Productive diversity and economic growth: some evidence for Brazilian municipalities

Abstract The regional development literature highlights the influence of Jacobian externalities on economic growth trajectories. Given view of this, the study seeks to contribute to this literature by evaluating the spillover effects of productive diversity to Brazilian municipalities. For this purpose, Moran's index I and the Local Indicators of Spatial Association (LISA) are used based on data on Effective Diversity of Activities extracted from the DATAVIVA database for 5,570 municipalities. The results found corroborate the hypothesis that productive diversification generates direct effects and spillover effects to municipal federative entities. More precisely, in addition to raising the economic growth rates of the municipality itself, productive diversification results in lower growth rates for neighboring municipalities, a result that shows a trend of regional concentration of production in municipalities with more diversified production.