The role of destination spatial spillovers and technological intensity in the location of manufacturing and services firms

Resumen

This paper focuses on the characteristics of destinations to identify the role of spatial spillovers in driving the location choices of manufacturing and services firms. With this objective in mind, a spatial conditional logit framework is defined, allowing for neighbourhood-related spatial effects. A broad indicator of spatial spillovers generated by a given destination is also proposed. The model is then applied to empirically capture the behaviour of 1,092,864 new firms established in 316 municipalities in the Spanish Mediterranean Arc (SMA) between 1998 and 2008. Estimation results show that these spatial effects have a considerable impact on the location decisions of manufacturing companies compared to services companies. When the sample is split by technological intensity of activities, it can be observed that spatial spillovers are more likely to affect decisions by high-tech companies than those of low-tech ones, particularly for manufacturing activities.