08/05: Assessing Agglomeration Impacts in Auckland: Phase 1

May 2008

• ISBN: 978-0-478-31668-1 (HTML)
• ISBN: 978-0-478-31660-5 (PDF)

Abstract

Vigorous debate around Auckland's role in the New Zealand economy continues. By examining the presence of agglomeration effects in Auckland, this paper presents a new set of relationships by which Auckland's productivity performance can be considered. The major finding of the paper is that agglomeration effects, stemming from the densification of employment activity, have contributed to Auckland's relatively strong productivity performance. These effects are predictably high for economic activities in the central business district (CBD), given the higher employment densities there. This paper also shows that congestion effects around the CBD are likely to be constraining economic benefits that may otherwise be achieved. The paper highlights the importance of transport infrastructure investments in unlocking agglomeration benefits.

This paper uses an approach developed in London to examine the economic impacts of the Crossrail project. Developing an understanding of how accessibility leads to increasing employment densities, and how greater employment density then leads to increased productivity, is central to this approach. These relationships have been examined in the Auckland context with simple regressions, using 2001 census data and information from the ART and APT models. The findings of this preliminary research support central Government's economic transformation agenda, which recognises the importance of Auckland to New Zealand's economic development.

JEL Classification

Keywords: agglomeration

Contact: Occasionalpapers@med.govt.nz

Disclaimer

The views, opinions, findings, and conclusions or recommendations expressed in this Occasional Paper are strictly those of the author(s). They do not necessarily reflect the views of the Ministry of Economic Development. The Ministry takes no responsibility for any errors or omissions in, or for the correctness of, the information contained in these occasional papers. The paper is presented not as policy, but with a view to inform and stimulate wider debate.

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