Does Agglomeration Process Exist in Small Provincial Urban Centers? Evidences from Sverdlovsk Region
In this paper we analyze the agglomeration of three small urban centers in Sverdlovsk
Region (Russia). We describe agglomeration economies as the process where firm can be divided
into those based on internal economies and those based on external economies, and also that each
kind of economy can be viewed from the perspectives of scale, scope, and complexity. In our
example, agglomeration economies are based on the internal economies. All analyzed towns are
different in the level of industrial production, economies of scale and increasing returns. Industrial
agglomeration effects are conceptually classified into localization and urbanization economies. We
believe that agglomeration is strong only in small towns with the effective industrial production.
As methods we used the Cobb-Douglas production function. Results of the research showed that
only a town with industrial specialization (Verkhnyaya Salda) is characterized by constant returns
to scale and the growth of total production which is mainly determined by increasing of capital.
The other two cases of the towns (which are not industrial specialized) do not generate these
results. Moreover, the town which not develops industrial production has no any effect of
agglomeration. Agglomeration effects can be observed at different levels of aggregation. Large
cities provide greater opportunity for economies of scale, availability of quality human capital,
cluster effects, innovation processes and knowledge spillover, but under certain conditions smaller
towns can also achieve some of the effects of agglomeration.