3. Industrial Agglomerations in Brazil
The estimate of the correlation of the IVA of the municipality j in relation to the average IVA of
its m-1 neighbors, in a given set of m contiguous municipalities, allows the identification of industrial
agglomerations in Brazil, without necessarily taking into account its political/administrative division.
The incidence of these agglomerations depends first on the statistical significance of the spatial
autocorrelation test (set at 10%), as it may limit the number of agglomerations within the territory and
exclude existing agglomerations that are not statistically significant. For this reason, we will name the
existing significant agglomerations as “Spatial Industrial Agglomerations” (SIA), which will be more
restricted than those industrial agglomerations identified in other studies in Brazil, such as that by Diniz
& Crocco (1996).
The definition of SIAs in this study thus has a restricted meaning, since it incorporates only the
municipalities with an industrial production which is statistically correlated to the average of their
neighbors. The distribution of the municipalities pursuant to the IVA in the Spatial Analysis divides
them into four types:
(a) Municipalities with high IVA and high positive correlation with neighbors (High-High);
(b) Municipalities with high IVA and high negative correlation with neighbors (High-Low);
(c) Municipalities with low IVA and high positive correlation with neighbors (Low-Low);
(d) Municipalities with low IVA and high negative correlation with neighbors (Low-High).
From the standpoint of SIA identification, type 1 (HH) is the relevant one, for it expresses the
spatial correlation of two or more municipalities with a high industrial production, suggesting the
existing of spatial spillovers and production effects, through complementarities and regional industrial
integration.
Type 2 (HL) reveals, in turn, the existence of a localized industrial production in a single
municipality, which may be integrated upstream and downstream with the local non-industrial
production base, especially in the area of agriculture and specialized services, which presupposes a
region with a dense urban network. This agglomeration may also be an “industrial island” with a
subsistence area surrounding it, like an urban/industrial enclave. The first case shall be called a
Localized Industrial Agglomeration (LIA) and the second an Industrial Enclave (IE).
As to type 3 (LL), it is mainly relevant in the identification of the areas and regions excluded from
industrial activity, which would be an indication of the effects of the geographic restrictions to the
industrial spatial spillover. In other words, there is also a significant spatial correlation among
municipalities where no minimum scale of industrial activity is found. This type may also indicate, yet