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Industrial structure and urban agglomeration: evidence from Chinese cities

Author

Listed:
  • Zhi Li

    (National Development and Reform Commission)

  • Chengri Ding

    (University of Maryland
    Zhengzhou University)

  • Yi Niu

    (Capital University of Economics and Business)

Abstract

This paper investigates whether and how regional industrial structure/concentration influences firm productivity. Based on the firm-level data from China, the paper estimates firm productivity with regional structure conditioning on agglomeration effects and concludes that regional industrial structure plays little role in firm’s output, but affects localization agglomeration, which in turn affects firm productivity. In other words, localization agglomeration is stronger in cities in which sectors are less dominated by a few large firms in their own sector. Our conclusions are robust to the classification of industries, intertemporal, and spatial dimensions of agglomeration externalities, alternative measures of regional industrial structure and agglomeration, and different spatial scales in which standard errors are clustered. An important policy implication of our findings is that China’s industrial policies favoring large firms may be harmful to local economic development in the long term.

Suggested Citation

  • Zhi Li & Chengri Ding & Yi Niu, 2019. "Industrial structure and urban agglomeration: evidence from Chinese cities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 63(1), pages 191-218, August.
    • Handle: RePEc:spr:anresc:v:63:y:2019:i:1:d:10.1007_s00168-019-00932-z
    DOI: 10.1007/s00168-019-00932-z
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    2. Behr, Andreas & Schiwy, Christoph & Hong, Lucy, 2022. "Impact of Agglomeration Economies on Regional Performance in Germany," Journal of Regional Analysis and Policy, Mid-Continent Regional Science Association, vol. 52(1), May.
    3. Kai Chang & Huijia Zhang & Boyang Li, 2024. "The Impact of Digital Economy and Industrial Agglomeration on the Changes of Industrial Structure in the Yangtze River Delta," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 15(2), pages 9207-9227, June.
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    More about this item

    JEL classification:

    • F1 - International Economics - - Trade
    • L1 - Industrial Organization - - Market Structure, Firm Strategy, and Market Performance
    • R1 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics

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