Rural-Urban Linkages: Regional Financial Business Services’ Integration into Chilean Agri-Food Value Chains

The spatial structure of urban-related industries and agri-food value chains is important for promoting sustainable linkages. Using an interregional input-output framework, this study explores the geography of inter-industry linkages between financial business services and the Chilean agri-food related industries from a subnational perspective. This framework allows adding evidence on rural-related economic activities and financial business services, covering Chilean internal geography, which has a regional concentration of both the business services supply and the agriculturally engaged regions, potentially blocking territorial competitiveness. Our findings indicate that the relationship between value-added and trade is consistent with the vertical fragmentation of domestic production associated with returns to scale. Consequently, while the value-added financial services are more intense in trade for global value chains, this occurs in regions specialized in agri-food industries and services. Our findings also show that Southern Chilean regions engaged in primary agricultural production have lower levels of financial services directly and indirectly embedded in both domestic and global value chains trade, thus highlighting an uneven geography of vertical integration within the country.