Explaining Local Manufacturing Growth in Chile : The Advantages of Sectoral Diversity

This article investigates whether the agglomeration of economic activity in regional clusters affects long-run manufacturing Total Factor Productivity (TFP) growth in an emerging market context. We explore a large firm-level panel dataset for Chile during a period characterized by high growth rates and rising regional income inequality (1992–2004). Our findings are clear-cut. Locations with greater concentration of a particular sector have not experienced faster TFP growth during this period. Rather, local sector diversity was associated with higher long-run TFP growth. However, there is no evidence that the diversity effect was driven by the local interaction with a set of suppliers and/or clients. We interpret this as evidence that agglomeration economies are driven by other factors such as the sharing of access to specialized inputs not provided solely by a single sector, e.g. skills or financing.

Bibliographic Details

Main Authors:	Almeida, Rita, Fernandes, Ana M.
Format:	Journal Article biblioteca
Language:	en_US
Published:	Taylor and Francis 2012-04-05
Subjects:	agglomeration economies, local growth, knowledge spillovers, total factor productivity growth,
Online Access:	http://hdl.handle.net/10986/13352
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