IDEAS home Printed from https://ideas.repec.org/p/eti/dpaper/12073.html
   My bibliography  Save this paper

Producers' Service Improvements and Manufacturing Agglomeration When Taking Trade Costs as a Mediator Variable: Mechanism and evidence from China

Author

Listed:
  • ZHAO Wei
  • ZHENG Wenwen

Abstract

Most studies about the effects of producers' services on manufacturing agglomeration focus on the effects themselves while neglecting the mechanism that such effects spread. By stressing the key role of trade costs in the process of manufacturing agglomeration, this paper identifies a chain of effects from producers' service improvements to manufacturing agglomeration via changing trade costs and builds a simple model to enable empirical analysis. Both in the mechanism used to assess this chain of effects and in the empirical model, trade costs are dealt with as a mediator variable. Empirical tests using firm-level data from China support the hypothesis that producers' services affect manufacturing agglomeration via changing trade costs. Further tests at the two-digit sector level show that these types of mediator effects vary in accordance with differences in sector factor intensiveness. Specifically, the mediator effects are more significant in the technology-intensive manufacturing industries than they are in the labor- or capital-intensive manufacturing industries. The policy implication of this finding is that encouraging the development and regional concentration of producers' services would not only promote manufacturing agglomeration but also stimulate technology progress in related sectors.

Suggested Citation

  • ZHAO Wei & ZHENG Wenwen, 2012. "Producers' Service Improvements and Manufacturing Agglomeration When Taking Trade Costs as a Mediator Variable: Mechanism and evidence from China," Discussion papers 12073, Research Institute of Economy, Trade and Industry (RIETI).
  • Handle: RePEc:eti:dpaper:12073
    as

    Download full text from publisher

    File URL: https://www.rieti.go.jp/jp/publications/dp/12e073.pdf
    Download Restriction: no

    More about this item

    NEP fields

    This paper has been announced in the following NEP Reports:

    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:eti:dpaper:12073. See general information about how to correct material in RePEc.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (KUMAGAI, Akiko). General contact details of provider: http://edirc.repec.org/data/rietijp.html .

    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.

    We have no references for this item. You can help adding them by using 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.

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service hosted by the Research Division of the Federal Reserve Bank of St. Louis . RePEc uses bibliographic data supplied by the respective publishers.