Entropy, Agglomeration and Economic Structures in Spatial Analysis

This chapter offer a critical review of the use of entropy indices to evaluate structural change and the evolution of the spatial distribution of economic activities. Section 1 presents basic insights from Information Theory and bridges them with the empirical literature on the spatial concentration of economic activities. Starting from a unifying approach for treating regions and sectors symmetrically, Section 2 illustrates absolute and relative indices of concentration and specialization while Section 3 focuses on the overall localization measure (L-index), its decomposition across spatial scales, its axiomatic properties and discusses issues of statistical testing. Section 4 concludes and suggests some avenues for future research