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Influences of production and R&D agglomeration on productivity: Evidence from Chinese electronics firms

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  • Yang, Chih-Hai
  • Lin, Hui-Lin
  • Li, Hsiao-Yun

Abstract

As China adopts a government-supported agglomeration model to develop high-tech industries, it is crucial to examine whether the spatial concentration of manufacturing and R&D activities enhance firm-level productivity. Based on a panel dataset of Chinese electronics firms from 2005 to 2007, the calculated Ellison–Glaeser (EG) index indicates that both production and R&D activities are highly spatially concentrated. Crucially, we find that production agglomeration has a positive relationship with firms' productivity, especially for smaller firms. In contrast, R&D agglomeration seems to negatively relate with productivity. It implies that the possible congestion effect and/or free rider problems erode the benefit derived from knowledge spillovers.

Suggested Citation

  • Yang, Chih-Hai & Lin, Hui-Lin & Li, Hsiao-Yun, 2013. "Influences of production and R&D agglomeration on productivity: Evidence from Chinese electronics firms," China Economic Review, Elsevier, vol. 27(C), pages 162-178.
    • Handle: RePEc:eee:chieco:v:27:y:2013:i:c:p:162-178
    DOI: 10.1016/j.chieco.2013.09.005
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    More about this item

    Keywords

    R&D; Agglomeration; Spillover; Productivity;
    All these keywords.

    JEL classification:

    • L67 - Industrial Organization - - Industry Studies: Manufacturing - - - Other Consumer Nondurables: Clothing, Textiles, Shoes, and Leather Goods; Household Goods; Sports Equipment
    • L14 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance - - - Transactional Relationships; Contracts and Reputation
    • R39 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location - - - Other
    • C33 - Mathematical and Quantitative Methods - - Multiple or Simultaneous Equation Models; Multiple Variables - - - Models with Panel Data; Spatio-temporal Models
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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