Temporal Trends in Agglomeration Economies amongst Firms in the Lagos Region, Nigeria

Abstract

This paper examined the temporal trends in agglomeration economies amongst firms, using the Lagos region as a case study. The primary data were collected in two different stages; the reconnaissance survey and questionnaire administration. All the 103 firms recognized in the twelve industrial estates during the reconnaissance survey were covered in the questionnaire administration. Secondary data such as the number of industrial estates and number of firms in each industrial estate were collected from Lagos state Ministry of Commerce and Industry and Lagos State Ministry of Economic Planning. The paper reveals tremendous agglomeration benefits between 2008 and 2012, in the forms of transportation economies, collaboration in Research and Development (R&D), labour economies, raw material purchase/supply economies, water supply economies, power economies, security economies, joint ports and shipping, waste treatment economies, telecommunication economies and access to financial institutions. It also reveals that agglomeration economies were highest in 2009. The paper concluded that agglomeration policy could be a potent tool of economic revival, through its multiplier effects on the economy of a region. It is however recommended that agglomeration of firms should be encouraged and strengthened through active participation of government in the industrial sector, giving tax holiday to younger investors, making the location factors to be liberal, relaxing the laws governing the importation of some raw materials, as such assistance can have positive impact on productions. Financial aids should be given to these industries in form of loan, while the collateral securities should be made affordable for the investors. Agglomeration policy could be further harnessed to launch African countries into the desired goal of rapid industrialization, and also, help to significantly transform the economy of the continent.

Key words: Agglomeration Economies, Firms, Lagos Region, Temporal trends, Regional innovation, Economy.