Knowledge Spillover Effects on Agglomerations of Environment-related Industries

Most developed countries transformed from an industrial society, which is based on labor or capital, to a knowledge society, in which knowledge and technology are emphasized. For such a societal change to take place, innovation is essential to build new companies and to maintain the competitiveness of these companies, and in turn, to grow new industries and achieve national competitiveness in a country. In recent years, new knowledge and technologies that enhance innovation have received a great deal of societal and academic interest (Malmberg and Maskell 1997; Porter 1998; Cooke et al. 2011; Asheim and Parrilli 2012). The growing interest in environment-related industries based on environmental technologies is an example of this attention. Since the collapse of the information technology (IT) bubble in the first half of the 2000s, many institutional investors have changed their investment focus from IT companies to environment-related industries. The start of the first commitment period of the Kyoto Protocol in 2008 also enhanced investment in environment-related industries. In line with the surging social interest in ways to protect the natural environment, such as effective resource use and the prevention of global warming, environmental technologies designed to reduce environmental loads have developed rapidly in recent years, and in turn, environment-related industries have been growing markedly. Under such circumstances, several metrics were developed to grasp the status of knowledge associated with various innovations and related environmental technologies. The Abstract : The number of environment-related technologies has increased remarkably over the past two decades, as has the public’s interest in effective resource use and ways to reduce the effects of global warming. Industries that are based on environment-related technologies are thus growing rapidly. Previous studies revealed that externalities derived from the population concentration in urban areas positively affect agglomerations of high-tech industries. Such externalities have been named the “knowledge spillover effect.” The purposes of the present paper are to (1) give a thumbnail sketch of the locations of environment-related industries around the world, using the Organisation for Economic Co-operation and Development environment-related patent statistics, and (2) explicate the effects of the Marshall-Arrow-Romer (MAR) and Jacobs externalities, which result from population concentrations in urban areas, on the agglomeration of environment-related industries in Sweden. The analysis revealed that environment-related industries are located chiefly in urban areas across the globe, and that only the MAR externalities influenced positively on the agglomeration of these industries in Sweden.