KIBS agglomeration and labor productivity in the Chilean mining sector

Abstract This paper explores the existence of inter-industry agglomeration economies in a developing country such as Chile, which is highly dependent on natural resources—especially mining. We estimate the impact of the spatial concentration of firms supplying knowledge-intensive business services (KIBS) on mining labor productivity using individual- and aggregate-level data. In addition, we conduct a spatial analysis to examine spatial dependencies and potential spillover effects. The results suggest that KIBS agglomeration is positively associated with the productivity of mining sector workers, and that this effect translates into broader territorial productivity gains at the functional labor market area level. The exploratory spatial analysis reveals spatial spillovers from KIBS agglomeration. These findings yield relevant policy implications regarding the location of knowledge-intensive firms, the promotion of a knowledge-based economy linked to natural resources, and strategies for subnational development.