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The Geographic Concentration of Enterprise in Developing Countries
John S Felkner1, Robert M Townsend
1University of Chicago, Massachusetts Institute of Technology.
The Quarterly Journal of Economics
|July 31, 2012
Summary
Economic geography significantly impacts national development. In Thailand, concentrated enterprise drives area growth, while stagnant regions lag behind, demonstrating spatial economic dynamics.
Area of Science:
- Economics
- Economic Geography
- Development Studies
Background:
- National economic geography profoundly influences development trajectories.
- Understanding spatial economic dynamics is crucial for policy interventions.
- Previous research highlights the link between location and economic outcomes.
Purpose of the Study:
- To investigate the relationship between enterprise concentration and subsequent economic growth in Thailand.
- To analyze the spatial patterns of economic convergence and divergence.
- To develop and test a micro-founded model explaining these observed economic phenomena.
Main Methods:
- Utilized village-level data from Thailand for analysis.
- Employed a structural, micro-founded model of occupation transitions.
- Incorporated fine-tuned geographic capabilities and exogenous physiographic conditions into the model.
Main Results:
- High enterprise concentration in an area predicts significant subsequent growth in and around that area.
- Observed spatially contiguous convergence of enterprise, with some areas experiencing stagnation.
- Exogenous physiographic conditions correlate with both enterprise location and economic growth.
Conclusions:
- Economic geography, particularly enterprise distribution, is a key determinant of regional development.
- Credit constraints and financial service expansion play critical roles in occupation choice and economic growth.
- The study provides a micro-founded framework to understand spatial economic development patterns.
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