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

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  • Rita Almeida
  • Ana M. Fernandes

Abstract

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.

Suggested Citation

  • Rita Almeida & Ana M. Fernandes, 2013. "Explaining local manufacturing growth in Chile: the advantages of sectoral diversity," Applied Economics, Taylor & Francis Journals, vol. 45(16), pages 2201-2213, June.
    • Handle: RePEc:taf:applec:45:y:2013:i:16:p:2201-2213
    DOI: 10.1080/00036846.2012.659344
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    3. R駩s Chenavaz & Octavio Escobar, 2015. "Population distribution, effective area and economic growth," Applied Economics, Taylor & Francis Journals, vol. 47(53), pages 5776-5790, November.
    4. Cazzuffi, Chiara & Pereira-López, Mariana & Soloaga, Isidro, 2017. "Local poverty reduction in Chile and Mexico: The role of food manufacturing growth," Food Policy, Elsevier, vol. 68(C), pages 160-185.
    5. Alexander McQuoid & Loris Rubini, 2014. "Trade Costs and Markups," Documentos de Trabajo 454, Instituto de Economia. Pontificia Universidad Católica de Chile..
    6. Khoirunurrofik, 2018. "Correction to: Local economic structure, productivity growth, and industry life cycle: evidence from Indonesia," Asia-Pacific Journal of Regional Science, Springer, vol. 2(2), pages 477-477, August.
    7. Alexander McQuoid & Loris Rubini, 2014. "The Opportunity Cost of Exporting," 2014 Meeting Papers 412, Society for Economic Dynamics.

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