Agglomeration benefits regions and residents because industry clusters lead to better job matching, higher wages and greater opportunities for social and civic engagement.

What industries benefit from agglomeration?

Knowledge-based industries, where sharing ideas are central to the production process, benefit the most from agglomeration. Agglomeration effects occur at many different geographic levels, from the microgeographic (within buildings) to larger regional clusters.

How agglomeration economies are beneficial for the economy?

Agglomeration economies are a fundamental explanation for the existence of cities. Spatial clustering allows for a variety of external benefits such as labor pooling, sharing of suppliers, and specialization; these in turn contribute to increased productivity and economic growth.