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This paper aimed at analysing the effects of economies of agglomeration (location and urbanization effects) on the industrial productivity of Brazilian municipalities between 2010 and 2017, identifying their possible spillover effects on the neighbourhood as a general and also regarding regional groups. In addition, the effects of location economies of the high/medium‐high and low/medium‐low technology on productivity were analysed. To achieve the aims proposed, an index of industrial development was built as a proxy for the productivity and estimates were calculated using the spatial dynamic panel. As a result, the effects of specialization economies were identified in the country as whole, mainly in the industry with less intense technology. [ABSTRACT FROM AUTHOR]