Modelling industrial firm relocation with impacts of spatial dependence: Fid-Bau Portal

Modelling industrial firm relocation with impacts of spatial dependence

An, Youngsoo / Wan, Li

The location choice of industrial firms has been studied extensively. However the relocation choice of industrial firm remains under-researched. In this study, we develop a multinomial logit model for firm relocation choices that considers both origin and destination attributes. The proposed model is empirically estimated with firm registration data for the Seoul Metropolitan Area. The estimation results show that the network distance for relocation is an important factor for manufacturing firms; reduced land costs is likely to be a significant economic factor in relocation choice of manufacturing firms. In terms of the impacts of spatial dependence, we clarify two types of spatial dependence in literature, i.e. the neighbourhood effects from contiguous locations and the extended spatial spillovers in agglomeration economy. Our test shows that both the neighbourhood and agglomeration effects are significant for high-tech industry, but not for heavy industry. Sensitive tests are carried out to determine the optimum catchment radius for measuring the agglomeration effects for each manufacturing firm types. We also investigate the possible relocation choice variance among manufacturing firms of different employment size.