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VERTICAL INDUSTRY RELATIONS, SPILLOVERS, AND PRODUCTIVITY: EVIDENCE FROM CHILEAN PLANTS

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ABSTRACT. 

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 for intraindustry spillovers, but none for general cross-industry spillovers. This picture changes when we take vertical industry relations into account. There are important productivity spillovers 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 plant-level TFP, just as the number of plants in other industries that are neither important upstream suppliers nor downstream customers also has no effect.
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Document Type: Research Article

Affiliations: 1: Department of Economics, Indiana University, Wylie Hall 105, 100 S Woodlawn, Bloomington, IN 47405., Email: rialopez@indiana.edu 2: Mercator School of Management, University of Duisburg-Essen, Lotharstrasse 65, 47057 Duisburg, Germany., Email: jens.suedekum@uni-due.de

Publication date: 2009-10-01

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