Industry cluster and regional economic growth: evidence from Hungary

Using census-type data of Hungarian firms, we test major hypotheses of spatial economic theories focusing on the impact of industrial and market concentrations on regional economic growth. Our empirical evidence confirms that both industrial and market concentrations have a significant positive impact on production growth. This finding strongly supports the Marshall-Arrow-Romer model of local knowledge externalities, suggesting that investment-driven regional development prevails in Hungary.

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This post was written by Szabolcs