Deborah Swenson opened the discussion by questioning the appropriateness of treating knowledge (technical and managerial know-how) spillover as the only channel through which location proximity impacts on the performance of given firms. She argued that competitive pressure and the demonstration effect emanating from firms in proximity could have a significant positive spillover effect. Swenson also noted the importance of including time dummies in the estimation equation to capture potential business-cycle effects.
Chalongphob Sussangkarn agreed with Swenson that the model specification had failed to fully capture the impact of location proximity. He noted that the paper had missed a large part of the proximity effect by ignoring the spillover effects operating through the labor market and intermediate-goods channels. Lu Ming argued that the median total factor productivity of firms in a given locality, which is used as the key explanatory variable in the model, does not fully capture knowledge spillover. She...