Interregional industrial transfer, industrial correlation spillover, and productivity: evidence from China’s textile industry

Abstract

ABSTRACT This paper studies the knowledge spillover effect through industrial correlation in the process of interregional textile industry transfer and its effects on the TFP of China’s textile industry. The paper calculates the industrial similarity coefficients of subdivided industries with the textile industry and identifies the related industries of China’s textile industry by using the data of China’s input-output table and extension tables from 2002 to 2017. Then, the paper defines the industrial correlation spillover as the weighted sum of the indirect R&D investment of one industry from its related industries and constructs a quantitative method to qualify the industrial correlation spillover. Furthermore, the paper makes two empirical analyses on the existence of industrial correlation spillover in the interregional industrial transfer and its effects on productivity using the panel data of two-digit subdivided industries in 30 provinces. The results show that the correlation spillover effect does exist and promotes the interregional textile industry transfer from the eastern coastal region to the central and the northern-coastal regions; the correlation spillover from the related tertiary industries in industrial transfer promotes the TFP of China’s textile industry, but the correlation spillover from the related secondary industries impedes the TFP of the textile industry.