The role of county competitiveness and manufacturing activity on the development of business service sectors: A precursor to territorial servitization

Abstract

This study evaluates how regional competitiveness and relevant properties of the manufacturing industry-i.e., size and rate of manufacturing firms-impact changes in the rate of business service firms. By employing fixed-effects regression models on a sample of 81 Costa Rican counties during 2010-2016, the findings reveal that the quality of the local environment positively affects business service specialization. Besides, manufacturing businesses contribute to increase in the rate of business services; however, this effect is only significant in counties with a greater manufacturing base, that is, in counties with a critical mass of manufacturers, in terms of number of manufacturers.