Agglomeration Of Firms Research Articles

Hindrance or facilitator? The economic consequences of national demonstration eco-industrial parks in China.

Many countries attach great importance to the green, low-carbon, and circular development of industrial parks. China is one of them and has entered an exploration journey of national demonstration eco-industrial parks (NDEIPs). However, the impact of the transformation of industrial parks into NDEIPs on local economic development still remains a mystery. To address this issue, we develop an empirical study using a combination of the multi-period difference-in-differences method and the propensity score matching method based on the panel data for 266 cities in China from 2001 to 2021. The results show that industrial parks becoming NDEIPs promotes cities' economic development. This conclusion still holds after a series of robustness tests, such as the reverse causality test and the placebo test. Moreover, the park heterogeneity tests show that the economic consequences vary according to differences in levels, industry types, life cycle phases, and the degree of foreign firm agglomeration. The city heterogeneity tests show that the economic consequences differ based on administrative levels, innovation capabilities, technology industrialization, and environmental friendliness. The spatial heterogeneity tests show that the economic consequences differ according to geographical location and whether situated in the Yangtze River Economic Belt. The policy upgrading heterogeneity tests show that the economic consequences differ during the process of policy upgrading and transformation. In addition, the mechanism tests reveal that green innovation, human capital level, and firm attractiveness mediate the relationship between industrial parks becoming NDEIPs and cities' economic development. This study provides a new perspective for understanding the economic effects of the transformation of industrial parks into NDEIPs, and provides a reference for the government on how to maximize these economic effects.

Tracking industry pollution sources and health risks in China

Agglomeration of firms significantly increases pollution emission intensity and brings unintended consequences to public health. We develop the pollution emission indices using the firm-level pollutant emission data in China to track pollution intensities at the source using the locally weighted regression approach. Our constant-quality pollutant emission indices for three pollutants (wastewater discharge, COD, and SO2) and the pollution emission heatmaps show decreasing trends for the three pollutants from 1998 to 2012. We also show significant spatial clustering and regional variations in pollution emission trends. Industrial pollution mitigations in China's Eastern and Central regions have been neglected for decades since 2021, when driving economic growth took priority. The regime shifts in pollution controls from the 10th (2000–2005) to the 11th (2006–2010) Five-Year Plan period show the effects of tightening pollution emission controls. Failure to cut pollution emissions at source causes health consequences to residents living and working in nearby polluting industries. The latent environmental hazard could be a ticking time bomb, which could not be delinked from the emergence of cancer villages in the regions. Therefore, enforcing strict and uniform pollution controls and setting clear emission limits at sources can eliminate free-rider problems by polluting firms.

How Does Foreign Direct Investment Drive Employment Growth in Vietnam’s Formal Economy?

Over the last three decades, Vietnam has undergone economic reforms and achieved rapid economic growth. However, the country is still facing numerous challenges linked to a relatively high share of employment in an informal economic sector, which could prevent Vietnam from escaping from the middle-income trap and becoming a high-income country. This research explores the effect of foreign direct investment (FDI) on job creation in the formal economic sector of Vietnam. A subnational dataset of 63 cities/provinces from 2006 to 2020 was analyzed using an instrumental variable two-stage least-squares fixed-effect model. The results show that FDI is an employment growth-enhancing factor in the formal economic sector. Specifically, FDI enterprises are found to be more capable than domestic enterprises in creating employment, and there is a positive employment spillover from the foreign to the domestic sector, although the magnitude of the effect remains small. Apart from FDI, firm agglomeration, capital resource productivity, and government support for sector development spur employment growth. Labor quality, profitability and foreign industrial agglomeration are identified to be determinants of FDI. Furthermore, the impact mechanism of FDI on the formal sector’s employment is further discussed using mindspongeconomics, the SM3D knowledge management system, and the culture tower.

The impact of pilot free trade zone on service industry structure upgrading

China has established pilot Free Trade Zones (FTZs) to optimize the service industry structure. However, limited research has been conducted on the impacts of pilot FTZs on service industry structure upgrading in response to the new international and domestic development paradigm. This study makes the first attempt to examine the impact of the GDFTZ policy on the service industry structure upgrading in China considering the establishment of the Guangdong Pilot Free Trade Zone (GDFTZ) in 2015 as a quasi-natural experiment. We apply the difference-in-differences method on panel data from 2005 to 2019. Furthermore, this study explores the mechanisms and the spatial spillover effect of the GDFTZ policy. We find that the GDFTZ significantly promotes service industry structure upgrading; the results hold after considering the endogeneity using the instrumental variable method. By distinguishing different types of technology innovation, we find that the GDFTZ can upgrade the service industry structure through imitation and independent innovation instead of technology introduction. Additionally, GDFTZ can promote service firm agglomerations and financial resource allocation efficiency to upgrade the service industry structure. Moreover, the GDFTZ has positive spatial spillover effects on neighboring cities. Our findings suggest that the GDFTZ policy can play a distinctive role in upgrading the service industry structure by promoting innovation and service firm agglomeration, which is different from the previous opening-up policies.

Prospects for growth and prosperity in West Cumbria: Nuclear decommissioning and regional economic adjustment

The objective of the paper is to trace out the effects of decommissioning of the Sellafield nuclear complex on the economy of West Cumbria. I seek to show how decommissioning expenditures are stimulating the formation of an agglomeration of advanced nuclear processing and engineering firms in the region and how this process is reinforced by a diverse array of emerging private and public institutions. With the aid of patent data, I indicate some possible pathways of industrial development in the region. I then proceed to examine how policy makers might enhance the developmental impacts of decommissioning especially in regard to measures focused on inter-firm network activities, training, and institutional infrastructures.

Eco-environmental constraints, economic incentives, and spatiotemporal variations of construction land use efficiency in regional China

Construction land expansion and use efficiency are tied to the promotion of sustainable cities and communities. This article explores how and why the spatiotemporal variation of construction land use efficiency (CLUE) evolved in the Yangtze River Delta (YRD), China between 2000 and 2020. Our descriptive results show that county-level regions with higher CLUE are concentrated in major cities in the core YRD, as well as ecologically sensitive regions in the peripheral YRD. Although CLUE improvement in peripheral regions has been more remarkable since the early 2010s, the efficiency gap in construction land use between the core YRD (central cities) and the peripheral YRD (suburban counties) has doubled. The modeling results indicate the temporally and spatially heterogeneous impacts of various factors related to economic incentives and eco-environmental constraints on the uneven CLUE. Economic level and ecological sensitivity are positively associated with regional CLUE. The continuing growth of service industries and the spatial agglomeration of knowledge-intensive and foreign-invested firms are increasingly vital for CLUE improvement in the core YRD, while the prosperity of manufacturing industries is more important for the peripheral YRD. The “crowding out effect” of environmental pollution on CLUE could be proved in the peripheral rather than the core YRD. Our findings suggest that proper policies should be tailored to specific places to coordinate construction land use, economic growth, and eco-environmental sustainability.

The Evolution of the Spatial Patterns of Startup Firms in the Tibet Autonomous Region, China in the 21st Century

It is increasingly recognized by policymakers and the academic community that startup firms play an important role in enhancing national and regional economic competitiveness. Existing studies have focused mainly on developed countries and highly marketed city-regions in developing countries, lacking sufficient attention to underdeveloped regions. The Tibet Autonomous Region (TAR) is the poorest province in post 1949 ‘New China’. In recent years, the TAR’s government has released a series of policies to encourage the establishment and development of startup firms, but understanding how to promote social development and economic growth through the creation and development of startup firms is still a significant issue for the TAR’s government. Therefore, taking Tibet as a case area, this article discusses the evolution of the spatial patterns of startup firms in underdeveloped regions in China. The findings include: ① The past two decades have witnessed tremendous growth in the number of startup firms; however, the number and rate of growth are not geographically even. ② In terms of geographical distribution, startup firms in the TAR have concentrated on or around key nodes along major transport corridors (place dependence); however, with the development of transportation infrastructure and development zones, they have also been established in new localities (place creation). ③ Although all subregions of the TAR have spatial agglomerations of startup firms, they are different in agglomeration characteristics. Finally, after acknowledging shortcomings in its research, this article calls for multi-sited research to investigate the diversity of the spatial patterns and dynamics of new firm formation in the underdeveloped regions of China.

Understanding Clustering-Segregating-Reconnecting Dynamics at Multiple Levels and Contexts

The main idea behind this symposium is premised on a series of core observations in social and organizational life: (1) social entities form clusters; (2) clusters result in segregation; (3) segregated clusters are reconnected by bridging ties. This clustering-segregating-reconnecting dynamics is the common mechanism underlying a wide range of empirical phenomena ranging from racial segregation to firm-level geographic clustering and small-world networks. Rather than examining these three dynamics separately, we bring them together and look for a common thread among them to acquire a holistic understanding of the segregating-integrating mechanisms. In this symposium, we bring together scholars who study a variety of empirical phenomena yet share a common interest in illuminating these forces. Each presenter will present and discuss their own cutting research on either clustering or reconnection in a diverse set of contexts: organizational coalitions, firm agglomeration, geographic clusters, racial segregation, and inventor networks. In the end, we highlight a future research direction for understanding the segregating-clustering-reconnecting dynamics from a holistic perspective.

Does High-Speed Rail Promote Agglomeration in China?

This paper constructs the agglomeration model of crossregional labor flow and market accessibility based on the new economic geography model. Using panel data in 2000-2013, this paper examines the impact of high-speed railways on industrial agglomeration. The results show that high-speed railway significantly promotes the spatial agglomeration of industrial firms. The high-speed railway promotes industrial agglomeration by promoting crossregional mobility of industrial labor and improving market accessibility. We also construct the instrument variable based on HSR construction cost and apply the TSLS model to solve the potential endogenous problems. At the same time, PSM results also get the net effect caused by the repair of a high-speed railway, which verifies the robustness of the results.

China’s Outward Direct Investment in the United States: From the perspective of agglomeration economies

Over most of the last two decades, China’s Outward Direct Investment (CODI) has reshaped the global economic landscape and attracted considerable attention. Although extensive research shows that CODI features agglomeration, there is limited research from the perspective of different patterns of agglomeration economies at the subnational level. It is unclear which patterns of agglomeration economies play a role in the location choice of CODI, especially with the variations of CODI in terms of entry mode and ownership. Therefore, based on the data of the CODI in the United States in the period 2000–2016, we use a conditional logit model to investigate the influence of specialized and diversified agglomeration of local firms as well as industry-specific and industry-diverse agglomeration of Chinese investors on the location choice of CODI, and further explore the heterogeneous influence concerning the entry mode and ownership. Our results show that among a variety of agglomeration economies, the specialized agglomeration of local firms is the premier factor influencing the location choice of CODI, even exceeding the influence of industry-specific agglomeration of CODI in the same industry. Industry-diverse agglomeration of CODI plays a weak role, while diversified agglomeration of local firms has no effect. Moreover, the location choice of acquisition is more sensitive to the specialized agglomeration of local firms than that of greenfield investment, and the influence of the industry-diverse agglomeration of CODI has no effect on the location choice of acquisition. In terms of the ownership, the location choice of state-owned enterprises (SOEs) is more sensitive to the specialized agglomeration of local firms and industry-specific agglomeration of CODI than that of private investment, and the industry-diverse agglomeration of CODI has no significant impact on the location choice of SOEs’ offshoring subsidiaries.

Does high-speed rail make firms cleaner in China?

With the firm level datasets from 2004 to 2014, this paper uses the difference in differences (DID) estimator to explore the effects of China's high-speed rail (HSR) on firms' environmental efficiency. We find that China's HSR lowered SO2 intensity (SO2 per unit output value) by approximately 7.9%. More importantly, firms reduce SO2 intensity mainly through innovation, productivity improvement, and the agglomeration of firms. Our additional analyses show that these observed effects of HSR are mainly driven by firms in core cities, while the environmental efficiency of firms in the peripheral cities seems to be unaffected. Heterogeneous effects indicate that the HSR has a more significant effect on dirty firms, state-owned firms, foreign firms, and large firms. Our results suggest that HSR construction could have contributed to the China's environmental governance.

Strategic complementarities, geographical agglomeration, and firm investment

We estimate the effect of strategic complementarities (measured by the geographical agglomeration of firms) on firm investment. Individual firm investment responds significantly to industry investment in agglomerated industries, whereas the response is null in dispersed industries. Industry-region sales do not explain the differential effect between these two types of industries. These results have been overlooked in the literature, provide a justification for regional and industry policies, and challenge the stable unit treatment value assumption (SUTVA) required in potential outcome analysis.

Industry characteristics and agglomeration of heterogeneous firms

Industry characteristics and agglomeration of heterogeneous firms

Circular Economy and the evolution of industrial districts: a supply chain perspective

Circular Economy promises to achieve sustainability by decoupling economic growth from resource extraction and environmental losses. However, it requires a systemic change in the design of products, business models and supply chains. In this study the evolution of the supply chain structure and relationships is addressed in the specific context of industrial districts – i.e., agglomerations of small and medium-sized firms territorially concentrated and specialised in one or more phases of a production process – undergoing a transition to Circular Economy. Through the study of the textile industrial district in Prato (Italy), this study addresses two topics that have been limitedly investigated in the literature. First, the potential role of Circular Economy in revitalising an industrial district in a decline phase. Second, how supply chain structure and relationships should evolve in an industrial district transitioning to Circular Economy. This study outlines the causes triggering industrial districts decline and discusses the factors that can induce a Circular Economy based re-organisation of industrial districts. Consequently, we provide insight to managers on how to successfully couple Circular Economy and technological or business model innovations with supply chain management practices. We also provide indications to policymakers on how local and regional actors can support a Circular Economy driven reorganisation of industrial districts. Finally, this study links contributions concerned with the Circular Economy transition, supply chain structure and relationships and evolution trajectories of industrial districts, thus paving the way for a deeper understanding of the interplay among these phenomena.

Amenity, firm agglomeration, and local creativity of producer services in Shanghai

Studies of creativity in urban China are heavily confined at the interurban level and have been criticized for unclear spatial mechanisms and missing local context. This study constructs a theoretical framework to understand the role of urban amenity on the local attractiveness to producer services and further analyzes such attractiveness in Shanghai in terms of agglomeration and creativity using open data. We find that creative firms are more clustered than other producer service firms and urban amenities in Shanghai. The regression results show that urban amenity is strong in explaining local attractiveness to creativity rather than firm agglomeration at the 1-km scale. The attractiveness of the local urban area to creativity may be affected by urban amenity in various ways, including co-location, accessibility, and high-density clusters. Such relationships also follow Shanghai's monocentric structure. The importance of urban amenity decays as the distance to the central business district (CBD) increases in regards to firm agglomeration but persists in terms of creativity level. These findings highlight the importance of considering the co-existence of different spatial relationships and accentuate the differentiated applicability of industrial agglomeration and creativity theories.

High-speed rail, firm agglomeration, and PM2.5: Evidence from China

• The aggregate effect of HSR on local air quality in China was investigated. • The impact of HSR on air quality through firm location was empirically measured. • Annual PM2.5 concentration declines by about 2.8% after a county was connected to HSR. • The elasticity of PM2.5 concentrations to the number of firms is about 0.25. • HSR can be used as an instrumental variable to explore the influence channels of air pollution. Over the past decade, China has built the most extensive high-speed rail (HSR) network in the world. This study estimated the effect of HSR connectivity on the local air quality in China between 2004 and 2016. Through difference-in-differences estimation, we found that on average, the concentration of particulate matter with a diameter of 2.5 μm (PM2.5) declined by 2.8% after a county had been connected to the HSR network. As industrial activities are the highest source of pollution, HSRs can affect local PM2.5 concentrations by changing firm and/or industrial agglomeration patterns. We further explored this channel by using HSR connectivity as an instrumental variable, and found that PM2.5 concentrations will decline by 2.74% on average due to the migration of polluting firms induced by HSR connections. The results indicate that the response of firms to HSR is important in understanding the spatial distribution of air pollution in China.

АНАЛІЗ ЕКОНОМІЧНОЇ ДУМКИ У РОЗРІЗІ ПЕРЕДУМОВ РОЗВИТКУ КЛАСТЕРНИХ ФОРМУВАНЬ У ПРАЦЯХ УКРАЇНСЬКИХ, БІЛОРУСЬКИХ ТА РОСІЙСЬКИХ ВЧЕНИХ

Historiography the concept of clusters in the evolution of Economic Thought has been formed for many years. A significant contribution to the development of the concept of cluster was made by foreign and domestic scientists. The article considers scientific works of Ukrainian, Russian and Belarusian scientists, in particular: N.Y. Kalyuzhnova, I.V. Pilipenko, T.O. Kuznetsova, A.A. Tashkinov, M.V. Gryazev, S.A. Vasin, O.Y. Shakhov, Y.А. Sidelnikov, L.V. Dmitriev, G.A. Vinokurov, G.A. Yashev, V.K. Shcherbin, S.A. Vidimov, V.F. Bainev, N.I. Bogdan, S.G. Galuzova and others. For example, N. Kalyuzhnova and I. Pilipenko in their monographs reveal the aspect of cluster functioning, in particular, paying attention to the aspect of geographical agglomeration of firms operating in one or more similar sectors of the national economy. O. Voronov and O. Buryak consider the cluster as an ordered, relatively stable set of specialized enterprises that produce competitive products, taking into account the territorial localization of the economic sector. V.K. Shcherbin defines innovation clusters as complexes of enterprises (industrial companies, research centers, scientific institutions), public administration bodies, trade unions, public organizations based on the territorial concentration of networks of specialized suppliers, main producers and consumers connected by a technological chain. Based on the research conducted by the author, the author gave his own definition of the concept of «regional cluster», which is considered as a set of enterprises of related industries, the key role in the formation of which is played by the resource, historical and economic potential of a particular region. We also carried out a theoretical and methodological analysis of the formation of regional clusters in the context of sustainable development of territories, based on matrix analysis methods. The contribution of Ukrainian, Belarusian and Russian scientists to the theory of cluster economic development was systematized by author, and key features of research were highlighted. The main aspects of the formation of regional clusters are considered, which made it possible to identify the main features of their functioning. The author’s hypothesis was put forward regarding the influence of system, process and situational approaches on the activity of clusters. The analysis made it possible to systematize the impact of the above-mentioned approaches on the activity of clusters depending on the stage of the life cycle. The stages of cluster formation, structural and functional intracluster connections based on process, system and situational approaches are studied, and approaches to the formation of cluster classification features are analyzed.

Spatial Clustering of Foreign Direct Investment: The Case of Japanese Automotive Suppliers in Mexico

The arrival of Japanese investment in the Mexican automotive industry has caused an increase in the economic dynamism of the Bajio region, especially since the entry into force of the Mexico-Japan Economic Partnership Agreement in 2005. Previous research has been conducted from different perspectives explaining the spatial distribution and agglomeration of Japanese enterprises in host countries; however, studies that employ measurements of spatial clustering for Japanese firms are still scarce. For the present research, a unique spatial georeferenced database of Japanese automotive suppliers was created to identify the clustering patterns of firms. The results suggest that Japanese automotive supplier firms in Mexico favor spatial proximity. The use of spatial measurements of concentration provides evidence to further understand the presence of agglomeration of Japanese firms in the automotive industry.

Location patterns of service activities in large metropolitan areas: the Case of São Paulo

We present a set of detailed evidence about the location patterns of service activities in the largest and most important Brazilian metropolitan region, the Sao Paulo Metropolitan Region (SPMR). Different from previous analysis of this big urban agglomeration, our results are obtained using a unique dataset of geocoded firms and a distance-based measure of firms’ location, thus not susceptible to the modifiable areal unit problem (MAUP). We find that around 89% of 3-digit service sectors present significant defined location patterns and, based on maximum distances where significant location patterns are observed, identify spatial location of clusters of some activities. Our results also indicate that firms’ activities of FIRE (finance and real estate), IT-related services, and high human capital-based services present the highest probability of location at shorter distance from each other. The tendency for location at shorter distances between firms engaged in these activities contrasts with the more decentralized patterns observed for firms involved in retail and urban infrastructure services. Additional results indicate that both the location patterns of activities and the degree of proximity or agglomeration of firms are positively associated with human capital, the degree of product differentiation, and the degree of inter-sector dependence between activities.

Industrial clusters, networks and resilience to the Covid-19 shock in China

We examine how Covid-19 resilience of Chinese firms varied with a cluster index (measuring spatial agglomeration of firms in related industries) at the county level. Two data sources are used: entry flows of newly registered firms in the entire country, and an entrepreneur sample survey regarding operation of existing firms. Both show greater resilience in counties with a higher cluster index, after controlling for industry dummies and local infection rates, besides county and time dummies in the entry data. Reliance of clusters on high density informal entrepreneur hometown networks and closer proximity to suppliers and customers help explain these findings.