing firms of Punjab, the largest province of Pakistan. Using firm level cross-section data, this research first explains the extent of agglomeration of manufacturing firms in Punjab by calculating the agglomeration indicators i.e., urbanization and localization. We used the firm’s distance from urban center as a proxy for urbanization. We used spatial autocorrelation as a measure to show the localization of firms. We constructed the translog production function to measure the effects of urbanization and localization on firms’ annual turnover. The overall impact of both agglomeration economies is positive on firms’ turnover. However, the effect of urbanization economies is more prevalent than the effects of localization economies in Punjab. At two-digit sector level, thirteen out of twenty-three sectors showed positive effect of urbanization on firm’s turnover. For localization, ten sectors showed positive on firm’s turnover. The results are consistent with the literature and the existing status of manufacturing sector of Punjab.

Keywords: Agglomeration, urbanization, localization, spatial autocorrelation, manufacturing, Punjab.

JEL: C21, L6, R12, R32

Author Biographies

  • Mutee ul Rehman, School of Economics, Quaid-i-Azam University, Islamabad, Pakistan

    Ph.D. Scholar

  • Muhammad Tariq Majeed, School of Economics, Quaid-i-Azam University, Islamabad, Pakistan

    Associate Professor & Director

Additional Files

Published

2022-06-22

Issue

Vol. 3 No. 3 (2021): Pakistan Journal of Social Research (PJSR)

Section

Research Article

License

Copyright (c) 2022 Mutee ul Rehman, Muhammad Tariq Majeed

Creative Commons License

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How to Cite

[1]
“NATURE & EFFECTS OF AGGLOMERATION ECONOMIES ON MANUFACTURING FIRMS IN PUNJAB”, Pak. J, Soc. Sci., vol. 3, no. 3, pp. 590–603, Jun. 2022, doi: 10.52567/pjsr.v3i3.405.