2019 Volume 5 Issue 4 Pages 635-652
The concept of industrial clusters has drawn considerable attention as a new perspective of regional and industrial policies in Japan. As for aerospace industry, Chubu region, including Aichi prefecture, was designated the International Strategic Comprehensive Special Zone in 2011. After providing an overview of the spatial concentration of aerospace industry at the municipal level in Japan, this paper aims to examine agglomeration economies with a special focus on aircraft parts industry in Aichi prefecture. The empirical results reveal strong evidence of urbanization economies or Jacobs type of externalities in contrast to maritime manufacturing sector. This suggests that knowledge spillovers and technological innovation could more easily occur in the industrially diversified environment. The paper concludes with the suggestion that agglomeration economies will play a more prominent role in the formation of aerospace industrial clusters.
