Productivity, agglomeration, and diversity: A multilevel analysis of firms in ecuadorian regions

Juan Fernández-Sastre and Juan Esteban González
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Juan Fernández-Sastre: Facultad Latinoamericana de Ciencias Sociales, FLACSO Ecuador
Juan Esteban González: Facultad Latinoamericana de Ciencias Sociales, FLACSO Ecuador

INVESTIGACIONES REGIONALES - Journal of REGIONAL RESEARCH, 2026, vol. 66, issue 66, 143-164

Abstract: This paper analyzes how territorial conditions influence the productivity of manufacturing and service firms in Ecuador. We employ multilevel models to estimate the effects of the urban population share and regional sectoral diversity on total factor productivity and labor productivity, also incorporating the moderating role of innovation. The results show that approximately 5% of the differences in productivity are attributable to geographic location. The share of urban population has a positive effect in both sectors, while sectoral diversity benefits manufacturing exclusively. Likewise, it is observed that innovative manufacturing firms enhance the benefits of both agglomeration and diversity, while service innovative firms obtain additional advantages from diversity.

Keywords: Productivity; agglomeration economies; sectoral diversity; multilevel models; developing countries (search for similar items in EconPapers)
JEL-codes: C21 L60 L80 O31 R11 (search for similar items in EconPapers)
Date: 2026
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Persistent link: https://EconPapers.repec.org/RePEc:ris:invreg:023683

DOI: 10.38191/iirr-jorr.26.003

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