THE GEOGRAPHY OF FIRM BIRTHS IN GERMANY

The linkages between the extent to which increasing returns to production exist within a spatial unit of observation and the tendency towards increased concentration of economic activity, measured in terms of the birth of new firms, is the focus of this paper. Based on 75 regions in west Germany, we find considerable evidence suggesting that birth rates are greater in regions exhibiting characteristics reflecting convexities in production. This provides support for the theory that the location of new economic activity tends to occur in the geographic space where such production convexities are the greatest.