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Journal of Economic Geography Advance Access originally published online on March 4, 2009
Journal of Economic Geography 2009 9(4):539-558; doi:10.1093/jeg/lbp010
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© The Author (2009). Published by Oxford University Press. All rights reserved. For Permissions, please email: journals.permissions@oxfordjournals.org

Plants’ self-selection, agglomeration economies and regional productivity in Chile

Hisamitsu Saito* and Munisamy Gopinath{dagger},{ddagger}

*Obihiro University of Agriculture and Veterinary Medicine, Inada-cho Nishi 2 Sen 11, Obihiro 0808555, Japan.
{dagger}Department of Agricultural and Resource Economics, 213 Ballard Hall, Oregon State University, Corvallis, OR 97331, USA.

{ddagger}Corresponding author: Department of Agricultural and Resource Economics, 213 Ballard Hall Oregon State University, Corvallis, OR 97331, USA. email <m.gopinath{at}oregonstate.edu>

JEL classifications: R12, R30, L11

In this study, we assess the relative contribution of plants’ self-selection and agglomeration economies to a region's productivity level. We focus on manufacturing plants by region in the Chilean food industry, which is not only a major source of employment and exports but also spatially dispersed. Our estimation of plant-level productivity corrects for possible simultaneity between productivity and conventional inputs and plants’ self-selection to locate in specific markets. Moreover, we account for three sources of externalities: localization, urbanization and demand-driven scale economies in our estimation. Then, a censored regression model relates regional productivity-distribution measures to agglomeration economies. We find that high-productivity (exporting) plants locate in a region where other plants in food industry agglomerate, industrial structure is diversified and market size is large. Our results suggest that plants’ self-selection outweighs the contribution of agglomeration economies in increasing a region's productivity level.

Keywords: economic geography, exporters, plant and regional productivity distribution
Date submitted: 14 May 2007     Date accepted: 2 February 2009


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