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Does the Type of Neighbor Matter?: Evidence of heterogeneous Export Spillovers on Domestic Companies in Mexico

Cardoso-Vargas, Carlos-Enrique (2016): Does the Type of Neighbor Matter?: Evidence of heterogeneous Export Spillovers on Domestic Companies in Mexico.

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Abstract

This document examines whether the agglomeration of foreign processing firms (PCS) that assemble imported inputs to make export products favors the incorporation of domestic companies into export activity and market expansion. Similarly, this is evaluated by considering ordinary foreign firms (ORD), those not manufacturing processed products, as well as non-local hybrid companies (HBR) that participate in both regimes of commerce. . The theoretical framework guiding the empirical evaluation is based on a simple model inspired by Melitz (2003), which is evaluated by means of a conditional logit model with panel data. The findings show evidence that the concentration of these types of foreign companies increases the probability that domestic companies show a presence in certain markets. Notwithstanding, these export spillovers widely heterogeneous in virtue of the fact that their existence and sphere of influence are associated with their specificity in terms of country or product, as well as with the regime of commerce and the technological capacity used by domestic companies vis-à-vis neighboring foreign companies.

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