The literature provides empirical evidence on the importance of geographic location for an effective provision of knowledge intensive business services (KIBS). According to the postulates of territorial servitization, KIBS are also fundamental for the development of manufacturing firms. Despite this, KIBS can be an important source of innovation. In Latin America there is still little attention paid to KIBS, both from academia and from policy makers. The purpose of this research is to analyse the relationship between KIBS co-locations and the innovativeness of the manufacturing firms in context of emerging countries. Drawing on the World Bank Enterprise Survey (WBES) for Latin-American countries, authors analysed 3,029 manufacturing firms using the OLS method. Findings indicated that manufacturing firms’ locations based on KIBS proximity, is a critical determinant of innovativeness. This relationship is considerably stronger in Central American countries, while in South America this relationship is negative, which leads to debate.