The cost of transportation to state capitals was not significant in explaining municipal IVA.
This seemingly low ability to polarize industrial activity does not mean that such regional centers have
no influence on how their economic spaces are organized, but it does mean that being close to a state
capital is not enough to play a determinant role in this process when compared to other factors.
As to the cost of transportation to Brazil’s largest economic center (CTRPSP), Sao Paulo, this
factor proved to have a strong influence on the scale of industrial activity. The closer one gets to Sao
Paulo city, the smaller the transportation cost and the higher the industrial concentration will be; in
other words, the higher the income generated by the industrial sector will be. As regards the
organization of the industrial space, this relationship indicates that the area surrounding the Sao Paulo
metropolitan area tends to be most preferred by industrial companies; a classic result of traditional
gravitational models applied to regional economics (Isard, 1956; Fujita et al, 1999)11.
Of the location quotients (QL), the only one that did not prove to be a determinant of spatial
concentrations was the one for type B companies (despite being positive - an expected sign - the
location quotient for type B companies is not statistically significant). At the outset, this result may
seem counterintuitive. Type B companies are large size businesses, usually competitive and selling to
foreign markets. However, these type B companies were expected to have more influence on the scale
of activity locally. As to type A companies, results were what had been expected. These companies
have positive and statistically significant location quotients. In general, type A companies are at least as
large as type B companies, but they are even more competitive and capable of adding value to
industrial activity, which can be partly explained by their technological capabilities.
11 This concentration of industrial activity around the city of de Sao Paulo was identified in a previous article and named
Sao Paulo’s Prime Industrial Agglomeration.
18
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