Spatial centrality: an approach with sectoral linkages

Abstract

This paper proposes a measure with six components to evaluate the degree of centrality (advantage) of a sector located in a region considering internal and external components and economic and geographical aspects. The main novelty of this indicator is that the definition of “mass” takes into consideration intra and inter-sectoral effects. In fact, the new economic geography has shown that a sector takes advantage of being in a particular location through two main channels: the proximity to other firms in the sector (intra-sectoral effects) and spillover effects arising from the proximity to upstream and downstream sectors (inter-sectoral effects). The two effects will be considered in both the region of location of the sector under analysis and in the other regions related to it. The hypothesis is that the spatial centrality of a sector varies positively with geographic proximity to firms in the same economic sector and in other sectors connected by vertical linkages and negatively with inter-regional distance. The index allows a double reading: it is possible to identify the sectors in which the region has a higher degree of centrality and the regions with a greater degree of centrality in this sector. To illustrate the method, we include an example for the Portuguese economy at the county level (275 regional units).