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Are Small Firms More Dependent on the Local Environment than Larger Firms? Evidence from Portuguese Manufacturing Firms

Author

Listed:
  • Carlos Carreira

    () (Faculty of Economics University of Coimbra and GEMF)

  • Luís Peres Lopes

    () (Faculty of Economics University of Coimbra and GEMF)

Abstract

This paper analyses the impact on firm-level total factor productivity of both agglomeration economies and regional knowledge, using an unbalanced panel of Portuguese manufacturing firms covering the period 1996–2004. Controlling for the endogeneity problem using the Arellano and Bond (1991) difference GMM estimator, we found that both localization and urbanization economies have a significant and positive effect on firms’ TFP, with the latter playing the most important role. Sectoral specialization economies are important for small and medium firms, but not for large firms. However, larger firms profit more from regional knowledge than smaller ones.

Suggested Citation

  • Carlos Carreira & Luís Peres Lopes, 2012. "Are Small Firms More Dependent on the Local Environment than Larger Firms? Evidence from Portuguese Manufacturing Firms," GEMF Working Papers 2012-21, GEMF, Faculty of Economics, University of Coimbra.
  • Handle: RePEc:gmf:wpaper:2012-21
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    File URL: http://gemf.fe.uc.pt/workingpapers/pdf/2012/gemf_2012-21.pdf
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    References listed on IDEAS

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    Cited by:

    1. Carlos Carreira & Luís Lopes, 2016. "Collecting new pieces to the regional knowledge spillovers puzzle: high-tech versus low-tech industries," GEMF Working Papers 2016-06, GEMF, Faculty of Economics, University of Coimbra.

    More about this item

    Keywords

    agglomeration economies; regional knowledge; total factor productivity; small firms.;

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods
    • O47 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Empirical Studies of Economic Growth; Aggregate Productivity; Cross-Country Output Convergence

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