Is Agglomeration a Free Lunch for New Exporters? Evidence from Chile
نویسنده
چکیده
Unlike policy makers‟ belief that geographical proximity to incumbent exporters encourages non-exporters to start exporting through positive information externalities, the empirical evidence in early studies is mixed. To make a contribution to fill the gap, this paper reexamines the relationship between the spatial and industrial agglomeration of exporting firms and the probability of being an exporter, with an emphasis on the spirit of “no free lunch”. According to results, the spatial and industrial agglomeration of exports positively affects the decision to start exporting. Furthermore, the squared term of this agglomeration calculated by skilled workers is negatively and significantly associated with the decision to start exporting, which can be explained by the cost of agglomeration, i.e. the congestion costs in a local labor market. As a result, these findings suggest the inverted U-shaped relationship between the agglomeration and the probability of being an exporter. JEL Classification: F1; R12; C25; C23
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