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Trends and determinants of China's industrial agglomeration

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  • Lu, Jiangyong
  • Tao, Zhigang

Abstract

This paper investigates trends and determinants of the geographic concentration of China's manufacturing industries using large firm-level data for the period of 1998 to 2005. It is found that the extent of industrial agglomeration in China, measured by the Ellison-Glaeser index, has increased steadily throughout the sample period, though it is still much lower than those of selected developed countries such as France, United Kingdom, and the United States. It is also found that local protectionism among China's various regions obstructs the process of geographic concentration of manufacturing industries, and this result is robust to the use of instrumental variable estimation for dealing with possible reverse causality and omitted variable problems and to the control for traditional determinants of industrial agglomeration such as Marshallian externalities, resource endowments and scale economies.

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Bibliographic Info

Article provided by Elsevier in its journal Journal of Urban Economics.

Volume (Year): 65 (2009)
Issue (Month): 2 (March)
Pages: 167-180

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Handle: RePEc:eee:juecon:v:65:y:2009:i:2:p:167-180

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Web page: http://www.elsevier.com/locate/inca/622905

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Keywords: Local protectionism Industrial agglomeration China's manufacturing industries Marshallian externalities Resource endowments Scale economies;

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References

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  1. Thomas J. Holmes, 1999. "Localization Of Industry And Vertical Disintegration," The Review of Economics and Statistics, MIT Press, vol. 81(2), pages 314-325, May.
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Citations

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Cited by:
  1. Sun, Churen & Yu, Zhihao & Zhang, Tao, 2012. "Agglomeration and Trade with Heterogeneous Firms," MPRA Paper 49001, University Library of Munich, Germany, revised 17 Aug 2013.
  2. Lu, Yi & Ni, Juan & Tao, Zhigang & Yu, Linhui, 2013. "City–industry growth in China," China Economic Review, Elsevier, vol. 27(C), pages 135-147.
  3. Long, Cheryl & Zhang, Xiaobo, 2009. "Cluster-based industrialization in China: Financing and performance," IFPRI discussion papers 937, International Food Policy Research Institute (IFPRI).
  4. Lin, Hui-Lin & Li, Hsiao-Yun & Yang, Chih-Hai, 2011. "Agglomeration and productivity: Firm-level evidence from China's textile industry," China Economic Review, Elsevier, vol. 22(3), pages 313-329, September.
  5. Liang, Lin & Lin, Shanglang & Li, Yong, 2014. "How agglomeration in the financial services industry influences economic growth: Evidence from Chinese cities," Economics Discussion Papers 2014-6, Kiel Institute for the World Economy.
  6. Nie, Huihua & Jiang, Ting & Yang, Rudai, 2012. "A Review and Reflection on the Use and Abuse of Chinese Industrial Enterprises Database," MPRA Paper 50945, University Library of Munich, Germany.
  7. Li, Han & Li, Zhigang, 2013. "Road investments and inventory reduction: Firm level evidence from China," Journal of Urban Economics, Elsevier, vol. 76(C), pages 43-52.
  8. Dan Zheng & Tatsuaki Kuroda, 2013. "The impact of economic policy on industrial specialization and regional concentration of China’s high-tech industries," The Annals of Regional Science, Springer, vol. 50(3), pages 771-790, June.
  9. Li, Ben & Lu, Yi, 2009. "Geographic concentration and vertical disintegration: Evidence from China," Journal of Urban Economics, Elsevier, vol. 65(3), pages 294-304, May.
  10. Du, Julan & Lu, Yi & Tao, Zhigang, 2012. "Contracting institutions and vertical integration: Evidence from China’s manufacturing firms," Journal of Comparative Economics, Elsevier, vol. 40(1), pages 89-107.
  11. Anne Otto & Michaela Fuchs & Wolfgang Dauth, 2011. "Long-term processes of regional concentration and dispersion - fuzzy evidence for Western Germany," ERSA conference papers ersa10p537, European Regional Science Association.
  12. Bagoulla, Corinne & Péridy, Nicolas, 2011. "Market access and the other determinants of North–South manufacturing location choice: An application to the Euro-Mediterranean area," Economic Systems, Elsevier, vol. 35(4), pages 537-561.
  13. Lu, Yi & Png, Ivan P.L. & Tao, Zhigang, 2013. "Do institutions not matter in China? Evidence from manufacturing enterprises," Journal of Comparative Economics, Elsevier, vol. 41(1), pages 74-90.
  14. ITO Banri & XU Zhaoyuan & YASHIRO Naomitsu, 2013. "Does Agglomeration Promote the Internationalization of Chinese Firms?," Discussion papers 13081, Research Institute of Economy, Trade and Industry (RIETI).
  15. Long, Cheryl & Zhang, Xiaobo, 2012. "Patterns of China's industrialization: Concentration, specialization, and clustering," China Economic Review, Elsevier, vol. 23(3), pages 593-612.
  16. Bao, Chengchao & Chen, Zhao & Wu, Jianfeng, 2013. "Chinese manufacturing on the move: Factor supply or market access?," China Economic Review, Elsevier, vol. 26(C), pages 170-181.
  17. Yang, Chih-Hai & Lin, Hui-Lin & Li, Hsiao-Yun, 2013. "Influences of production and R&D agglomeration on productivity: Evidence from Chinese electronics firms," China Economic Review, Elsevier, vol. 27(C), pages 162-178.
  18. Li, Dongya & Lu, Yi & Wu, Mingqin, 2012. "Industrial agglomeration and firm size: Evidence from China," Regional Science and Urban Economics, Elsevier, vol. 42(1-2), pages 135-143.

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