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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.

Suggested Citation

  • Almeida, Rita & Fernandes, Ana M., 2011. "Explaining local manufacturing growth in Chile : the advantages of sectoral diversity," Policy Research Working Paper Series 5891, The World Bank.
  • Handle: RePEc:wbk:wbrwps:5891
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    References listed on IDEAS

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    Cited by:

    1. JaeBin Ahn & Alexander McQuoid, 2013. "Capacity Constrained Exporters: Micro Evidence and Macro Implications," Working Papers 1301, Florida International University, Department of Economics.
    2. Cazzuffi, Chiara & Pereira-López, Mariana & Soloaga, Isidro, 2017. "Local poverty reduction in Chile and Mexico: The role of food manufacturing growth," Food Policy, Elsevier, pages 160-185.
    3. Alexander McQuoid & Loris Rubini, 2014. "Trade Costs and Markups," Documentos de Trabajo 454, Instituto de Economia. Pontificia Universidad Católica de Chile..

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    Keywords

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

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