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2016-01-28T06:40:04+05:30

In the context of economic geography, agglomeration may refer to a concentration in space of some entity, or the process by which such a spatial formation is created. Much may be learned about the role of space and place in economic processes by trying to pinpoint the driving forces that make for agglomeration in space of economic activity. Some would go as far as to argue that spatial agglomeration is the phenomenon that ultimately defines and motivates the existence of economic geography as a discipline. The concept of agglomeration economies, held to define the economic advantages gained by agglomerative behavior, is often divided into two types. Thus, the concept of urbanization economies denotes those advantages to be gained by location in a large and dense urban area, while the notion of localization economies refers to advantages gained by spatial clustering of similar or related firms. This article focuses on the latter phenomenon. It reviews the mechanisms that are held to make up the concept of agglomeration (or rather localization) economies and it discusses how we can understand the birth, growth, saturation, decline, and possible reinvigoration of industry agglomerations over time, by adopting an evolutionary approach.

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