IDEAS home Printed from https://ideas.repec.org/a/bla/presci/v94y2015ips95-s114.html
   My bibliography  Save this article

Agglomeration and firm-level productivity: A Bayesian spatial approach

Author

Listed:
  • Yoshihiro Hashiguchi
  • Kiyoyasu Tanaka

Abstract

This paper estimates the impact of industrial agglomeration on firm-level productivity in Chinese manufacturing sectors. To account for spatial autocorrelation across regions, we formulate a hierarchical spatial model at the firm level and develop a Bayesian estimation algorithm. A Bayesian instrumental-variables approach is used to address endogeneity bias of agglomeration. Robust to these potential biases, we find that agglomeration of the same industry (i.e. localization) has a productivity-boosting effect, but agglomeration of urban population (i.e. urbanization) has no such effects. Additionally, the localization effects increase with educational levels of employees and the share of intermediate inputs in gross output. These results may suggest that agglomeration externalities occur through knowledge spillovers and input sharing among firms producing similar manufactures.
(This abstract was borrowed from another version of this item.)

Suggested Citation

  • Yoshihiro Hashiguchi & Kiyoyasu Tanaka, 2015. "Agglomeration and firm-level productivity: A Bayesian spatial approach," Papers in Regional Science, Wiley Blackwell, vol. 94, pages 95-114, November.
    • Handle: RePEc:bla:presci:v:94:y:2015:i::p:s95-s114
    as

    Download full text from publisher

    File URL: http://hdl.handle.net/10.1111/pirs.12147
    Download Restriction: Access to full text is restricted to subscribers.
    ---><---

    As the access to this document is restricted, you may want to look for a different version below or

    for a different version of it.

    Other versions of this item:

    References listed on IDEAS

    as
    1. Martin, Philippe & Mayer, Thierry & Mayneris, Florian, 2011. "Spatial concentration and plant-level productivity in France," Journal of Urban Economics, Elsevier, vol. 69(2), pages 182-195, March.
    2. Rosenthal, Stuart S. & Strange, William C., 2001. "The Determinants of Agglomeration," Journal of Urban Economics, Elsevier, vol. 50(2), pages 191-229, September.
    3. Randall W. Eberts & Daniel P. McMillen, 1999. "Agglomeration Economies and Urban Public Infrastructure," Book chapters authored by Upjohn Institute researchers, in: Paul Cheshire & Edwin S. Mills (ed.),handbook or Regional and Urban Economics, volume 3, pages 1455-1495, W.E. Upjohn Institute for Employment Research.
    4. Michael Greenstone & Richard Hornbeck & Enrico Moretti, 2010. "Identifying Agglomeration Spillovers: Evidence from Winners and Losers of Large Plant Openings," Journal of Political Economy, University of Chicago Press, vol. 118(3), pages 536-598, June.
    5. Brülhart, Marius & Mathys, Nicole A., 2008. "Sectoral agglomeration economies in a panel of European regions," Regional Science and Urban Economics, Elsevier, vol. 38(4), pages 348-362, July.
    6. Ellison, Glenn & Glaeser, Edward L, 1997. "Geographic Concentration in U.S. Manufacturing Industries: A Dartboard Approach," Journal of Political Economy, University of Chicago Press, vol. 105(5), pages 889-927, October.
    7. Daniel J Graham, 2009. "Identifying urbanisation and localisation externalities in manufacturing and service industries," Papers in Regional Science, Wiley Blackwell, vol. 88(1), pages 63-84, March.
    8. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171, Elsevier.
    9. 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.
    10. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
    11. Diego Puga, 2010. "The Magnitude And Causes Of Agglomeration Economies," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 203-219, February.
    12. repec:hal:wpspec:info:hdl:2441/c8dmi8nm4pdjkuc9g8mc6ihim is not listed on IDEAS
    13. Glenn Ellison & Edward L. Glaeser & William R. Kerr, 2010. "What Causes Industry Agglomeration? Evidence from Coagglomeration Patterns," American Economic Review, American Economic Association, vol. 100(3), pages 1195-1213, June.
    14. Brandt, Loren & Van Biesebroeck, Johannes & Zhang, Yifan, 2012. "Creative accounting or creative destruction? Firm-level productivity growth in Chinese manufacturing," Journal of Development Economics, Elsevier, vol. 97(2), pages 339-351.
    15. Andrew B. Bernard & J. Bradford Jensen & Stephen J. Redding & Peter K. Schott, 2007. "Firms in International Trade," Journal of Economic Perspectives, American Economic Association, vol. 21(3), pages 105-130, Summer.
    16. Brülhart, Marius & Sbergami, Federica, 2009. "Agglomeration and growth: Cross-country evidence," Journal of Urban Economics, Elsevier, vol. 65(1), pages 48-63, January.
    17. Duranton, Gilles & Puga, Diego, 2004. "Micro-foundations of urban agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 48, pages 2063-2117, Elsevier.
    18. Richard E. Baldwin & Toshihiro Okubo, 2006. "Heterogeneous firms, agglomeration and economic geography: spatial selection and sorting," Journal of Economic Geography, Oxford University Press, vol. 6(3), pages 323-346, June.
    19. Masayuki Morikawa, 2011. "Economies of Density and Productivity in Service Industries: An Analysis of Personal Service Industries Based on Establishment-Level Data," The Review of Economics and Statistics, MIT Press, vol. 93(1), pages 179-192, February.
    20. Nijkamp, P. & Abreu, M., 2009. "Regional development theory," Serie Research Memoranda 0029, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    21. repec:spo:wpecon:info:hdl:2441/c8dmi8nm4pdjkuc9g8mc6ihim is not listed on IDEAS
    22. Chun-Chung Au & J. Vernon Henderson, 2006. "Are Chinese Cities Too Small?," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 73(3), pages 549-576.
    23. Melo, Patricia C. & Graham, Daniel J. & Noland, Robert B., 2009. "A meta-analysis of estimates of urban agglomeration economies," Regional Science and Urban Economics, Elsevier, vol. 39(3), pages 332-342, May.
    24. Shanzi Ke, 2010. "Agglomeration, productivity, and spatial spillovers across Chinese cities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(1), pages 157-179, August.
    25. Mitra, Arup, 1999. "Agglomeration Economies as Manifested in Technical Efficiency at the Firm Level," Journal of Urban Economics, Elsevier, vol. 45(3), pages 490-500, May.
    26. repec:hal:spmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8mc6ihim is not listed on IDEAS
    27. Hashiguchi, Yoshihiro & Chen, Kuang-hui, 2012. "Assessing agglomeration economies in the Yangzi River Delta, China : a bayesian spatial econometric approach," IDE Discussion Papers 339, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    28. Roberta Capello & Peter Nijkamp (ed.), 2009. "Handbook of Regional Growth and Development Theories," Books, Edward Elgar Publishing, number 12874.
    29. Michael J. Artis & Ernest Miguelez & Rosina Moreno, 2012. "Agglomeration economies and regional intangible assets: an empirical investigation," Journal of Economic Geography, Oxford University Press, vol. 12(6), pages 1167-1189, November.
    30. 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.
    31. repec:spo:wpmain:info:hdl:2441/c8dmi8nm4pdjkuc9g8mc6ihim is not listed on IDEAS
    32. Henderson, J. Vernon, 2003. "Marshall's scale economies," Journal of Urban Economics, Elsevier, vol. 53(1), pages 1-28, January.
    33. Lourens Broersma & Jan Oosterhaven, 2009. "Regional Labor Productivity In The Netherlands: Evidence Of Agglomeration And Congestion Effects," Journal of Regional Science, Wiley Blackwell, vol. 49(3), pages 483-511, August.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Carlos Carreira & Luís Lopes, 2018. "Regional knowledge spillovers: a firm-based analysis of non-linear effects," Regional Studies, Taylor & Francis Journals, vol. 52(7), pages 948-958, July.
    2. Zhaoying Lu, 2021. "Human capital spillovers from Special Economic Zones: evidence from Yangtze Delta in China," Discussion Papers in Economics and Business 21-02, Osaka University, Graduate School of Economics.
    3. Carlos Carreira & Luís Lopes, 2016. "Collecting new pieces to the regional knowledge spillovers puzzle: high-tech versus low-tech industries," GEMF Working Papers 2016-06, GEMF, Faculty of Economics, University of Coimbra.
    4. Ana Uluwiyah & Nachrowi Djalal Nachrowi & Chaikal Nuryakin, 2025. "Regional proliferation in Indonesia: impact on manufacturing outcomes and firm survival," Asia-Pacific Journal of Regional Science, Springer, vol. 9(2), pages 419-447, June.
    5. 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.
    6. Zhaoying Lu, 2022. "Human Capital Spillovers from Special Economic Zones: Evidence from Yangtze Delta in China," Economies, MDPI, vol. 10(5), pages 1-15, April.
    7. Cheng, Zhonghua & Li, Xiang & Zhu, Yeman & Wang, Meixiao, 2023. "The effects of agglomeration externalities on urban green total-factor productivity in China," Economic Systems, Elsevier, vol. 47(2).
    8. Neng Shen & Yuqing Zhao & Qunwei Wang, 2018. "Diversified Agglomeration, Specialized Agglomeration, and Emission Reduction Effect—A Nonlinear Test Based on Chinese City Data," Sustainability, MDPI, vol. 10(6), pages 1-22, June.
    9. Carlos Carreira & Luís Lopes, 2016. "Collecting new pieces to the regional knowledge spillovers puzzle: high-tech versus low-tech industries," GEMF Working Papers 2016-06, GEMF, Faculty of Economics, University of Coimbra.
    10. Mauricio Sarrias, 2020. "Random Parameters and Spatial Heterogeneity using Rchoice in R," REGION, European Regional Science Association, vol. 7, pages 1-19.
    11. Meihong Dai & Xianneng Li & Yuduo Lu, 2017. "How Urbanization Economies Impact TFP of R&D Performers: Evidence from China," Sustainability, MDPI, vol. 9(10), pages 1-17, September.
    12. Tanaka, Kiyoyasu & Hashiguchi, Yoshihiro, 2017. "Agglomeration economies in the formal and informal sectors : a Bayesian spatial approach," IDE Discussion Papers 666, Institute of Developing Economies, Japan External Trade Organization(JETRO).

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tanaka, Kiyoyasu & Hashiguchi, Yoshihiro, 2015. "Agglomeration effects of informal sector: evidence from Cambodia," IDE Discussion Papers 495, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    2. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 247-348, Elsevier.
    3. Tanaka, Kiyoyasu & Hashiguchi, Yoshihiro, 2017. "Agglomeration economies in the formal and informal sectors : a Bayesian spatial approach," IDE Discussion Papers 666, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    4. Moretti, Enrico, 2011. "Local Labor Markets," Handbook of Labor Economics, in: O. Ashenfelter & D. Card (ed.), Handbook of Labor Economics, edition 1, volume 4, chapter 14, pages 1237-1313, Elsevier.
    5. Giulio Cainelli & Andrea Fracasso & Giuseppe Vittucci Marzetti, 2015. "Spatial agglomeration and productivity in Italy: A panel smooth transition regression approach," Papers in Regional Science, Wiley Blackwell, vol. 94, pages 39-67, November.
    6. Ana Gouveia & Sílvia Santos & Marli Fernandes, 2017. "The empirics of agglomeration economies: the link with productivity," GEE Papers 0067, Gabinete de Estratégia e Estudos, Ministério da Economia, revised Feb 2017.
    7. Hu, Cui & Xu, Zhaoyuan & Yashiro, Naomitsu, 2015. "Agglomeration and productivity in China: Firm level evidence," China Economic Review, Elsevier, vol. 33(C), pages 50-66.
    8. Diego Puga, 2017. "The changing distribution of firms and workers across cities," Development Working Papers 418, Centro Studi Luca d'Agliano, University of Milano.
    9. Diego Puga, 2010. "The Magnitude And Causes Of Agglomeration Economies," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 203-219, February.
    10. Gilles Duranton & Diego Puga, 2020. "The Economics of Urban Density," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 3-26, Summer.
    11. Ehrl, Philipp, 2013. "Agglomeration economies with consistent productivity estimates," Regional Science and Urban Economics, Elsevier, vol. 43(5), pages 751-763.
    12. Ming He & Yang Chen & Ron Schramm, 2018. "Technological spillovers in space and firm productivity: Evidence from China’s electric apparatus industry," Urban Studies, Urban Studies Journal Limited, vol. 55(11), pages 2522-2541, August.
    13. Graham, Daniel J. & Gibbons, Stephen, 2019. "Quantifying Wider Economic Impacts of agglomeration for transport appraisal: Existing evidence and future directions," Economics of Transportation, Elsevier, vol. 19(C), pages 1-1.
    14. Kristian Behrens & Gilles Duranton & Frédéric Robert-Nicoud, 2014. "Productive Cities: Sorting, Selection, and Agglomeration," Journal of Political Economy, University of Chicago Press, vol. 122(3), pages 507-553.
    15. Békés, Gábor & Harasztosi, Péter, 2013. "Agglomeration premium and trading activity of firms," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 51-64.
    16. Hashiguchi, Yoshihiro & Chen, Kuang-hui, 2012. "Assessing agglomeration economies in the Yangzi River Delta, China : a bayesian spatial econometric approach," IDE Discussion Papers 339, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    17. Emanuela Marrocu & Raffaele Paci & Stefano Usai, 2013. "Productivity Growth In The Old And New Europe: The Role Of Agglomeration Externalities," Journal of Regional Science, Wiley Blackwell, vol. 53(3), pages 418-442, August.
    18. Federico Curci, 2015. "The taller the better? Agglomeration determinants and urban structure," ERSA conference papers ersa15p991, European Regional Science Association.
    19. Jordi Jofre-Monseny & Raquel Marín-López & Elisabet Viladecans-Marsal, 2012. "What underlies localization and urbanization economies? Evidence from the location of new firms," Working Papers 2012/9, Institut d'Economia de Barcelona (IEB).
    20. William R. Kerr & Scott Duke Kominers, 2015. "Agglomerative Forces and Cluster Shapes," The Review of Economics and Statistics, MIT Press, vol. 97(4), pages 877-899, October.

    More about this item

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:bla:presci:v:94:y:2015:i::p:s95-s114. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Wiley Content Delivery (email available below). General contact details of provider: http://www.blackwellpublishing.com/journal.asp?ref=1056-8190 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.