Agglomeration economies and firm-level performance: evidence from the industrial and agricultural sectors

Abstract

Economic theorists such as Porter, Marshall, and Jacobs argued that the economic activity of one firm affects the economic activity of another firm because of their geographic proximity, which thus explains the growth of cities and industries. As regards to this, a number of papers attempted to estimate the influence of agglomeration economies on the performance of firms, industries, and regions. This paper provides a survey of peer-reviewed literature that relates the effect of agglomeration economies to the economic performance of firms from the industrial and agricultural sectors. Taken as a whole, the results of the studies were inconclusive.