Copyright © UNU-WIDER 2011 1 Department of Economics, Trinity College Dublin, Ireland; 2 Department of Economics & Related Studies, University of York, UK. This study has been prepared within the UNU-WIDER project ‘Learning to Compete (L2C): Accelerating Industrial Development in Africa’, directed by John Page. UNU-WIDER gratefully acknowledges the financial contributions to the research programme by the governments of Denmark (Ministry of Foreign Affairs), Finland (Ministry for Foreign Affairs), Sweden (Swedish International Development Cooperation Agency—Sida) and the United Kingdom (Department for International Development). ISSN 1798-7237 ISBN 978-92-9230-454-6 Working Paper No. 2011/87 Are Spatial Networks of Firms Random? Evidence from Vietnam Emma Howard 1 , Carol Newman 1 and Jacco Thijssen 2 December 2011 Abstract We present a new approach for the empirical investigation of agglomeration patterns. We examine the clustering of manufacturing firms by identifying patterns of spatial network formation that deviate from randomly generated networks. Using firm-level panel data from Vietnam we calculate transitivity, a measure to determine the strength of clustering of manufacturing firms. We then test whether the observed clustering of firms is greater than that of a randomly generated network. Our findings suggest that the extent of clustering is over and above that which can be attributed to the legal and regulatory framework, economic zoning, or population patterns. JEL classification: D21, D22, D85, L14, O12, O25 Keywords: clustering, network formation, manufacturing firms, Vietnam