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Urban Agglomeration and Firm Innovation: Evidence from Asia

Author

Listed:
  • Liming Chen
  • Rana Hasan
  • Yi Jiang

Abstract

This paper examines the relationship between urban agglomeration and firm innovation using a recently developed dataset that consistently measures city boundaries across Asia together with geo-referenced firm-level data. It finds that the spatial distribution of innovation by firms is highly concentrated within countries. Further, firms in larger cities have substantially higher propensities to introduce product and process innovations and to undertake R&D activities, a result that holds for subgroups of countries and even when the largest cities are excluded from the analysis. Finally, the presence of high-quality universities and highly ranked engineering departments in cities is positively associated with firm innovation, lending support to the idea that the accumulation of human capital locally is a key channel through which urban agglomeration affects innovation.

Suggested Citation

  • Liming Chen & Rana Hasan & Yi Jiang, 2022. "Urban Agglomeration and Firm Innovation: Evidence from Asia," The World Bank Economic Review, World Bank, vol. 36(2), pages 533-558.
    • Handle: RePEc:oup:wbecrv:v:36:y:2022:i:2:p:533-558.
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    File URL: http://hdl.handle.net/10.1093/wber/lhab022
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    Cited by:

    1. Saul Estrin & Yuan Hu & Daniel Shapiro & Peng Zhang, 2024. "Agglomeration costs limit sustainable innovation in cities in developing economies," PLOS ONE, Public Library of Science, vol. 19(11), pages 1-24, November.
    2. Luong Vinh Quoc Duy & Damien Cassells, 2022. "Agglomeration and innovation effort: A longitudinal study on small and medium manufacturing enterprises in Vietnam," Review of Development Economics, Wiley Blackwell, vol. 26(3), pages 1252-1268, August.
    3. Dhamija, Gaurav & Roychowdhury, Punarjit & Shankar, Binay, 2023. "Urbanization and Women Empowerment: Evidence from India," GLO Discussion Paper Series 1323, Global Labor Organization (GLO).
    4. Gibson, John & Jiang, Yi & Susantono, Bambang, 2023. "Revisiting the role of secondary towns: How different types of urban growth relate to poverty in Indonesia," World Development, Elsevier, vol. 169(C).
    5. Estrin, Saul & Hu, Yuan & Shapiro, Daniel & Zhang, Peng, 2024. "Agglomeration costs limit sustainable innovation in cities in developing economies," LSE Research Online Documents on Economics 125983, London School of Economics and Political Science, LSE Library.
    6. John Gibson & Yi Jiang & Bambang Susantono, 2022. "Revisiting the role of secondary towns: Effects of different types of urban growth on poverty in Indonesia," Working Papers in Economics 22/05, University of Waikato.
    7. Nelunika Priyashani & Nayomi Kankanamge & Tan Yigitcanlar, 2023. "Multisource Open Geospatial Big Data Fusion: Application of the Method to Demarcate Urban Agglomeration Footprints," Land, MDPI, vol. 12(2), pages 1-23, February.
    8. Radeef Chundakkadan & Subash Sasidharan & Kausik Chaudhuri, 2025. "Automation, firm performance, and employment: Evidence from developing countries," Journal of Evolutionary Economics, Springer, vol. 35(5), pages 873-900, November.

    More about this item

    Keywords

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    JEL classification:

    • O10 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - General
    • O30 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - General
    • 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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