Specialization, agglomeration and urban manufacturing growth in the northern border cities of Mexico

Abstract

Abstract The objective of this paper is to investigate the effect of agglomeration economies on the manufacturing sector of the northern border cities of Mexico. It is assumed that economic globalization is an important determinant in the trend toward the relocation of manufacturing activities to the northern border region. The present research is based on the hypothesis that agglomeration has had a positive impact on the urban manufacturing growth in the northern cities studied. An econometric model was established to relate agglomeration with manufacturing growth. The results of the study revealed that the externalities caused by industrial specialization among industries make up one of the explanatory factors of manufacturing employment growth during 1988-1993. For the period 1993-1998 the control variables of total initial urban employment and total initial wage level were relevant to urban manufacturing growth. Finally, when including the effect of urban agglomeration, using the population as a proxy, a positive but small impact on manufacturing employment growth was found.