Edited by Bernard Fingleton
John Dewhurst and Philip McCann INTRODUCTION In this chapter we investigate the relationship between the size of an area and the extent of its industrial specialization. Much recent literature in regional economics and new economic geography suggests that certain patterns of industrial specialization, and by implication, regional trade, will be empirically evident within the spatial economy. In particular, renewed theoretical interest on the role played by agglomeration economies in determining the patterns of regional specialization, has also led to the development of new empirical eﬀorts aimed at identifying such agglomeration eﬀects. However, a fundamental point that has been largely overlooked in the literature on agglomeration is the fact that the outcomes of these empirical exercises may themselves also be aﬀected by our chosen spatial units of analysis. As such, it is necessary to be rather cautious where empirical evidence is used to support theoretical arguments of agglomeration externalities. In order to discuss the relationship between the size of a region and its level of specialization we analyse UK sectoral employment data at a variety of diﬀerent levels of spatial aggregation. This allows us to distinguish the eﬀect of regional size on measures of industrial specialization from those related to agglomeration economies. In the following sections we outline how this issue is generally understood by researchers. In Section 7.2 we explain the general understanding in the literature regarding the relationship between employment specialization, density and agglomeration eﬀects. In Section 7.3 we focus on the problematic...
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