IDEAS home Printed from https://ideas.repec.org/a/gam/jsusta/v17y2025i7p3090-d1624939.html

Impact of Industrial Agglomeration on the Upgrading of China’s Automobile Industry: The Threshold Effect of Human Capital and Moderating Effect of Government

Author

Listed:
  • Tingting Sun

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Malaysia)

  • Muhammad Asraf bin Abdullah

    (Faculty of Economics and Business, Universiti Malaysia Sarawak, Kota Samarahan 94300, Malaysia)

Abstract

This study investigates the impact of industrial agglomeration on the upgrading of China’s automobile industry (UCAI) using panel data from 28 Chinese provinces spanning 2000 to 2020. The automobile industry is vital to China’s manufacturing and service sectors, with its upgrading capable of driving national economic growth and contributing to sustainable development goals. We employ the Malmquist productivity index based on the Data Envelopment Analysis (DEA) method, implemented through DEAP 2.1 software, to assess the UCAI. System Generalized Method of Moments (GMM) analysis, conducted using Stata 17 software, was used to examine the impact of industrial agglomeration on this process, while also exploring the threshold effect of human capital and the moderating effect of government. The results indicate that industrial agglomeration significantly enhances the upgrading of the automobile industry; however, human capital acts as a critical threshold. Below this threshold, agglomeration does not have a significant impact on the upgrading of the automobile industry, while exceeding it allows for significant positive effects. Additionally, government has a moderating effect in facilitating this process by implementing policies that support innovation and sustainable practices. Based on these findings, this paper presents several policy implications aimed at further promoting the UCAI and advancing sustainable development in the sector.

Suggested Citation

  • Tingting Sun & Muhammad Asraf bin Abdullah, 2025. "Impact of Industrial Agglomeration on the Upgrading of China’s Automobile Industry: The Threshold Effect of Human Capital and Moderating Effect of Government," Sustainability, MDPI, vol. 17(7), pages 1-25, March.
    • Handle: RePEc:gam:jsusta:v:17:y:2025:i:7:p:3090-:d:1624939
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2071-1050/17/7/3090/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2071-1050/17/7/3090/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Seo, Myung Hwan & Shin, Yongcheol, 2016. "Dynamic panels with threshold effect and endogeneity," Journal of Econometrics, Elsevier, vol. 195(2), pages 169-186.
    2. Xuemeng Guo & Ke Guo & Hanzhong Zheng, 2023. "Industrial Agglomeration and Enterprise Innovation Sustainability: Empirical Evidence from the Chinese A-Share Market," Sustainability, MDPI, vol. 15(15), pages 1-26, July.
    3. Badi H. Baltagi, 2021. "Econometric Analysis of Panel Data," Springer Texts in Business and Economics, Springer, edition 6, number 978-3-030-53953-5, December.
    4. Isaac Ehrlich & Yun Pei, 2020. "Human Capital as Engine of Growth: The Role of Knowledge Transfers in Promoting Balanced Growth within and across Countries," Asian Development Review, MIT Press, vol. 37(2), pages 225-263, September.
    5. Toshiharu Ishikawa, 2025. "Role of Industrial Agglomeration in Regional Economic Activity," Springer Books, Springer, number 978-981-97-9198-9, March.
    6. Krugman, Paul, 1991. "Increasing Returns and Economic Geography," Journal of Political Economy, University of Chicago Press, vol. 99(3), pages 483-499, June.
    7. Gary S. Becker, 1964. "Human Capital: A Theoretical and Empirical Analysis with Special Reference to Education, First Edition," NBER Books, National Bureau of Economic Research, Inc, number beck-5, January.
    8. Fayuan Wang & Rong Wang & Zhili He, 2022. "Exploring the Impact of “Double Cycle” and Industrial Upgrading on Sustainable High-Quality Economic Development: Application of Spatial and Mediation Models," Sustainability, MDPI, vol. 14(4), pages 1-17, February.
    9. Wang, Miao & Wu, Yi & Zhang, Xinmin & Lei, Lei, 2024. "How does industrial agglomeration affect internal structures of green economy in China? An analysis based on a three-hierarchy meta-frontier DEA and systematic GMM approach," Technological Forecasting and Social Change, Elsevier, vol. 206(C).
    10. Yang, Senmiao & Wang, Jianda & Dong, Kangyin & Jiang, Qingzhe, 2023. "A path towards China's energy justice: How does digital technology innovation bring about a just revolution?," Energy Economics, Elsevier, vol. 127(PA).
    11. Myung Hwan Seo & Sueyoul Kim & Young-Joo Kim, 2019. "Estimation of dynamic panel threshold model using Stata," Stata Journal, StataCorp LLC, vol. 19(3), pages 685-697, September.
    12. Jingjing Zeng & Dingjie Liu & Hongtao Yi, 2019. "Agglomeration, Structural Embeddedness, and Enterprises’ Innovation Performance: An Empirical Study of Wuhan Biopharmaceutical Industrial Cluster Network," Sustainability, MDPI, vol. 11(14), pages 1-15, July.
    13. Ran Feng & Xiaoe Qu, 2023. "Innovation-Driven Industrial Agglomeration Impact on Green Economic Growth in the Yellow River Basin: An Empirical Analysis," Sustainability, MDPI, vol. 15(17), pages 1-24, September.
    14. Manuel Arellano & Stephen Bond, 1991. "Some Tests of Specification for Panel Data: Monte Carlo Evidence and an Application to Employment Equations," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 58(2), pages 277-297.
    15. Stephanie Kremer & Alexander Bick & Dieter Nautz, 2013. "Inflation and growth: new evidence from a dynamic panel threshold analysis," Empirical Economics, Springer, vol. 44(2), pages 861-878, April.
    16. Blundell, Richard & Bond, Stephen, 1998. "Initial conditions and moment restrictions in dynamic panel data models," Journal of Econometrics, Elsevier, vol. 87(1), pages 115-143, August.
    17. Fare, Rolf & Shawna Grosskopf & Mary Norris & Zhongyang Zhang, 1994. "Productivity Growth, Technical Progress, and Efficiency Change in Industrialized Countries," American Economic Review, American Economic Association, vol. 84(1), pages 66-83, March.
    18. Xiaoling Zhang & Zhiwei Pan & Decai Tang & Zixuan Deng & Valentina Boamah, 2023. "Impact of Environmental Regulation and Industrial Agglomeration on Carbon Emissions in the Yangtze River Economic Belt," Sustainability, MDPI, vol. 15(10), pages 1-18, May.
    Full references (including those not matched with items on IDEAS)

    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. Obaike John Ojeka & Tajudeen Egbetunde & Gideon Oseibibi Okoduwa & Aisha Omobolanle Ojeyode & Mumuni Jimoh & Gideon Oladele Ogunbowale, 2024. "Moderating effect of institutional quality on the influence of debt on investment in sub-Saharan Africa," Future Business Journal, Springer, vol. 10(1), pages 1-17, December.
    2. Awoa, Paul Awoa & Efogo, Françoise Okah & Ondoa, Henri Atangana, 2023. "Oil dependence and entrepreneurship: Non-linear evidence," Economic Systems, Elsevier, vol. 47(1).
    3. Qusai Mohammad Qasim Alabed & Fathin Faizah Said & Zulkefly Abdul Karim & Mohd Azlan Shah Zaidi & Mohammed Daher Alshammary, 2021. "Energy–Growth Nexus in the MENA Region: A Dynamic Panel Threshold Estimation," Sustainability, MDPI, vol. 13(22), pages 1-18, November.
    4. Horvey, Sylvester Senyo & Odei-Mensah, Jones & Moloi, Tankiso & Bokpin, Godfred A., 2024. "Digital economy, financial development and energy transition in Africa: Exploring for synergies and nonlinearities," Applied Energy, Elsevier, vol. 376(PB).
    5. Paul Awoa Awoa & Henri Atangana Ondoa, 2024. "Heterogeneous role of resource dependence on industrialization in developing countries," Comparative Economic Studies, Palgrave Macmillan;Association for Comparative Economic Studies, vol. 66(4), pages 753-781, December.
    6. Nidhaleddine Ben Cheikh & Christophe Rault, 2025. "Financial Inclusion for Inclusive Growth," Working Papers 1803, Economic Research Forum, revised 01 Dec 2025.
    7. Anis Ochi & Makram Nouaili & Yosra Saidi & Amine Haouas & Anis Saidi, 2026. "Foreign Direct Investment and Economic Growth in Arab Countries: Do Institutions, Financial Development, and Knowledge Economy Matter?," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 17(2), pages 5145-5179, April.
    8. Skare, Marinko & Ozturk, Ilhan & Porada-Rochoń, Małgorzata & Stjepanovic, Sasa, 2024. "Energy as the new frontier: Dynamic panel data analysis revealing energy's transformative role in economic growth and technological progress," Technological Forecasting and Social Change, Elsevier, vol. 200(C).
    9. Kim, Dong-Hyeon & Liu, Peiyao & Lin, Shu-Chin, 2025. "Nonlinearity in the nexus between financial development and wealth inequality," Journal of International Financial Markets, Institutions and Money, Elsevier, vol. 99(C).
    10. Mara, Eugenia Ramona, 2025. "Mitigating energy poverty in the European union welfare states through renewable energy and technological innovation," Economic Analysis and Policy, Elsevier, vol. 86(C), pages 438-460.
    11. Patrick Kagambo John Nahabwe & Willy Rwamparagi Kagarura, 2026. "Government Expenditure and Inflation Vis-À-Vis Trade Balance in Sub-Saharan Africa," Journal of Economics and Behavioral Studies, AMH International, vol. 18(1), pages 59-74.
    12. Olaoye, Olumide O. & Eluwole, Oluwatosin O. & Ayesha, Aziz & Afolabi, Olugbenga O., 2020. "Government spending and economic growth in ECOWAS: An asymmetric analysis," The Journal of Economic Asymmetries, Elsevier, vol. 22(C).
    13. Ben Atta, Oussama & Mughal, Mazhar Yasin & Rey, Serge, 2025. "Migrant remittances and real exchange rate dynamics in developing countries: Evidence of a U-shaped relationship," Economic Modelling, Elsevier, vol. 148(C).
    14. Gebauer, Stefan & Setzer, Ralph & Westphal, Andreas, 2017. "Corporate debt and investment: a firm analysis for stressed euro area countries," Working Paper Series 2101, European Central Bank.
    15. Liu, Shihua & Padhan, Hemachandra & P., Jithin & Jose, Annmary & Rahut, Dil, 2024. "Do green trade and technology-oriented trade affect economic cycles? Evidence from the Chinese provinces," Technological Forecasting and Social Change, Elsevier, vol. 202(C).
    16. Jacques Boundioa, 2025. "Does public indebtedness matter in the effect of public health expenditure on human longevity in Sub-Saharan Africa countries? Evidence from dynamic panel threshold regression," Health Economics Review, Springer, vol. 15(1), pages 1-15, December.
    17. Hwang, Young Kyu & Venter, Alanda, 2025. "The impact of the digital economy and institutional quality in promoting low-carbon energy transition," Renewable Energy, Elsevier, vol. 238(C).
    18. Bação, Pedro & Duarte, Joshua & Pereira, Melissa & Simões, Marta, 2025. "Social expenditure composition and inequality: A dynamic panel threshold analysis for OECD countries," European Journal of Political Economy, Elsevier, vol. 90(PA).
    19. Sylvester Senyo Horvey & Jones Odei-Mensah, 2025. "Re-examining the microeconomic and macroeconomic determinants of nonlife insurers profitability in South Africa: insights from linear and threshold analysis," Journal of Innovation and Entrepreneurship, Springer, vol. 14(1), pages 1-29, December.
    20. Emmanuel Mensah & Christopher Boachie, 2024. "The Threshold Effects of National Governance Quality on the Earnings Management – Performance Nexus: Evidence From Dynamic Panel Threshold Regression," SAGE Open, , vol. 14(4), pages 21582440241, December.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    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:gam:jsusta:v:17:y:2025:i:7:p:3090-:d:1624939. 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: MDPI Indexing Manager The email address of this maintainer does not seem to be valid anymore. Please ask MDPI Indexing Manager to update the entry or send us the correct address (email available below). General contact details of provider: https://www.mdpi.com .

    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.