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Urban Agglomeration and Firm Innovation: Evidence from Developing Asia

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  • Chen,Liming
  • Hasan,Rana
  • Jiang,Yi

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 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

  • Chen,Liming & Hasan,Rana & Jiang,Yi, 2021. "Urban Agglomeration and Firm Innovation: Evidence from Developing Asia," Policy Research Working Paper Series 9861, The World Bank.
    • Handle: RePEc:wbk:wbrwps:9861
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    File URL: http://documents.worldbank.org/curated/en/148381637761830496/pdf/Urban-Agglomeration-and-Firm-Innovation-Evidence-from-Developing-Asia.pdf
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    References listed on IDEAS

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    1. Hernán D. Rozenfeld & Diego Rybski & Xavier Gabaix & Hernán A. Makse, 2011. "The Area and Population of Cities: New Insights from a Different Perspective on Cities," American Economic Review, American Economic Association, vol. 101(5), pages 2205-2225, August.
    2. Kwok Tong Soo, 2014. "Zipf, Gibrat and geography: Evidence from China, India and Brazil," Papers in Regional Science, Wiley Blackwell, vol. 93(1), pages 159-181, March.
    3. Chauvin, Juan Pablo & Glaeser, Edward & Ma, Yueran & Tobio, Kristina, 2017. "What is different about urbanization in rich and poor countries? Cities in Brazil, China, India and the United States," Journal of Urban Economics, Elsevier, vol. 98(C), pages 17-49.
    4. Alexandra Schaffar & Michel Dimou, 2012. "Rank-size City Dynamics in China and India, 1981--2004," Regional Studies, Taylor & Francis Journals, vol. 46(6), pages 707-721, August.
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    Cited by:

    1. Calvo, Nuria & Fernández-López, Sara & Rodríguez-Gulías, María Jesús & Rodeiro-Pazos, David, 2022. "The effect of population size and technological collaboration on firms' innovation," Technological Forecasting and Social Change, Elsevier, vol. 183(C).

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