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This paper analyzes the relationship between local poverty and food manufacturing growth in Chile and Mexico using propensity score matching, differences in differences and spatial econometrics methods. We focus on food manufacturing as a sector with a number of characteristics that make it potentially pro-poor, and whose incentives for spatial distribution may either strengthen or dampen its poverty reduction potential. The overall results indicate that i) geographically, food manufacturing locates in relatively poor areas, but not in the poorest; ii) food manufacturing tends to locate in municipalities with more availability of labor and raw materials and with better infrastructure; iii) controlling for other factors, food manufacturing growth contributes to local poverty reduction both in terms of magnitude and speed.

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This study has been prepared within the UNU-WIDER project on 'Structural transformation and inclusive growth in Vietnam'.