Agglomeration Benefits Research Articles

Colleges as anchors of their communities: emergence and agglomeration

ABSTRACT This paper argues that colleges anchor their communities by developing knowledge and skills within their region; establishing links and exchanges outside the region; contributing to civic, political, cultural, and social activities and networks in their region; developing facilities and amenities used by the community; and, contributing to their region’s economic activity. Particularly important are colleges’ development of shared, collective or communal capacities, since these develop communities as communities, rather than individuals and organisations as discrete members of communities. We use Durkheimian sociology and critical realism to re-interpret the concept of agglomeration which we borrow from economics to trace the evolution of the concept of anchor institutions. Agglomeration is a particular type of emergence of phenomena from the interaction of components, where the whole is greater than the sum of its parts. We argue that colleges benefit their communities through the agglomeration of activities and organisations, from which emerge distinctive characteristics of their communities. This leads to the economic, social, and cultural benefits of agglomeration or clustering of activities within a geographic area. The accumulation of knowledge and knowledgeable people in communities increases the sharing of knowledge between people and organisations, and facilitates the generation and diffusion of knowledge.

Nonlinear impact of automobile industry agglomeration on CO2 emission: Incorporating urban characteristics in China

Despite the increasing economic benefits generated by the cluster effect of the automotive industry, CO2 emissions have become a serious challenge in the “3060” dual-carbon context. There are significant uncertainties regarding the impact of automotive industry agglomeration on urban CO2 emissions, including quantifying impact thresholds and understanding the sensitivity of different agglomeration patterns. This study explores how automotive industry agglomeration impacts CO2 emissions across 278 Chinese cities, and uncover the impact patterns based on varying city characteristics. The results show that the technology agglomeration of the automobile industry exhibits a nonlinear “U-shaped” impact on CO2 emissions with a threshold value of 0.4267, while the scale agglomeration shows a nonlinear inverted “U-shaped” impact with a threshold value of 0.1206. In low-carbon demonstration cities, technology agglomeration has the most significant impact, with fluctuations ranging from −14.65% to 16.12%. In contrast, transitional cities are most affected by scale agglomeration, with a fluctuation range of −18.1%–11.19%. Besides, the results indicate that China's automobile industry development programs tend to relocate economic activities from highly agglomerated low-carbon demonstration cities to potential development cities with lower levels of agglomeration and other transitioning cities. Lastly, the results reconfirm that developing automotive industry development models based on cities' characteristics can enhance the environmental benefits of industrial agglomeration.

Specialized, diversified agglomeration and CO2 emissions —An empirical study based on panel data of Chinese cities

Taking proactive steps to control carbon emissions (CO2) in the industrial sector is crucial for meeting the “30.60” carbon reduction commitment expediently. This study meticulously investigates the correlation and underlying mechanisms between industrial agglomeration and CO2 emissions, employing the fixed-effect model and regulatory-effect model across 283 cities from 2006 to 2019.The findings reveal the following: Firstly, specialized agglomeration exacerbates CO2 emissions, while diversified agglomeration substantially contributes to their reduction. Notably, the carbon reduction effect of industrial diversification is particularly pronounced in the southern region, carbon peak region, and industrial transfer region. Secondly, delving into mechanisms uncovers that specialized agglomeration's exacerbating effect stems from labor misallocation, whereas diversified agglomeration mitigates CO2 emissions by enhancing both labor and capital allocation. Thirdly, regarding spatial spillover effects, specialized agglomeration not only increases CO2 emissions locally but also elevates nearby emissions, whereas diverse agglomeration not only reduces local CO2 emissions but also radiates carbon reduction in adjacent areas. To fully realize the benefits of agglomeration in reducing carbon emissions and promoting regional development, the government should thus support diversified agglomeration, remove any barriers preventing the flow of production factors, and fortify interregional industrial division and cooperation.

Research on the Development, Influencing Factors and Influencing Effects of Industrial Agglomeration in China

Since the rapid development of Chinese society and economy, industrial agglomeration has become an important trend of structural change. In order to help enterprises see the advantages and disadvantages of industrial agglomeration, it is very important to study the causes and effects of industrial agglomeration. Therefore, this paper organizes and proposes the reasons for the agglomeration of the four major industries as well as its positive and negative effects. The research results show that political factors, environmental factors, enterprise advantages and culture, talents and consumption level are the main causes of industrial agglomeration. Moreover, the positive benefits of industrial agglomeration are the sharing of infrastructure, resources and markets and the acceleration of knowledge dissemination and technology exchange. The negative impacts are that they increase the economic risk of the agglomeration area and lead to duplication of construction and waste of resources. For these reasons, the Chinese government should weigh the positive and negative benefits of promoting industrial agglomeration. This paper proposes to explore the causes and effects of industrial agglomeration from a macroscopic perspective, which improves the lack of macroscopic analysis in this field.

City characteristics, land prices and volatility

We develop a model that describes how city characteristics affect the volatility of real estate rents and values. The model includes agglomeration externalities, which amplify the effect of productivity shocks on population growth and rents, as well as city characteristics that constrain population growth. While growth constraints make rents more subject to productivity shocks because of the inelastic supply, they can also suppress the benefits of agglomeration, which has the effect of decreasing the sensitivity of rents to productivity shocks. Our dynamic model exhibits persistent rent growth and rent-to-value ratios that vary across cities and over time. In particular, we show that productivity shocks have a larger initial effect on rents in more constrained cities, but a greater long-term effect in less constrained cities.

Disentangling agglomeration economies from selection under policy distortions in China

ABSTRACT This paper explores the competing sources of productivity gains observed in China’s urban agglomerations focusing on three pillar industries: agro-food processing, textiles and electronics. The main results reveal that the higher aggregate productivity observed in denser Chinese cities is driven by both agglomeration and selection forces. Subsequent analysis shows that industrial support policies help to mitigate the selection penalty, but come at the expense of reducing agglomeration benefits. Complementing the city-level analysis, we estimate dynamic and distributive firm-level panel data models to explore the policy rationale of propping up inefficient firms, despite creating a less competitive environment. The micro-based results reveal that inefficient firms targeted by industrial support policies benefit from productivity spillovers in denser cities, mainly in the electronics industry, providing some policy rationale for keeping them in the market.

Agglomeration costs limit sustainable innovation in cities in developing economies.

Theory and evidence from developed economies suggests that innovation activities benefit from agglomeration economies associated with urban economic density. However, despite the fact that eighteen of the world's top twenty cities are in developing countries, we do not know whether agglomeration affects innovation in the same way in developing countries. We propose that, while there are still agglomeration benefits, the development path followed by cities in developing countries also creates significant agglomeration costs and these act to limit innovation. We build a unique database to measure consistently both urban economic density and innovation across a large number of developing countries. Based on geospatial information, we combine data on nightlights at the city level to proxy urban density with information on innovation activity at the firm level. We find that in developing countries, as urban economic density increases, innovation first increases and then begins to decrease beyond a certain point, with the decline being most prominent in the largest cities. That is, the largest cities in developing countries are not able to act as sustainable sources of innovation. Cities in developing countries therefore display different patterns of agglomeration from those documented in the literature focused on developed countries. Our analysis explores the relationship between UN Sustainable Development Goal (SDG) 9 which fosters innovation, and SDG 11 which promotes sustainable and resilient cities. Our results suggest the importance of addressing urban agglomeration costs as a means to facilitate innovative activity.

Remote Work and City Decline: Lessons From the Garment District

Abstract The dramatic rise of remote work threatens the traditional source of urban growth—the unique ability of dense cities to provide a setting in which firms and employees share productive resources, match needs with skills, and transmit knowledge at low cost. These “agglomeration benefits” have induced cities to pursue clusters of related firms that have served as the basis for local economic development and technological innovation. Remote work reduces the necessity for related firms to co-locate, and its popularity has led commentators to predict significant decrease in city business activity, tax revenues, and services as traditional clusters dissipate. It remains unclear how cities will react to the remote work phenomenon. Prior episodes of cluster decline, however, reveal that cities have difficulty pivoting to new economic models when outmoded ones threaten local decay. Instead, cities tend to support existing clusters, notwithstanding that the impending decline is a function of external forces rather than of local policies. This article addresses the potential mismatch between cluster decline that may flow from remote work and city responses. The article theorizes that continued municipal efforts to support a declining cluster emerge from the ability of affected firms to coalesce, exercise political influence, and exploit fragmented municipal decision making to preserve the status quo, maintain or increase municipal subsidies for the cluster, and deter entry by competitors for city resources. Those strategies impede the city’s transition to a more productive economy in the face of looming cluster decline. The article then turns to the history of the garment industry in New York City to illustrate the theory. That history provides a cautionary tale about how cities should and should not respond to the threats they face from remote work.

Zone defense: Why liberal cities build too few homes

In this article, I investigate a puzzling feature of American urban politics: cities with more liberal residents tend to enact more restrictive zoning policies and permit fewer new housing units each year than similar conservative cities. To help explain this puzzle, I develop a formal model in which local governments regulate the size of their population to balance the benefits of agglomeration with the costs of congestion. To defend against congestion externalities imposed by new residents, cities enact zoning policies that undersupply housing relative to the social optimum. In liberal cities, where residents value the benefits of agglomeration the most, this undersupply of housing is the most severe.

Competition, agglomeration, and tenant composition in shopping malls

AbstractPrevious models of tenant composition in shopping malls have focused on traditional anchor and nonanchor retailers who sell similar merchandise. With the changing preferences of modern shoppers who seek unique and entertaining experiences, this article introduces a new type of store known as “specialty stores” that offer experiential consumption. Using a dynamic game model that considers the trade‐off between the benefits of agglomeration and the costs of competition, we re‐examine the tenant optimization problem faced by mall owners in the current retail environment. Our findings show that specialty stores have a significant impact on the optimal tenant mix and the rent revenue of developers. This article provides valuable insights into the optimal tenant composition for large‐scale shopping centers that cater to contemporary consumers.

Agglomeration benefits and costs of investing in urban transport infrastructure

Agglomeration benefits and costs of investing in urban transport infrastructure

Foreign direct investment and industrial agglomeration: Evidence from China

This paper studies the effect of foreign direct investment (FDI) on industrial agglomeration. Using the differential effects of FDI deregulation in 2002 in China on different industries, we find that FDI affects industrial agglomeration negatively. As FDI brings technological spillovers and various agglomeration benefits, other forces must be at work to drive this empirical finding. We propose a simple theory that FDI may discourage industrial agglomeration due to fiercer competition pressure. We find various evidence of this competition mechanism. We also find that FDI deregulation is conducive to industrial growth, but the dispersion induced by FDI deregulation reduces the positive effect of FDI on the growth rate by 8 to 14%.

Location choices of Chinese greenfield investments across EU regions: the role of industry and country-of-origin agglomerations

ABSTRACT The presence of Chinese multinational enterprises (MNEs) in Europe is on the rise, yet they concentrate in specific regions. Traditional spatial explanations of this clustering refer to the co-location of foreign and local firms in the same or related sectors (‘industry agglomeration’). Nonetheless, Chinese investors may also favour locations with a presence of Chinese firms and ethnic communities (‘country-of-origin agglomeration’). We investigate the combined role of both agglomeration typologies by using data on 1307 Chinese investments in 176 NUTS-2 regions during the period 2009–19. While both agglomerations matter in general, we find a substitution effect of country-of-origin agglomeration offsetting the benefits of industry agglomeration.

Logistics cluster and its future development: A comprehensive research review

Logistics clusters play an essential role in bridging production and consumption. Researchers, government authorities, and investors have widely recognized the benefits of logistics agglomeration, and extensive research on this topic has been performed in recent years. The aim of this study is to present an intellectual landscape through a structured literature review of logistics cluster research. First, following the logic of “what-why-how”, we found that logistics cluster research can be divided into three parts: the concept and quantitative identification of logistics clusters, the agglomeration externalities of logistics clusters, and the competitiveness and growth mechanism of logistics clusters. Second, the bibliometric results indicate that: (i) logistics clusters have gradually developed from an engineering or operations management discipline into one involving multidisciplinary approaches of geosciences, sustainable science, etc.; (ii) the focus of research has gradually shifted from the development and operation of logistics clusters to the exploration of the clusters growth mechanism; (iii) researchers start to concentrate on spatially explicit analyses of the economic and environmental effects of logistics clusters, and the exploration of sustainable growth paths for clusters. Finally, in consideration of these trends and the emerging situation, we propose some new research topics, such as (i) the convergence and competitive effect of logistics clusters, (ii) data science and analytics in logistics clusters, (iii) the application of new theories and technologies to transportation and supply chain, etc. in logistics cluster scenarios, (iv) sustainable operation of logistics clusters, and (v) quantitative modeling research in logistics clusters. Overall, much room is left for theoretically and practically expanding logistics cluster research. This study can further the unveiling of the systemic nature of logistics cluster research and provide new insights for scholars, practitioners and policymakers.

Spatial aggregation error and agglomeration benefits from transport improvements

Aggregating data to other spatial resolutions can result in spatial aggregation errors, which can affect the data and subsequent analyses. This paper investigates the nature of spatial aggregation errors in the calculation of agglomeration benefits. The finding shows that inappropriate aggregation can result in significant errors in the monetised benefits used in transport appraisals. The error is analysed using both a stylised model and four case studies. Using arithmetic employment-weighted averages for transport costs when calculating the access to economic mass (ATEM) of the aggregated zones resulted in an error of +/-70%. An arithmetic trip-weighted average reduces errors. The error is further reduced using a harmonic employment-weighted average in the ATEM calculation, but it is not eliminated. The remaining error stems from the altered structure of the data stemming from the aggregation process, which is called the modifiable area unit problem (MAUP). Our findings, which concur with the broader MAUP literature, indicate that this error is unavoidable. Our policy recommendation is to calculate the agglomeration benefits as disaggregated as possible, but if aggregation is necessary, use the harmonic employment-weighted average for transport costs.

Agglomeration spillover, accessibility by high-speed rail, and urban innovation in China: A focus on the electronic information industry

This study examines the impacts of different sources and types of agglomeration economies on urban innovation in the context high-speed rail (HSR), using the Electronic Information (EI) industry in China as an example. The impacts of inter-city access to different innovation factors such as knowledge sources (e.g., universities/research institutions), human capital (e.g., scientific/technical workers), input suppliers (e.g., producer services) and final markets through HSR networks are explored while local agglomeration effects and local proximity to HSR stations are controlled. Historical courier routes and stations and landform characteristics are used to construct instruments for endogenous HSR accessibility measures. Results indicate that local agglomeration benefits such as overall urban size, level of industrialization specialization and local access to top science/engineering universities/research institutions and producer service suppliers are positively associated with innovation performance in the EI sector. When longer travel time thresholds (e.g., >2 h) are applied, inter-city access to knowledge sources, human capital, producer services and final customers through HSR network yields significant impacts on innovation outputs of Type-II large cities (population in 1–3 million).

Enterprise hubs as a mechanism for local economic development in rural areas

Until recently, rural areas have been largely disregarded in innovation policies, due to the lack of physical proximity between businesses required to create agglomeration benefits. Rural enterprise hubs – defined as physical infrastructure that provides workspaces to multiple tenant businesses, with additional services such as shared equipment, meeting rooms, co-working spaces, and business advice or support - are one means of increasing not only physical, but a wide range of non-spatial proximities between rural businesses. Drawing on and extending proximity theory, and based on qualitative case study research, this paper provides the first in-depth analysis of how co-location of businesses within Rural Enterprise Hubs can generate benefits for tenants and overcome a lack of proximity to networks and support systems. It identifies the salience of these benefits for different types of businesses and the extent to which hubs help to overcome common constraints faced by rural businesses.

Agglomeration economies and firm performance in Chinese cities: does CEO educational specialization matter

This paper examines how CEOs educational background affects the agglomeration economies–firm performance relationship based on the upper echelons theory. With a sample of Chinese software and information technology services public listed firms, it is found that CEO educational specialization helps firms to reap the benefits of agglomeration. Specifically, firms led by CEOs with science or engineering degrees benefit more from specialization externalities, while firms led by CEOs with business, economics or legal degrees enjoy more diversity externalities. This paper contributes to the specialization versus diversity debate by stating the importance of individual CEOs.

Addressing patient\u2019s unmet social needs: disparities in access to social services in the United States from 1990 to 2014, a national times series study

BackgroundTo address patient’s unmet social needs and improve health outcomes, health systems have developed programs to refer patients in need to social service agencies. However, the capacity to respond to patient referrals varies tremendously across communities. This study assesses the emergence of disparities in spatial access to social services from 1990 to 2014.MethodsSocial service providers in the lower 48 continental U.S. states were identified annually from 1990 to 2014 from the National Establishment Times Series (NETS) database. The addresses of providers were linked in each year to 2010 US Census tract geometries. Time series analyses of annual counts of services per Km2 were conducted using Generalized Estimating Equations with tracts stratified into tertiles of 1990 population density, quartiles of 1990 poverty rate and quartiles of 1990 to 2010 change in median household income.ResultsThroughout the period, social service agencies/Km2 increased across tracts. For high population density tracts, in the top quartile of 1990 poverty rate, compared to tracts that experienced the steepest declines in median household income from 1990 to 2010, tracts that experienced the largest increases in income had more services (+ 1.53/Km2, 95% CI 1.23, 1.83) in 1990 and also experienced the steepest increases in services from 1990 to 2010: a 0.09 services/Km2/year greater increase (95% CI 0.07, 0.11). Similar results were observed for high poverty tracts in the middle third of population density, but not in tracts in the lowest third of population density, where there were very few providers.ConclusionFrom 1990 to 2014 a spatial mismatch emerged between the availability of social services and the expected need for social services as the population characteristics of neighborhoods changed. High poverty tracts that experienced further economic decline from 1990 to 2010, began the period with the lowest access to services and experienced the smallest increases in access to services. Access was highest and grew the fastest in high poverty tracts that experienced the largest increases in median household income. We theorize that agglomeration benefits and the marketization of welfare may explain the emergence of this spatial mismatch.

FOREIGN DIRECT INVESTMENT AND INNOVATION: EVIDENCE FROM CHINESE FIRMS’ PATENT FILINGS

One main motivation of attracting inward foreign direct investment (FDI) for emerging economies is to obtain knowledge spillovers from developed countries and promote domestic innovation. The effects of FDI on innovation include both the direct effects from FDI on targeted domestic firms and indirect effects from foreign ownership on other foreign and domestic firms’ innovation. Applying a design with a two-stage randomization procedure that allows for both direct and indirect effects of FDI on innovation and allows these two effects to vary with the share of foreign firms in a well-specified cluster, we empirically investigate the effects of inward FDI on Chinese firms’ innovation using patent filings as a proxy for innovation. Our findings indicate that the potential innovation of firm varies with the share of foreign firms in the cluster. The approach used in this paper can help researchers and policymakers to better understand the benefits of inward FDI promotion programs, agglomeration and regional policy.