Working Paper: CEPR ID: DP2934
Authors: Mario Forni; Sergio Paba
Abstract: The literature on localised knowledge spillovers and growth focuses on the relative importance of intra vs. inter-industry externalities, but the nature and the characteristics of the dynamic linkages across manufacturing sectors are not investigated. In this Paper we perform a very disaggregated analysis in order to identify, for each 3-digit industry, which composition of industrial activity is more conducive to growth. We find that diversity matters for growth, but each industry needs its own diversity. We provide some evidence of clustering of industries based on dynamic externalities. We find that many spillovers occur within input-output relationships. They often originate in downstream sectors favoring the growth of upstream industries. Lastly, the importance of spillovers does not depend on the technological intensity of the industry.
Keywords: growth; spatial agglomeration; spillovers
JEL Codes: L60; O30; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| diversity in industrial activity (L69) | growth (O40) |
| downstream sectors favor the growth of upstream industries (O25) | growth of upstream industries (O49) |
| importance of spillovers is not contingent upon technological intensity (O36) | interindustry spillovers (L69) |
| metal products and machinery sectors (L64) | growth influenced by performance of other industries (O49) |
| balanced clusters of sectors (C38) | enhance industry growth (O25) |
| composition of local industries (L79) | growth performance (O41) |