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Is agglomeration a free lunch for new exporters? Evidence from Chile

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  • Youngho Kang

    (Soongsil University)

Abstract

The extant empirical studies do not wholly support the popular belief held by policy-makers on the positive influence of geographical proximity of incumbent exporters on the export decision of a non-exporter. To reconcile the mixed evidence, this paper examines the nonlinear relationship between the agglomeration of exporters and export decisions. In brief, the results show that the former positively affects the latter. Furthermore, the squared term of agglomeration calculated only by the number of skilled workers is negatively and significantly associated with export decisions, which can be explained by congestion costs in a local labor market for the skilled worker. As a result, these findings suggest an inverted U-shaped relationship between the agglomeration of exporters and the probability of being an exporter.

Suggested Citation

  • Youngho Kang, 2016. "Is agglomeration a free lunch for new exporters? Evidence from Chile," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 57(1), pages 195-222, July.
    • Handle: RePEc:spr:anresc:v:57:y:2016:i:1:d:10.1007_s00168-016-0774-5
    DOI: 10.1007/s00168-016-0774-5
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    Cited by:

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    3. Sun, Churen & Yu, Zhihao & Zhang, Tao, 2012. "Agglomeration and Trade with Heterogeneous Firms," MPRA Paper 49001, University Library of Munich, Germany, revised 17 Aug 2013.

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    More about this item

    JEL classification:

    • F16 - International Economics - - Trade - - - Trade and Labor Market Interactions
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • C25 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Discrete Regression and Qualitative Choice Models; Discrete Regressors; Proportions; Probabilities
    • C23 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Models with Panel Data; Spatio-temporal Models

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