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Explaining local manufacturing growth in Chile : the advantages of sectoral diversity

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  • Almeida, Rita
  • Fernandes, Ana M.

Abstract

This paper investigates whether the agglomeration of economic activity in regional clusters affects long-run manufacturing total factor productivity growth in an emerging market context. It explores a large firm-level panel dataset for Chile during a period characterized by high growth rates and rising regional income inequality (1992-2004). The findings are clear-cut. Locations with greater concentration of a particular sector did not experience faster growth in total factor productivity during this period. Rather, local sector diversity was associated with higher long-run growth in total factor productivity. However, there is no evidence that the diversity effect was driven by the local interaction with a set of suppliers and/or clients. The authors 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, such as skills or financing.

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Bibliographic Info

Paper provided by The World Bank in its series Policy Research Working Paper Series with number 5891.

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Date of creation: 01 Dec 2011
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Handle: RePEc:wbk:wbrwps:5891

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Keywords: Labor Policies; Economic Theory&Research; Economic Growth; Political Economy; Achieving Shared Growth;

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References

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  1. Amiti, Mary & Cameron, Lisa, 2004. "Economic Geography and Wages," CEPR Discussion Papers, C.E.P.R. Discussion Papers 4234, C.E.P.R. Discussion Papers.
  2. Brülhart, Marius & Mathys, Nicole Andréa, 2007. "Sectoral Agglomeration Economies in a Panel of European Regions," CEPR Discussion Papers, C.E.P.R. Discussion Papers 6410, C.E.P.R. Discussion Papers.
  3. Raphael Bergoeing & Patrick J. Kehoe & Timothy J. Kehoe & Raimundo Soto, 2002. "Policy-Driven Productivity in Chile and Mexico in the 1980's and 1990's," American Economic Review, American Economic Association, American Economic Association, vol. 92(2), pages 16-21, May.
  4. Francisco Gallego & Norman Loayza, 2002. "The Golden Period for Growth in Chile. Explanations and Forecasts," Central Banking, Analysis, and Economic Policies Book Series, Central Bank of Chile, in: Norman Loayza & Raimundo Soto & Norman Loayza (Series Editor) & Klaus Schmidt-Hebbel (Series Editor) (ed.), Economic Growth: Sources, Trends, and Cycles, edition 1, volume 6, chapter 13, pages 417-464 Central Bank of Chile.
  5. Philippe Martin & Thierry Mayer & Florian Mayneris, 2011. "Spatial concentration and plant-level productivity in france," Sciences Po publications info:hdl:2441/c8dmi8nm4pd, Sciences Po.
  6. Roberto Álvarez & Luis Opazo, 2011. "Effects of Chinese Imports on Relative Wages: Microevidence from Chile," Scandinavian Journal of Economics, Wiley Blackwell, Wiley Blackwell, vol. 113, pages 342-363, 06.
  7. Federico Cingano & Fabiano Schivardi, 2004. "Identifying the Sources of Local Productivity Growth," Journal of the European Economic Association, MIT Press, MIT Press, vol. 2(4), pages 720-742, 06.
  8. Roberto Duncan & Rodrigo Fuentes, 2006. "Regional Convergence in Chile: New Tests, Old Results," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 43(127), pages 81-112.
  9. Blalock, Garrick & Gertler, Paul J., 2008. "Welfare gains from Foreign Direct Investment through technology transfer to local suppliers," Journal of International Economics, Elsevier, Elsevier, vol. 74(2), pages 402-421, March.
  10. de Lucio, Juan J. & Herce, Jose A. & Goicolea, Ana, 2002. "The effects of externalities on productivity growth in Spanish industry," Regional Science and Urban Economics, Elsevier, Elsevier, vol. 32(2), pages 241-258, March.
  11. Raphael Bergoeing & Andrea Repetto, 2006. "Micro Efficiency and Aggregate Growth in Chile," Latin American Journal of Economics-formerly Cuadernos de Economía, Instituto de Economía. Pontificia Universidad Católica de Chile., Instituto de Economía. Pontificia Universidad Católica de Chile., vol. 43(127), pages 169-192.
  12. Rita Almeida, 2007. "Local Economic Structure and Growth," Spatial Economic Analysis, Taylor & Francis Journals, Taylor & Francis Journals, vol. 2(1), pages 65-90.
  13. Carlos Pombo, 1999. "Productividad industrial en Colombia: Una aplicación de números índices," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO.
  14. Ana M. Fernandes & Caroline Paunov, 2013. "Does trade stimulate product quality upgrading?," Canadian Journal of Economics, Canadian Economics Association, Canadian Economics Association, vol. 46(4), pages 1232-1264, November.
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Cited by:
  1. JaeBin Ahn & Alexander McQuoid, 2013. "Capacity Constrained Exporters: Micro Evidence and Macro Implications," Working Papers, Florida International University, Department of Economics 1301, Florida International University, Department of Economics.

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