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Assessing agglomeration economies in the Yangzi River Delta, China : a bayesian spatial econometric approach

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  • Hashiguchi, Yoshihiro
  • Chen, Kuang-hui

Abstract

This paper estimates the elasticity of labor productivity with respect to employment density, a widely used measure of the agglomeration effect, in the Yangtze River Delta, China. A spatial Durbin model is presented that makes explicit the influences of spatial dependence and endogeneity bias in a very simple way. Results of Bayesian estimation using the data of the year 2009 indicate that the productivity is influenced by factors correlated with density rather than density itself and that spatial spillovers of these factors of agglomeration play a significant role. They are consistent with the findings of Ke (2010) and Artis, et al. (2011) that suggest the importance of taking into account spatial dependence and hitherto omitted variables.

Suggested Citation

  • Hashiguchi, Yoshihiro & Chen, Kuang-hui, 2012. "Assessing agglomeration economies in the Yangzi River Delta, China : a bayesian spatial econometric approach," IDE Discussion Papers 339, Institute of Developing Economies, Japan External Trade Organization(JETRO).
    • Handle: RePEc:jet:dpaper:dpaper339
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    References listed on IDEAS

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    1. Brülhart, Marius & Mathys, Nicole A., 2008. "Sectoral agglomeration economies in a panel of European regions," Regional Science and Urban Economics, Elsevier, vol. 38(4), pages 348-362, July.
    2. Randall W. Eberts & Daniel P. McMillen, 1999. "Agglomeration Economies and Urban Public Infrastructure," Book chapters authored by Upjohn Institute researchers, in: Paul Cheshire & Edwin S. Mills (ed.),handbook or Regional and Urban Economics, volume 3, pages 1455-1495, W.E. Upjohn Institute for Employment Research.
    3. Artis, Michael & Moreno, Rosina & Miguelez, Ernest, 2009. "Assessing agglomeration economies in a spatial framework with endogenous regressors," CEPR Discussion Papers 7267, C.E.P.R. Discussion Papers.
    4. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171, Elsevier.
    5. Ciccone, Antonio & Hall, Robert E, 1996. "Productivity and the Density of Economic Activity," American Economic Review, American Economic Association, vol. 86(1), pages 54-70, March.
    6. Diego Puga, 2010. "The Magnitude And Causes Of Agglomeration Economies," Journal of Regional Science, Wiley Blackwell, vol. 50(1), pages 203-219, February.
    7. Roberta Capello & Peter Nijkamp (ed.), 2009. "Handbook of Regional Growth and Development Theories," Books, Edward Elgar Publishing, number 12874.
    8. Kelejian, Harry H & Prucha, Ingmar R, 1998. "A Generalized Spatial Two-Stage Least Squares Procedure for Estimating a Spatial Autoregressive Model with Autoregressive Disturbances," The Journal of Real Estate Finance and Economics, Springer, vol. 17(1), pages 99-121, July.
    9. Lourens Broersma & Jan Oosterhaven, 2009. "Regional Labor Productivity In The Netherlands: Evidence Of Agglomeration And Congestion Effects," Journal of Regional Science, Wiley Blackwell, vol. 49(3), pages 483-511, August.
    10. Nijkamp, P. & Abreu, M., 2009. "Regional development theory," Serie Research Memoranda 0029, VU University Amsterdam, Faculty of Economics, Business Administration and Econometrics.
    11. Shanzi Ke, 2010. "Agglomeration, productivity, and spatial spillovers across Chinese cities," The Annals of Regional Science, Springer;Western Regional Science Association, vol. 45(1), pages 157-179, August.
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    Cited by:

    1. Kiyoyasu Tanaka & Yoshihiro Hashiguchi, 2015. "Spatial Spillovers from Foreign Direct Investment: Evidence from the Yangtze River Delta in China," China & World Economy, Institute of World Economics and Politics, Chinese Academy of Social Sciences, vol. 23(2), pages 40-60, March.
    2. Yoshihiro Hashiguchi & Kiyoyasu Tanaka, 2015. "Agglomeration and firm-level productivity: A Bayesian spatial approach," Papers in Regional Science, Wiley Blackwell, vol. 94, pages 95-114, November.
    3. Tanaka, Kiyoyasu & Hashiguchi, Yoshihiro, 2012. "Spatial spillovers from FDI agglomeration : evidence from the Yangtze River Delta in China," IDE Discussion Papers 354, Institute of Developing Economies, Japan External Trade Organization(JETRO).

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    More about this item

    Keywords

    China; Local economy; Econometric model; Agglomeration economies; Spatial autocorrelation; Endogeneity; Bayesian estimation; Omitted variables; Bayesian; Spatial Durbin model;
    All these keywords.

    JEL classification:

    • C21 - Mathematical and Quantitative Methods - - Single Equation Models; Single Variables - - - Cross-Sectional Models; Spatial Models; Treatment Effect Models
    • C51 - Mathematical and Quantitative Methods - - Econometric Modeling - - - Model Construction and Estimation
    • R10 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - General
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R15 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Econometric and Input-Output Models; Other Methods

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