Local poverty reduction in Chile and Mexico: The role of food manufacturing growth

•We analyze the impact of food manufacturing on poverty reduction in Chile and Mexico.•Propensity score-weighted difference in differences and spatial methods are used.•Growth in food manufacturing employment contributes to local poverty reduction.

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 growth in food manufacturing employment contributes to local poverty reduction.