How do urban agglomerations drive economic development? A policy implementation and spatial effects perspective

Abstract

Urban agglomerations (UAs) are important basic components for countries to take part in international competition, and scholars have examined various UAs in different fields. This study is not limited to specific UAs but considers all of them in China as a whole, uses panel data of 285 cities in China from 2003 to 2020, introduces the spatial difference-in-differences Durbin model to verify the impacts of UA policies on economic development and their spatial effects, and further explores the intrinsic influence mechanism. After various robustness tests, this study draws the following conclusions: (1) UA policies significantly promote the economic development of UAs and generate significant spatial spillover effects; (2) fixed assets and foreign direct investment significantly boosts the economic development of UAs, and the former has a significant spatial effect; the industrial structure negatively affects economic development; the digital economy is yet to take an essential role in economic development; and (3) mechanism analysis showed that UAs could promote regional economic development through green development, medical resources, and logistics. This study serves as a valuable reference for the overall development situation and internal development logic of UAs in China and proposes relevant policy suggestions.