General agglomeration externalities, export spillovers, and firm behavior: A study of the electronics industry in Taiwan over the 1986--1996 period (China)

Over the 1980s and 1990s, Taiwan has become an important producer in the global electronics industry. Section I documents the role of public-private partnership, foreign strategic alliances and joint ventures, with the development of the semiconductor sector presented as a case study. While government policies aimed to create institutions that facilitate innovation and investment, partnerships with leading foreign companies were formed to obtain process or product technologies for domestic producers. I also outline the empirical questions to be examined in later sections of this paper, and analyze the census data used to answer these questions.; Section II analyzes the effects of inter-firm spillovers on the decision of individual firms to enter the export market, using unbalanced panel data over the 1986--1996 period. I find that the export spillovers are localized in nature, as a firm's decision to export is positively affected by others in the same industry in its geographic vicinity, but is not affected by firms in the same industry in a different location. The evidence indicates that these spillovers facilitate industry growth as they help lower barriers to entry and improve firm productivity. In particular, entrants to the foreign market benefit more from the presence of other exporting firms than do firms with prior exporting experience. One channel by which these spillovers are transmitted is through firm networks established through membership in formal organizations.; Section III examines the effects of inter-firm spillovers on the location choice of new electronics firms. Using the conditional logit approach, I analyze the effect of the activities/presence of other exporters on the location choice of exporting new firms and non-exporting new firms, while controlling for general agglomeration externalities and other location-specific effects. I find that the activities/presence of other exporters has a more positive effect on the location choice of exporting new firms than on the choice of non-exporting new firms, suggesting the presence of spillovers specific to the export sector.; Section IV summarizes the principal findings of this paper, and puts into context the contributions of this paper to the existing literature. Observations regarding policy implications discussed.