This paper studies how spatial proximity and value-chain access shape firm productivity, with emphasis on ownership and organizational scope. Using a 10-year panel of about 29,000 Belgian firms, we estimate models with rich fixed effects and instrument agglomeration, input access, and market access using pre-period shift–share exposure. Three findings emerge. First, within-municipality agglomeration raises total factor productivity, and the effect is larger when endogeneity is addressed. Second, foreign multinationals have a level premium but weaker ties to local externalities; gains from agglomeration and access concentrate among domestically owned single-plant firms, and multi-establishment structures also dampen sensitivity to local inputs and demand. Third, sectoral asymmetries are pronounced, with strong agglomeration and market access premia in services and muted effects in manufacturing. Results are robust to restricting to predetermined locations and to alternative input–output measures. Place based improvements in density and market access yield the largest productivity gains for domestic single-plant firms and services.
Authors Mustapha Douch, Huw Edwards, Marian Rizov