Collecting new pieces to the regional knowledge spillovers puzzle: high-tech versus low-tech industries
Carlos Carreira & Luís Lopes
This paper revisits the puzzling question regarding the role of spatial agglomeration of production activities and knowledge on firm’s total factor productivity (TFP). In particular, it addresses the overlooked issue of a plausible non-linear effect and different across industries. Using a panel of Portuguese manufacturing firms, we found that specialization economies have a positive impact on firms’ productivity, especially for those operating in medium-high and high-tech sectors. Diversity externalities, for its part, have an inverted U-shaped relationship with firms’ TFP in low, medium-low and medium-high tech sectors. The relationship between regional R&D employment and productivity differs across sectors: in all manufacturing firms and firms from medium-low and high-tech sectors, there is an inverted U-shaped relationship; in low-tech sector, there is a U-shaped relationship and a positive elasticity for any employment level higher than the 20th percentile. Overall, agglomeration economies differ substantially across industries and they are non-linear.
Keywords: Regional knowledge spillovers; agglomeration economies; low-tech vs. high-tech industries; total factor productivity