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Agglomeration externalities of high-growth firms: the case of the manufacturing sector in China

Author

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  • Yang, Jing
  • Lu, Danning
  • Shi, Jianxun

Abstract

The contribution of high-growth firms to economic growth is gradually expanding, but its actual and subsequent effects on economy need to be further explored. This paper provides evidence for the study of the agglomeration externalities involving high-growth firms by analyzing their influence on non-high-growth firms’ productivity growth and input allocation within the same industry and region, as well as their spillover effects via both backward and forward linkages. The analysis shows robust proof of positive spillovers of high-growth firms on the labor productivity and inputs allocation of non-high-growth firms within the identical region and industry using manufacturing firm-level data on China between 2003 and 2013. The detailed mechanisms of agglomeration externalities associated with high-growth firms are further analyzed through three important channels, mainly including labor pooling, input sharing and knowledge spillover effects by the high-growth externalities.

Suggested Citation

  • Yang, Jing & Lu, Danning & Shi, Jianxun, 2026. "Agglomeration externalities of high-growth firms: the case of the manufacturing sector in China," Structural Change and Economic Dynamics, Elsevier, vol. 76(C), pages 1-19.
    • Handle: RePEc:eee:streco:v:76:y:2026:i:c:p:1-19
    DOI: 10.1016/j.strueco.2025.11.004
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