Barcelona's manufacturing and high-tech industry displays a
strong tendency to cluster.
The new models of industrial location explain this as the
result of the tension between two opposing forces. Agglomeration forces
encourage firms to concentrate in a few locations: firms benefit from locating
near each other because, for example, they have access to larger pools of
skilled labour. But wage differences (or other factor supply issues such as
truck rental) push in the opposite direction: if too many firms locate close
together, the competition for labour forces wages up. This encourages the
dispersion of industry. The agglomeration forces may overcome the dispersion
forces if workers migrate easily or if there are strong vertical linkages
between firms operating in the same or related industries.
A combination of economies of scale and transport costs
encourages many firms to locate close to Barcelona, a market in the wider
metropolitan area of some four million people. Wages in this region are higher
than elsewhere but the transport savings created by linkages compensate for the
higher wage costs, land costs and traffic congestion.
The hallmark of these location models is that agglomeration
forces tend to encourage the concentration of industrial activity via
'cumulative causation'. In other words, spatial concentration itself creates an
environment that encourages spatial concentration. The early stages of
clustering bring large gains as firms exploit economies of scale by
concentrating production close to the market where they have more customers and
suppliers. Agglomeration forces tend to be sector-specific as a given firm will
want to locate close to its particular buyers and suppliers. This encourages
increasing specialization and tends to increase the differences between rich and
poor regions, even if there are overall gains.
Simplified animation to show the development of
an industrial region (after Gunnar Myrdal)
