A Study on Industrial Agglomeration in Manufacturing Sector of Pakistan Using Ellison–Glaeser index

This paper explores the geographic concentration in manufacturing sector of Pakistan. Census of manufacturing industries CMI-data set is used for the period of 2000 to 2012. It is found that the extent of industrial agglomeration in Pakistan has diversified magnificently in recent years. Ellison–Glaeser index has been applied in the study and its values have increased steadily throughout the sample time period. Pakistan’s various regions obstructs the process of geographic concentration of manufacturing industries due to some social, political and economic problems, involving improper management of resources and failure in the achievement of policy objectives. The location decisions of two business units in the same industry are very important in their spillover gains through internal and external concentration of economies of scale. Along with some primary and traditional industries, some high technology industries are highly localized, which supports the view that technological spillovers may be important. A time period understanding of industrial transformation is developed along with extent of industrial agglomeration in this study with several implications for policy makers. Keywords: Industrial agglomeration, Manufacturing Industries, Spillovers, Pakistan.