The location of tertiary activities: a major economic issue

Summary Tertiarization, industrial agglomeration, and increasing integration are well-known phenomena in developed countries. However, studies on the spatial distribution of activities rarely include the role of services. We show that knowledge-intensive business services show a higher level of agglomeration than other service industries. We then jointly study the determinants of the location of industries and advanced services within a model of geographic economy. We measure the extent of backward and forward linkages between these two differentiated sectors and show that advanced services are less dependent on industrial location than industrial firms are on these services. In addition, we analyze the historical evolution of the location behavior of the two sectors with the transition from so-called industrial economies to "post-industrial" economies.