Does ownership matter for industrial agglomeration in China?

Abstract

Economic reform has successfully diversified the ownership structure of the Chinese economy. Different types of industrial enterprises may differ in their incentives and capabilities to reap from agglomeration benefits. Using plant level data from 2007, this study found that foreign enterprises are the most agglomerated while the domestically owned enterprises are spatially dispersed. In many industries, SOEs are the most dispersed and are less likely to co-locate with other types of industrial enterprises. HTM and foreign enterprises however fully exploit the benefits of spatial clustering. In liberalized and globalized industries, privately or collectively owned enterprises are also highly agglomerated. The strong agglomeration of foreign and privately owned enterprises is positively associated with overall industrial agglomeration. Performance improvement of ownership reform shall be partially attributed to the more agglomeration of liberalized and globalized industries. Ownership does matter in the formation of industrial clusters in transitional economies like China.