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"Learning by dining" : informal networks and productivity in Mexican industry, Volume 1
Author:Lall, Somik V.; Ghosh, Sudeshna; Country:Mexico;
Date Stored:2002/03/22Document Date:2002/02/28
Document Type:Policy Research Working PaperSubTopics:Environmental Economics & Policies; Economic Theory & Research; Banks & Banking Reform; Labor Policies; Municipal Financial Management; Decentralization; ICT Policy and Strategies
Language:EnglishMajor Sector:Public Administration, Law, and Justice
Region:Latin America & CaribbeanReport Number:WPS2789
Sub Sectors:Other Public Sector ManagementCollection Title:Policy, Research working paper series ; no. WPS 2789
Volume No:1  

Summary: The authors analyze the determinants of firm productivity in a group of Mexican firms. In particular, they test the contribution of external factors such as trade and knowledge diffusion, the availability of infrastructure, informal knowledge exchange, competitive environment, and business regulatory climate. The authors find that one factor consistently emerges as an important proximate source of productivity-access to informal networks. Interaction in the form of "business lunches" with local buyers and suppliers, competitors, government officials, and other professionals have a significant and positive effect on a firm's productivity. Access to regulators and agents of backward and forward linkages are important in settings where information on business practices and regulations is not publicly disclosed. The results complement predictions of traditional growth theory-in addition to technology and learning being the driving force of firm productivity, proximity to influential individuals who can grant favors or provide information advantage on business and trade practices have significant productivity impacts.

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