Industrial clusters, firm location and productivity – Some empirical evidence for Danish firms

According to the economic literature, industrial clusters are groups of firms on the same <p> location composing a production system with spillovers that can be vertical and/or <p> horizontal. This paper focuses on horizontal clusters by exploring the spatial <p> distribution of industrial clusters in Denmark. The key issue in the theoretical part of the <p> paper is whether firms located in industrial clusters are more productive than their <p> counterparts located separately outside industrial agglomerations. Firms located in <p> clusters are potentially more productive than other firms because of the agglomeration <p> advantages of e.g. networks, knowledge spillovers, human capital mobility etc. In the <p> empirical part of the paper, industrial clusters are identified using municipalities as the <p> spatial dimension. In the first part of the analysis, clusters are identified at the NACE-2 <p> digit industrial level. Next, using firm-level data for the 1990s the relative ‘cluster-firm’ <p> productivity is estimated. The study finds evidence of a significantly higher productivity <p> in clusters. However, the magnitude of the cluster advantages varies a lot across <p> industries and is highest in textile.