The Annals of Regional Science

, Volume 52, Issue 3, pp 659–696 | Cite as

How important is geographical agglomeration to factory efficiency in Japan’s manufacturing sector?

  • Kyoji Fukao
  • Victoria KravtsovaEmail author
  • Kentaro Nakajima
Original Paper


In this paper, the productivity spillovers from efficient factories have been investigated using factory-level data of Japan’s Census of Manufactures. The following three steps have been performed by estimating: first, efficiency of each factory using a nonparametric data envelopment analysis model for each industry, second, geographical distances to the most efficient factory in the prefecture and Japan overall are third, determinants of factories’ performance. Results suggest that clustering occurs in each industry and efficient factories concentrate in certain regions. The share of efficient firms in total firms is particularly high in the Chubu and Tohoku regions. For many industries closeness to the most efficient factories plays a statistically significant positive role in the efficiency of manufacturing factories in Japan. However, this is not the case in high-tech industries.

JEL Classification

C31 018 R1 



The authors acknowledge financial support from the Japanese Society for the Promotion of Science (JSPS) and Sasakawa Foundation in Nordic countries. We were able to gain access to the micro-data of the Census of Manufactures as part of the research project on the “Factory and Industry Level Analysis of Productivity” at the Research Institute of Economy, Trade and Industry (RIETI). We would like to acknowledge research assistance of Hangtian Xu and useful comments of the participants of the NISTEP workshop (Tokyo, Japan) and referees of this journal.

Supplementary material

168_2014_601_MOESM1_ESM.doc (439 kb)
Supplementary material 1 (doc 439 KB)


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Copyright information

© Springer-Verlag Berlin Heidelberg 2014

Authors and Affiliations

  • Kyoji Fukao
    • 1
  • Victoria Kravtsova
    • 2
    Email author
  • Kentaro Nakajima
    • 3
  1. 1.Hitotsubashi UniversityKunitachiJapan
  2. 2.Copenhagen Business SchoolFrederiksbergDenmark
  3. 3.Tohoku UniversitySendaiJapan

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