AGGLOMERATION AND INDUSTRIAL-LOCATION - AN ECONOMETRIC-ANALYSIS OF JAPANESE-AFFILIATED MANUFACTURING ESTABLISHMENTS IN AUTOMOTIVE-RELATED INDUSTRIES

This paper examines the role of a particular type of agglomeration, th e co-location of backward- and forward-linked manufacturing enterprise s, in the process of industrial location. It does so by an econometric analysis of Japanese-affiliated manufacturing establishments in autom otive-related industries. We advance the hypothesis that proximity to Japanese-affiliated automotive assemblers is the major consideration i n the choice of location by Japanese-affiliated automotive suppliers a nd related manufacturing establishments. We develop econometric models to test this hypothesis in light of a series of measures of agglomera tion and other area characteristics such as manufacturing density, uni onization, wages, minority concentration, and taxes. The empirical fin dings confirm this hypothesis. Japanese automotive-related manufacturi ng establishments reveal a preference for locations in close proximity to Japanese automotive assemblers, with larger populations, a higher manufacturing density, a more educated work force, and better transpor tation. Furthermore, in contrast to the prevailing literature, Japanes e automotive-related manufacturing establishments are found to prefer locations with higher wages and higher concentrations of minorities. ( C) 1994 Academic Press, Inc.