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Current analytic contribution to the new economic geography theory, linked with the development of innovative methods of analysis, has renewed interest in the location and spatial concentration of economic activities. The primary objective of this paper is to examine the extent to which agglomeration economies contribute to economic productivity. More specifically, we disaggregate the sources of agglomeration economies to distinguish between economies of scale, localization economies, and urbanization economies across industries. We use a production function framework in the empirical analysis and make allowance for non-constant returns to scale, and for agglomeration economies to be factor augmenting. We find considerable variation in the sources and effects of agglomeration economies between sectors. For most sector we find the effects of agglomeration economies to be factor augmenting.