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Determinants of industrial location in Ecuador

Abstract:

The purpose of this investigation is to know the changes that the economic integration has produced in the geographic location of the Ecuadorian manufacturing activity through the econometric analysis of the determinants of the industrial location by means of estimation of Ordinary Least Squares (OLS). The data used to construct the independent variable location index; as well as the dependent variables, differences in productivity (PROD), endowment of factors (DF), economies of scale (ESC), intensity of intermediate goods (IBI) come from the National Institute of Statistics and Censuses (INEC), National Economic Census (CENEC)) corresponding to the III Census of Manufacturing and Mining and II of Commerce and Services, carried out in the year 1980; and III National Economic Census and are based on the theories of international trade and localization. The results obtained in the econometric model indicate that the factor that influences the location of Ecuadorian industries is the average business size - economies of scale - that is adjusted to what is proposed by the new economic geography (NGE).