Can Spatial Agglomeration Promote Exports? The Evidence from China’s Wood-Processing Industry

Abstract

Wood processing products can be used as a substitute for some high carbon emission materials, thus contributing significantly to climate change mitigation. China has significant importance in guaranteeing a stable global supply of wood products. However, China has experienced a decline in wood product exports recently, which could affect the world’s progress toward sustainable development. This study focuses on the spatial agglomeration of China’s wood-processing industry and explores the potential of integrating spatial agglomeration to address the diminishing export growth. We found that the spatial agglomeration of China’s wood-processing industry generally increased rapidly between 1999 and 2004, but decreased after 2004. The centroid of China’s wood-processing is shifting from the northeastern region toward the eastern coastal areas. The industry is more concentrated in the north–south direction and slightly dispersed in the east–west direction. Most sub-sectors of China’s wood-processing industry operate at the primary agglomeration level, indicating significant potential for improvement and further development. The empirical results unveil the substantial positive influence of spatial agglomeration on exports within China’s wood-processing industry, indicating the prospects for enhancing exports through the deliberate exploitation of agglomeration effects. The results advocate the view that spatial agglomeration acts as an essential accelerator for export growth and firms’ international competitiveness. Therefore, spatial agglomeration can alleviate the export constraints of China’s wood-processing industry. The results also show that exports are hampered by increased enterprise productivity. The ‘productivity paradox’ phenomenon has also surfaced in low-tech industries, like the wood-processing industry, as a result of issues with transaction costs, the development path, and policy orientation. Therefore, we should strategically leverage the spatial agglomeration effect, especially in the western region, and guide the moderate competition of enterprises to enhance the competitiveness of low-tech enterprises. China’s wood-processing industry can provide advanced experience and lessons for other countries regarding industrial cluster allocation and sustainable development models.