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The effects of factor proximity and market potential on urban manufacturing output

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  • Han, Feng
  • Ke, Shanzi

Abstract

This paper derives a NEG-style model that outlines several spatial spillover channels and examines the effects of proximities to spatially distributed factor supply and market demand on Chinese urban economies. A panel dataset of 283 prefecture or higher-level cities from 2003–2013 is used for the empirical analysis. The estimation shows that proximities to government expenditure on science and technology, to professionals in science and technology, and to the domestic and foreign markets all contribute to urban manufacturing growth, while concentrations of specialized labor force and producer services in neighboring cities have negative effects. The spatial effects of factor proximities and market potentials differ in China's three regions. Surprisingly, cities in the central region have the most significant gain from spillovers of factor supply, and cities in the eastern and western regions benefit substantially from the domestic and foreign markets. Policy implications are derived from the findings.

Suggested Citation

  • Han, Feng & Ke, Shanzi, 2016. "The effects of factor proximity and market potential on urban manufacturing output," China Economic Review, Elsevier, vol. 39(C), pages 31-45.
    • Handle: RePEc:eee:chieco:v:39:y:2016:i:c:p:31-45
    DOI: 10.1016/j.chieco.2016.04.002
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    2. Chao Gao & Dequan Yao & Jiayu Fang & Zhengchu He, 2022. "Analysis of the Relationships between Financial Development and Sustainable Economic Growth: Evidence from Chinese Cities," Sustainability, MDPI, vol. 14(15), pages 1-15, July.
    3. Han, Feng & Xie, Rui & Fang, Jiayu, 2018. "Urban agglomeration economies and industrial energy efficiency," Energy, Elsevier, vol. 162(C), pages 45-59.
    4. Jin, Gang & Shen, Kunrong & Li, Jian, 2020. "Interjurisdiction political competition and green total factor productivity in China: An inverted-U relationship," China Economic Review, Elsevier, vol. 61(C).
    5. Zhou, Xiaoxiao & Cai, Ziming & Tan, Kim Hua & Zhang, Linling & Du, Juntao & Song, Malin, 2021. "Technological innovation and structural change for economic development in China as an emerging market," Technological Forecasting and Social Change, Elsevier, vol. 167(C).
    6. Rui Ding & Tao Zhou & Jian Yin & Yilin Zhang & Siwei Shen & Jun Fu & Linyu Du & Yiming Du & Shihui Chen, 2022. "Does the Urban Agglomeration Policy Reduce Energy Intensity? Evidence from China," IJERPH, MDPI, vol. 19(22), pages 1-20, November.
    7. Hu, Xiaoshan & Song, Jie & Wan, Guanghua, 2024. "Transborder spillover effects of poverty on crime: Applying spatial econometric models to Chinese data," China Economic Review, Elsevier, vol. 85(C).

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    More about this item

    Keywords

    Factor agglomeration; Market potential; Spatial effects; Urban economies; Chinese cities;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R12 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Size and Spatial Distributions of Regional Economic Activity; Interregional Trade (economic geography)

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