| In the section | Articles |
| Title of the article | Localization and Diversification of Russian Economy: Regions’ and Industries’ Peculiarities |
| Pages | 39-69 |
| Author 1 | Alexander Vladimirovich Zyuzin Postgraduate Student National Research University Higher School of Economics 11 Pokrovskiy Bulvar, Moscow, 109028, Russian Federation This email address is being protected from spambots. You need JavaScript enabled to view it. ORCID: 0000-0002-2050-8018 |
| Author 2 | Olga Anatolyevna Demidova Candidate of Science (Physics and Mathematics), Associate Prоfessor, Faculty of Economic Sciences National Research University Higher School of Economics 11 Pokrovskiy Bulvar, Moscow, 109028, Russian Federation This email address is being protected from spambots. You need JavaScript enabled to view it. ORCID: 0000-0001-5201-3207 |
| Author 3 | Tatyana Grigoryevna Dolgopyatova Doctor of science, Chief Researcher, Institute for Industrial and Market Studies, Tenured Professor National Research University Higher School of Economics 18 Myasnitskaya St., Moscow, 101000, Russian Federation This email address is being protected from spambots. You need JavaScript enabled to view it. ORCID: 0000-0002-9390-4505 |
| Abstract | This paper studies the influence of industry localization and region economy diversification on firm profitability in Russia and provides quantitative estimation to such an influence. In this paper two main hypotheses are tested: (a) industry localization and region economy diversification improve enterprise profitability and (b) both localization and diversification influence smaller companies rather than bigger ones. Localization effects are estimated via Ellison-Glaeser index. Diversification is measured with Herfindahl-Hirschman index (HHI). The data set consists of 650 thousand of observations and approximates the full set of commercial real sector Russian companies in 2017. The indicator ‘number of employees’ is used for Ellison-Glaeser and HHI indexes calculation but this indicator contains missing values. To avoid distortions in the indexes’ magnitudes missing values are estimated in multiple ways that given closely same results. All companies were divided into four groups by scale (big, medium, small and micro). The regression models for testing two main hypotheses are estimated separately for each group. Method of regression estimation is OLS. It was found that profitability increases with the degree of industry localization and the effect is stronger for bigger companies. An increase of Ellison-Glaeser index by 0,1 results in 0,7–7,5% rise of sales margin. The effect from region diversification was found only for small and micro companies. HHI growth of 0,1 increases sales margin by 1,5–2,6% |
| Code | 332.1 |
| JEL | C21, R11, R12, R15 |
| DOI | https://dx.doi.org/10.14530/se.2020.2.039-069 |
| Keywords | regional diversification ♦ industry localization ♦ sales margin ♦ Russian regions |
| Download | |
| For citation | Zyuzin A.V., Demidova O.A., Dolgopyatova T.G. Localization and Diversification of Russian Economy: Regions’ and Industries’ Peculiarities. Prostranstvennaya Ekonomika = Spatial Economics, 2020, vol. 16, no. 2, pp. 39–69. https://dx.doi.org/10.14530/se.2020.2.039-069 (In Russian) |
| References | 1. Appold S.J. Agglomeration, Interorganizational Networks, and Competitive Performance in the U.S. Metalworking Sector. Economic Geography, 1995, vol. 71, no. 1, pp. 27–54. 2. Audretsch D.B. Agglomeration and the Location of Innovative Activity. Oxford Review of Economic Policy, 1998, vol. 14, issue 2, pp. 18–29. 3. Audretsch D.B., Feldman M. R&D Spillovers and the Geography of Innovation and Production. American Economic Review, 1996, vol. 86, issue 3, pp. 630–640. 4. Baptista R., Swann P. Do Firms in Clusters Innovate More? Research Policy, 1998, vol. 27, issue 5, pp. 525–540. 5. Baumgardner J.R. Physicians’ Services and the Division of Labor Across Local Markets Author. Journal of Political Economy, 1988, vol. 96, no. 5, pp. 948–982. 6. Bell G.G. Clusters, Networks, and Firm Innovativeness. Strategic Management Journal, 2005, vol. 26, no. 3, pp. 287–295. 7. Ciccone A., Hall R.E. Productivity and the Density of Economic Activity. American Economic Review, 1996, vol. 86, issue 1, pp. 54–70. 8. Cohen J.P., Morrison Paul C.J. Agglomeration, Productivity and Regional Growth: Production Theory Approaches. Handbook of Regional Growth and Development Theories, 2009, pp. 101–117. 9. Davidson N.B., Mariev O.S. The Impact of Spatial Concentration on Enterprise Performance. Economy of Region, 2015, no. 4, pp. 95–105. 10. Duranton G., Puga D. Micro-Foundations of Urban Agglomeration Economies. Handbook of Regional and Urban Economics, 2004, vol. 4, pp. 2063–2117. 11. Ellison G., Glaeser E.L. Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach. Journal of Political Economy, 1997, vol. 105, no. 5, pp. 889–927. 12. Ellison G., Glaeser E.L., Kerr W.R. What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns. American Economic Review, 2010, vol. 100, no. 3, pp. 1195–1213. 13. Fischer M.M., Scherngell T., Jansenberger E. The Geography of Knowledge Spillovers Between High-Technology Firms in Europe: Evidence from a Spatial Interaction Modeling Perspective. Geographical Analysis, 2006, vol. 38, no. 3, pp. 288–309. 14. Glaeser E.L., Kallal H.D., Scheinkman J.A., Shleifer A. Growth in Cities. Journal of Political Economy, 1992, vol. 100, no. 6, pp. 1126–1152. 15. Hervas-Oliver J.-L., Sempere-Ripoll F., Rojas Alvarado R., Estelles-Miguel S. Agglomerations and Firm Performance: Who Benefits and How Much? Regional Studies, 2018, vol. 52, issue 3, pp. 338–349. 16. Henderson J.V. Marshall’s Scale Economies. Journal of Urban Economics, 2003, vol. 53, issue 1, pp. 1–28. 17. Hilber C.A.L., Voicu I. Agglomeration Economies and the Location of Foreign Direct Investment: Empirical Evidence from Romania. Regional Studies, 2010, vol. 44, issue 3, pp. 355–371. 18. Hippel E. von. Economics of Product Development by Users: The Impact of ‘Sticky’ Local Information. Management Science, 1998, vol. 44, issue 5, pp. 629–644. 19. Holmes T.J. Localization of Industry and Vertical Disintegration. The Review of Economics and Statistics, 1999, vol. 81, issue 2, pp. 314–325. 20. Jacobs J. The Death and Life of Great American Cities. New York: Random House, 1961. 458 р. 21. Jacobs J. The Economies of Cities. New York: Random House, 1969. 288 р. 22. Kim S. Expansion of Markets and the Geographic Distribution of Economic Activities: The Trends in U.S. Regional Manufacturing Structure, 1860–1987. The Quarterly Journal of Economics, 1995, vol. 110, issue 4, pp. 881–908. 23. Knoben J., Arikan A.T., Oort F. van, Raspe O. Agglomeration and Firm Performance: One Firm’s Medicine is Another Firm’s Poison. Environment and Planning A: Economy and Space, 2016, vol. 48, issue 1, pp. 132–153. 24. Kolomak E.A. Evolution of Spatial Distribution of Economic Activity in Russia. Regional Research of Russia, 2015, vol. 5, no. 3, pp. 236–242. 25. Krugman P. Increasing Returns and Economic Geography. Journal of Political Economy, 1991, vol. 99, no. 3, pp. 483–499. 26. Lavrinenko P.A., Mikhailova T.N., Romashina A.A., Chistyakov P.A. Agglomeration Effect as a Tool of Regional Development. Problemy Prognozirovaniya = Studies on Russian Economic Development, 2019, vol. 3, pp. 50–59. (In Russian). 27. Lobodina O.N., Shmidt Y.D. Estimation of the Influence of Spatial Factors on the Intensity of Innovation Processes. Vestnik Tikhookeanskogo Gosudarstvennogo Ekonomicheskogo Universiteta [Bulletin of the Pacific State University of Economics], 2013, vol. 3, pp. 20–30. (In Russian). 28. Lu Y., Tao Z., Yu L. Agglomeration and Markup, 2012, 34 p. 29. Malmberg A., Malmberg B., Lundequist P. Agglomeration and Firm Performance: Economies of Scale, Localisation, and Urbanisation Among Swedish Export Firms. Environment and Planning A: Economy and Space, 2000, vol. 32, issue 2, pp. 305–321. 30. Morrison Paul C.J., Siegel D.S. Knowledge Capital and Cost Structure in the U.S. Food and Fiber Industries. American Journal of Agricultural Economics, 1998, vol. 80, issue 1, pp. 30–45. 31. Nakamura R. Agglomeration Economies in Urban Manufacturing Industries: A Case of Japanese Cities. Journal of Urban Economics, 1985, vol. 17, issue 1, pp. 108–124. 32. Qian G., Li L., Li J., Qian Z. Regional Diversification and Firm Performance. Journal of International Business Studies, 2008, vol. 39, issue 2, pp. 197–214. 33. Quigley J.M. Urban Diversity and Economic Growth. Journal of Economic Perspectives, 1998, vol. 12, no. 2. Pp. 127–138. 34. Rastvortseva S.N., Chentsova A.S. Regional Specialization and Geographical Concentration of Industry in Russia. Regional Science Inquiry, 2015, vol. 7, issue 2, pp. 97–106. 35. Rosenthal S.S., Strange W.C. Evidence on the Nature and Sources of Agglomeration Economies. Handbook of Regional and Urban Economics, 2004, vol. 4, pp. 2119–2171. 36. Shaver J.M., Flyer F. Agglomeration Economies, Firm Heterogeneity, and Foreign Direct Investment in the United States. Strategic Management Journal, 2000, vol. 21, issue 12, pp. 1175–1193. 37. Stuart T., Sorenson O. The Geography of Opportunity: Spatial Heterogeneity in Founding Rates and the Performance of Biotechnology Firms. Research Policy, 2003, vol. 32, issue 2, pp. 229–253. 38. Thang T.T., Pham T.S.H., Barnes B.R. Spatial Spillover Effects from Foreign Direct Investment in Vietnam. Journal of Development Studies, 2016, vol. 52, issue 10, pp. 1431–1445. 39. Wheaton W.C., Lewis M.J. Urban Wages and Labor Market Agglomeration. Journal of Urban Economics, vol. 51, issue 3, pp. 542–562. |
| Financing | The survey was sponsored by the Basic Research Program of Higher School of Economics (NRU HSE) in 2020 and by the Faculty of Economic Sciences |
| Submitted | 15.04.2020 |
| Revised | 22.05.2020 |
| Published online | 30.06.2020 |