The purpose of this research is to study the agglomeration effects in the development process of Taiwan’s electronics industry. By examining the firm-level data obtained from the census of manufacturers from 1990 to 1999, we hope to detect the existence of agglomeration effects, or the lack thereof, and to estimate their magnitude where they do exist. In particular, we will investigate how location choice of newly established firms is affected by geographical concentration of the industry. The paper shows geographic concentration of the electronic industry in Taiwan is modest. There is no apparent systemic pattern for the degree of geographical concentration, but there is a trend for newly emerged industries to increase their geographical concentration and for declining industries to decrease their geographical concentration. It also shows that agglomeration economies are important determinants of location choice of new firms, especially for those in emerging industries.
