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Influences of production and R&D agglomeration on productivity: Evidence from Chinese electronics firms

  • Yang, Chih-Hai
  • Lin, Hui-Lin
  • Li, Hsiao-Yun
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    As China adopts a government-supported agglomeration model to develop high-tech industries, it is crucial to examine whether the spatial concentration of manufacturing and R&D activities enhance firm-level productivity. Based on a panel dataset of Chinese electronics firms from 2005 to 2007, the calculated Ellison–Glaeser (EG) index indicates that both production and R&D activities are highly spatially concentrated. Crucially, we find that production agglomeration has a positive relationship with firms' productivity, especially for smaller firms. In contrast, R&D agglomeration seems to negatively relate with productivity. It implies that the possible congestion effect and/or free rider problems erode the benefit derived from knowledge spillovers.

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    Article provided by Elsevier in its journal China Economic Review.

    Volume (Year): 27 (2013)
    Issue (Month): C ()
    Pages: 162-178

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    Handle: RePEc:eee:chieco:v:27:y:2013:i:c:p:162-178
    DOI: 10.1016/j.chieco.2013.09.005
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