The prime objective of this study is to examine how agglomeration affects the productivity of firms by location. Using different spatial econometrics on geo-referenced data of textile manufacturers in Pakistan, the study confirmed the presence of spatial autocorrelation in firm productivity. Results show that highly productive textile firms appear to be clustered in the regions of Lahore and Faisalabad, while low productivity textile firms appear to be clustered in Karachi and the Federal areas of Pakistan. Although the spread of clusters varies a bit with the use of different weight matrices, similar hotspots and cold spot patterns are observable. Furthermore, spatial error and spatial lag models find that younger textile firms tend to be more productive than older ones and firm size, exports, quality assurance certifications, and R&D spending are the key spatial correlates of textile firm productivity.