The Impact of Aging and Technological Relatedness on Agglomeration Externalities: A Survival Analysis

We study localization, urbanization, and Jacobs' externality effects on plant survival inSweden (1970-2004). We focus on two questions: (1) do agglomeration externalities changewith the age of plants? (2) using new information about the relatedness among industries,what is the role of technological relatedness among local industries? We find thatagglomeration externalities affect survival chances of plants. This effect, however, differsbetween corporate and non-affiliated plants. Furthermore, we find that Jacobs' externalitiesbenefit only young plants, whereas urbanization externalities harm plants at all ages.Localization externalities are insignificant, while the presence of related industriessubstantially increases survival rates.