Agglomeration Economies in Ireland: Implications for Firm Productivity

This study identifies how internal economies of scale and external economies of
localization and urbanization affect labour productivity differences between Irish
manufacturing firms. According to O‘Leary (2007) Irish policymakers have
focused on localization economies as the only source of agglomeration economies.
The study first attempts to operationalize Parr‘s (2002) classification of six
agglomeration economies, three of which are internal to the firm and three of
which are external to the firm. Based on secondary data on Irish manufacturing
establishments from the Census of Industrial Production (CIP) it then attempts to
quantify the relative importance of the different kinds of agglomeration economies
on manufacturing labour productivity for firms operating in Irish regions.