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How does agglomeration promote the product innovation of Chinese firms?

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  • ZHANG, Hongyong

Abstract

This study empirically analyzes the effect of agglomeration economies on firm-level product innovation (new products), using Chinese firm-level data from 1998 to 2007. In terms of new product introduction and new product output, I find that Chinese firms benefit from urbanization economies (as measured by the number of workers in other industries in the same city and by the diversity of industries in the same city). Conversely, I find no positive effects of localization economies (as measured by the number of other workers working for neighboring firms in the same industry and in the same city). These results suggest that in China, urbanization economies play an important role in fostering product innovation by urban size and diversity.

Suggested Citation

  • ZHANG, Hongyong, 2015. "How does agglomeration promote the product innovation of Chinese firms?," China Economic Review, Elsevier, vol. 35(C), pages 105-120.
  • Handle: RePEc:eee:chieco:v:35:y:2015:i:c:p:105-120
    DOI: 10.1016/j.chieco.2015.06.003
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    3. Shang, Hua & Song, Quanyun & Wu, Yu, 2017. "Credit Market Development and Firm Innovation: Evidence from the People’s Republic of China," ADBI Working Papers 649, Asian Development Bank Institute.
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    7. Tianjiao Xia & Xiaohui Liu, 2017. "Foreign competition, domestic competition and innovation in Chinese private high-tech new ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(6), pages 716-739, August.
    8. Wei Han & Ying Zhang & Jianming Cai & Enpu Ma, 2019. "Does Urban Industrial Agglomeration Lead to the Improvement of Land Use Efficiency in China? An Empirical Study from a Spatial Perspective," Sustainability, MDPI, Open Access Journal, vol. 11(4), pages 1-22, February.
    9. INADA Mitsuo, 2019. "Promotion or Liberalization: The Effect of Targeted Investment Policies on FDI Inflows," Discussion papers 19071, Research Institute of Economy, Trade and Industry (RIETI).
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    More about this item

    Keywords

    Agglomeration economies; Localization economies; Urbanization economies; Product innovation; New product;
    All these keywords.

    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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