Three Essays on Local Industrial Growth

This thesis focuses on the impact of external economies on economic performance resulting from the geographic concentration of manufacturing activities. In particular, I focus on several aspects of economic performance, such as unemployment fluctuations, productivity, and employment growth; on factors that facilitate external economies, such as competition and local structures; on a specific geographic unit of study, the local labor market area (LMA, divided into industrial districts and other areas); and on manufacturing as a variable that affects local growth (through basic to non-basic multipliers) as well as a variable that is affected by local characteristics. It is based on three chapters. The introduction of the dissertation is an attempt to give a sketchy idea of the relevance of the spatial division of labor for the Italian manufacturing sector, where I also discuss theoretically relevant policy implications. The first chapter documents that when tradable (manufacturing + extraction) firms enter a local market, they create additional jobs in non-tradable sectors. It analyzes this mechanism by looking at the size of firms entering the local market. Chapter two provides an analytical model for and analyzes the effect of geographic concentration of manufacturing on local TFP and the role of local competition in moderating such an effect. Chapter three empirically estimates the differential impact of global shocks on LMAs according to the strength of input-output linkages among manufacturing sectors. Finally, the paper concludes with policy implications.