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

  • Rita Almeida
  • Ana M. Fernandes

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.

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File URL: http://hdl.handle.net/10.1080/00036846.2012.659344
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Article provided by Taylor & Francis Journals in its journal Applied Economics.

Volume (Year): 45 (2013)
Issue (Month): 16 (June)
Pages: 2201-2213

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Handle: RePEc:taf:applec:45:y:2013:i:16:p:2201-2213
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  1. Blalock, Garrick & Gertler, Paul J., 2008. "Welfare gains from Foreign Direct Investment through technology transfer to local suppliers," Journal of International Economics, Elsevier, vol. 74(2), pages 402-421, March.
  2. Raphael Bergoeing & Patrick J. Kehoe & Timothy J. Kehoe & Raimundo Soto, 2002. "Policy-Driven Productivity in Chile and Mexico in the 1980s and 1990s," NBER Working Papers 8892, National Bureau of Economic Research, Inc.
  3. Marius BRÜLHART & Nicole A. MATHYS, 2007. "Sectoral Agglomeration Economies in a Panel of European Regions," Cahiers de Recherches Economiques du Département d'Econométrie et d'Economie politique (DEEP) 07.04, Université de Lausanne, Faculté des HEC, DEEP.
  4. Francisco Gallego & Norman Loayza, 2002. "The Golden Period for Growth in Chile: Explanations and Forecasts," Working Papers Central Bank of Chile 146, Central Bank of Chile.
  5. Almeida, Rita, 2005. "Local economic structure and growth," Policy Research Working Paper Series 3728, The World Bank.
  6. Lisa A. Cameron & Mary Amiti, 2004. "Economic Geography and Wages," Econometric Society 2004 Australasian Meetings 253, Econometric Society.
  7. Carlos Pombo, 1999. "Productividad industrial en Colombia: Una aplicación de números índices," REVISTA DE ECONOMÍA DEL ROSARIO, UNIVERSIDAD DEL ROSARIO.
  8. 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, vol. 32(2), pages 241-258, March.
  9. Philippe Martin & Thierry Mayer & Florian Mayneris, 2011. "Spatial concentration and plant-level productivity in france," Sciences Po publications info:hdl:2441/c8dmi8nm4pd, Sciences Po.
  10. Federico Cingano & Fabiano Schivardi, 2003. "Identifying the Sources of Local Productivity Growth," Temi di discussione (Economic working papers) 474, Bank of Italy, Economic Research and International Relations Area.
  11. 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., vol. 43(127), pages 81-112.
  12. Raphael Bergoeing & Andrea Repetto, 2006. "Micro Efficiency and Aggregate Growth in Chile," Documentos de Trabajo 218, Centro de Economía Aplicada, Universidad de Chile.
  13. Roberto Álvarez & Luis Opazo, 2011. "Effects of Chinese Imports on Relative Wages: Microevidence from Chile," Scandinavian Journal of Economics, Wiley Blackwell, vol. 113, pages 342-363, 06.
  14. Ana M. Fernandes & Caroline Paunov, 2013. "Does trade stimulate product quality upgrading?," Canadian Journal of Economics, Canadian Economics Association, vol. 46(4), pages 1232-1264, November.
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