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 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.