Abstract
There is a strong correlation between government intervention and urban production structure in China. Particularly, the outputs of the cities partly come from the economic rent of city relational network (CRN), which is a unique regional policy and administrative hierarchy. In order to analyze the gravity flows of CRN under the nonmarket mechanism, we attempt to build a new gravity model that adopts the production sector. The new gravity produces relational data with direction, which makes it possible to use social network analysis (SNA) and overcome the endogeneity of the linear model. The empirical results show that (1) modified new gravity model can effectively capture the distribution of CRN gravity flows and the convergence of regional development in China, (2) the CRN, which especially stems from the government financial intervention, increases the share of nontradable sectors in cities, and (3) adjustment of the production sector leads to the difference of CRN gravity flows, so asymmetric flows distribution leads to the heterogeneity of regional economic performance. Cities with higher share of nontradables have relatively slower productivity growth in long-term.
Highlights
City relational network (CRN) is the network formed by the flows of people, logistics, and capital between regions. e economic rent of CRN is an important nonmarket source of outputs of Chinese cities, which is very different from urban governance in the market-oriented countries
In order to make the results in the previous section more robust, we use the method of combining urban gravity flows and social network analysis (SNA) to carry out further analysis. is statistical technology of SNA can effectively solve the endogeneity of linear model, especially the endogeneity of mutual causality
A CRN gravity flow model was constructed through a social network analysis on the gravity flows between Chinese cities in different regions and on different levels, coupled with the data on other directed relations. e authors drew the following conclusions: First, this paper establishes a statistical model of CRN gravity flows with the characteristics of urbanization in China, and proves the effectiveness of the model in analyzing the correlations and flow trend of CRN
Summary
City relational network (CRN) is the network formed by the flows of people, logistics, and capital between regions. e economic rent of CRN is an important nonmarket source of outputs of Chinese cities, which is very different from urban governance in the market-oriented countries. Under the combined effects of interregional trade and the economic rent of CRN, the relations between cities in China gradually form a complex network with multiple directions. Is paper attempts to build a statistical model based on the gravity flows in CRN, and uses the model to depict the structural features and convergence trend of the regional production sector, trying to make the analysis results more objective and accurate. While the traditional gravity model centers on population size or per-capita gross domestic product (GDP), this paper modifies the gravity parameters, and introduces new variables into the benchmark gravity model (e.g., the ratio between tradable and nontradable sectors), creating directed gravity flows in the urban relational network. E results show that our CRN gravity flow model and its method can effectively capture city structural changes and regional convergence trend of China. E remainder of this paper is organized as follows: Section 2 models the adjustment of the urban production sector, and puts forward theoretical propositions; Section 3 presents ridge regression; Section 4 establishes a model of CRN gravity flows; and Section 5 summarizes the main findings
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