Agglomeration by export destination: evidence from Spain

We use a dataset of Spanish exporters with rich spatial information to document the existence of agglomeration economies by export destination. More specifically, we show that, for a large set of export destinations, exporters are geographically too close to be the result of a random outcome. We also analyze the variables that explain the cross-destination heterogeneity in agglomeration. We find that firms selling to countries with worse institutions, a dissimilar language and a different currency are significantly more agglomerated. These results suggest that the value provided by agglomeration is higher concerning destinations where entry is more difficult.