Vertical Industry Relations, Spillovers and Productivity: Evidence from Chilean Plants
Ricardo A. López
Brandeis International Business School
Heinrich-Heine-University Duesseldorf, Duesseldorf Institute for Competition Economics (DICE); Centre for Economic Policy Research (CEPR); CESifo (Center for Economic Studies and Ifo Institute); Institute for the Study of Labor (IZA)
September 11, 2007
CAEPR Working Paper No. 2007-016
IZA Discussion Paper No. 3047
We use disaggregated data on Chilean plants, and the Chilean input-output table to examine the impact of agglomeration spillovers on total factor productivity (TFP). In common with previous studies, we find evidence of intra-industry spillovers, but no evidence of cross-industry spillovers in general. This picture changes, however, when we take vertical industry relations into account. We find important productivity spillover effects from plants in upstream industries. Interestingly, a similar effect cannot be found from plants in downstream industries. The number of plants in these sectors has no effect on firm level TFP, just as the number of plants in other industries that are neither important upstream suppliers nor downstream customers also has no effect. Agglomeration effects are stronger for small than for large plants.
Number of Pages in PDF File: 28
Keywords: vertical linkages, agglomeration, productivity, Chile
JEL Classification: R11, R15, O18, O54
Date posted: September 11, 2007
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