Agglomeration Economies Research Articles

Spatial pattern, and evolution of China’s urban agglomerations

China's urban agglomeration is not only crucial to tackle with the more and more contradiction between population, resources and environment, but also an important spatial actor to increase the global competitiveness and promote the transformation of China's economic development mode. In the national "14th Five-Year Plan" in 2021, it is proposed to "promote the coordinated and development of large, medium-sized and small cities and towns based on urban agglomeration and metropolitan area". Generally, 19 urban agglomerations designated in this Plan are heterogeneous in development level and national functions. To this end, from the nature of urban agglomerations, especially on agglomeration economy and functional urban region hypothesis, the research focuses on the spatial pattern and changes of these 19 areas mainly based on the 6th and 7th national census. The findings show that, China’s UAs are unique in driving forces, and spatial patterns as well. China’s UAs are more state-led, though now the marketing forces more and more crucial. The UAs have been evolved from the early planned economy period to the reform and opening up period, and then to the further development of the Socialist market economy until now. Unlike other typical UAs abroad, most of the developed UAs are more specialized in manufacture, not in producer services, though these regions show a remarkable high-end services oriented shift in 2010–2020.

Exploring music geography beyond the West: Clustering and mobility of Chinese musicians in the digital era

This study explores music geography beyond the Anglo-American circle through an investigation of the spatiality and mobility of musical workers in a Chinese context. Drawing on a dataset containing the information of 3,689 influential musicians in China’s music market, we investigated the (1) geographical landscape of China’s music industry, (2) spatial mobility of musicians at different stages of their careers, and (3) impact of digital technologies on the clustering of creative musical workers. Our study discovers a conspicuous clustering of post-work musicians in large metropolises, which reflects both the dynamics of scale and scope economies and the influence of state on the offering of cultural infrastructures and institutions in China. Most Chinese musicians have high trans-regional mobility and target locations (increasingly on the Chinese mainland) with large consumer markets or important art education institutions. The impact of geographical distance and agglomeration economies on musicians’ mobility varies at different stages of their careers. In addition, while digitalisation generates certain decentralising effects, enabling more musicians in formerly peripheral areas to enter the market and reducing the need for long-distance mobility, it also strengthens the advantages of dominant music clusters and produces precarious and volatile consequences in China’s music industry.

How does regional economic integration affect carbon emission efficiency? Evidence from the Yangtze River Delta, China.

Rapid urbanization and industrialization promote economic growth as well as bring carbon emissions, which seriously threaten the eco-environment and socioeconomic sustainable development. Facing increasing resource constraints, improving carbon emissions efficiency (CEE) is conducive to promote coordinated development of economy and environmental protection. In recent years, regional economic integration (REI) has rapidly developed. It can not only promote factors flow between regions but also achieve industrial and economic agglomeration. However, few studies have been reported in the literature about the relationship between the REI and CEE. In this study, we first illustrate how the REI influences CEE in theory, then take the Yangtze River Delta (YRD) as a case study to conduct empirical research. The results show that (1) the overall CEE value in the YRD has exhibited an upward trend from 2000 to 2020, and its spatial distribution has revealed a significant auto-correlation pattern. (2) On the whole, the REI act a noteworthy positive impact on CEE. When considering types of cities, it is found to have significant positive impacts for the CEE in economically developed cities, while it exhibits a negative impact in the less-developed ones. (3) Upgrading industrial structure and increasing per capita GDP can promote the CEE, but hinder its growth in surrounding areas. Our findings suggest that the government should formulate a unified overall plan to facilitate REI development and establish a modern industrial system of clean and low-carbon to promote regional sustainable development.

Adapting to an Economic Crisis: The Market System vs Hierarchical Governance

This research investigates how exchange governance and the local market system influence a firm's adaptability to an economic crisis. This paper unveils a nuanced performance disparity by leveraging a rich dataset of manufacturing firms in Spain. While vertically integrated firms exhibit superior performance during periods of stability, they confront more significant setbacks in the aftermath of economic crises. This study demonstrates that the extent of this performance divergence is contingent upon the thickness of the local market system, supporting the hypothesis that vertically integrated firms derive reduced adaptive benefits from agglomeration economies. These findings shed light on the dynamic interrelationship between a firm's vertical scope and geographical context. They underscore the significance of a holistic assessment when determining the optimal approach to exchange governance. This assessment must evaluate the advantages and drawbacks of autonomous versus coordinated adaptation across economic cycles and geographies.

Can digitalization effectively promote green energy efficiency? The linear and nonlinear relationship analysis.

In light of the integration of digitalization and the energy revolution, digitalization can be integrated into the energy industry to develop energy-saving technologies and improve resource allocation efficiency. On the basis of 2013-2019 Chinese provincial panel data, this paper measures the level of green energy efficiency based on the super-EBM-DEA model and analyzes the linear relationship, nonlinear relationship, and potential mechanism between digitalization and green energy efficiency. The findings indicate that (1) overall, both China's digitalization and green energy efficiency formed a steady upward trajectory during the sample period. Digitalization showed a spatial characteristic of extending and spreading from the eastern region to the central and western regions. Green energy efficiency was characterized by obvious regional heterogeneity. (2) Progress in digitalization has a significant driving effect on green energy efficiency. Subdimensional analysis shows that this driving effect mainly comes from digital development and digital transactions. (3) The impact of digitalization on green energy efficiency presents a threshold effect of economic agglomeration (with a threshold of 0.0257 and a marginally increasing, positive driving trend) and population agglomeration (with a threshold of 4.2750 and a marginally decreasing, positive driving trend). (4) Decomposing changes in green energy efficiency into scale efficiency and pure technical efficiency, this study shows that pure technical efficiency gains due to digitalization are the main driver of green energy efficiency improvements. Finally, some specific policy recommendations are proposed.

The Increasing Trend in Effective Tax Rates in India: Role of Macroeconomic Factors, Tax Policy Changes and Firm Characteristics

We show that over the last two decades, India’s effective tax rates (ETRs) have increased by 7.8 percent, which contrasts with the downward trend in ETRs for US firms documented by Dyreng et al. (2017). After controlling for changes in firm characteristics, macroeconomic factors, and tax policy changes, our findings show that ETRs increased by 0.37 percent per year during the sample period. Further, we examine the proposition that public firms are more likely to engage in non-conforming tax management than private firms. We observe a stronger upward trend in ETRs among private firms than public firms, consistent with the capital market pressure hypothesis. The permanent book-tax difference is the primary driver of the ETR trend for both private and public firms. Our findings contribute to the recent debate about the trend in ETRs by undermining concerns regarding rising corporate tax avoidance and reinforcing the argument that improved tax efficiency and economies of agglomeration in countries with large domestic markets contribute to higher ETRs. JEL Codes: G38, H25, H26, H32

Place-based policy and urban green technology innovation: Evidence from the revitalization of old revolutionary base areas in China

Based on panel data of 282 cities in China from 2006 to 2019, this study uses the revitalization policy of old revolutionary base areas (ORBAs) as a quasi-natural experiment and investigates the effect of place-based policy on urban green technology innovation (GTI) using a multi-period difference-in-differences (DID) model. The results indicate that the revitalization policy of ORBAs significantly promotes GTI, resulting in a 23.46% increase in urban green patent applications. Mechanism tests show that the revitalization policy of ORBAs can promote GTI through three channels: increasing fiscal technology expenditure, promoting economic agglomeration, and strengthening environmental governance. Heterogeneity analyses reveal that China's revitalization policy for ORBAs has a significant promotion effect on green utility model patents, but little effect on green invention patents. Moreover, the promotion effect is more pronounced in northern cities and cities with lower administrative levels. This study not only adds to the body of knowledge on the implementation effects of place-based policy and the factors influencing GTI, but also serves as a guide for policymakers in designing place-based policy and promoting urban GTI.

Analysis of Regional Social–Economic Spatial Pattern and Evolution along the Beijing–Hangzhou Grand Canal

With the proposal of the Beijing–Hangzhou Grand Canal Cultural Belt, the Beijing–Hangzhou Grand Canal has become an indispensable component of China’s economic development pattern. Despite relatively high regional-economic-development levels along the canal, there still exists a common imbalance in regional development which will hinder the high-quality collaborative development of the region, highlighting the importance of measuring this disparity. This study adopts the district and county as spatial scales and selects five dimensions: economic growth, livelihood benefits, green ecology, innovation drive, and food guarantee in order to construct a comprehensive socio-economic index. Entropy weight method, Moran index, and Theil index analyses are used to examine the recent ten-year evolution laws in regional socio-economic spatial patterns along the Beijing–Hangzhou Grand Canal. Results indicate that socio-economic indicators designed for each dimension effectively measure both individual districts’ and counties’ economic situations as well as those of entire regions. In 2021, limited significance was observed regarding the level of regional economic agglomeration along the Grand Canal region, suggesting a tendency towards fragmented development rather than forming a well-coordinated model. Over the decade from 2011 to 2021, there was an increase in social and economic agglomeration. From a city unit perspective, developmental disparities among districts and counties within cities follow three distinct patterns. Cities at different stages of development can learn from each other’s models to enhance integration cooperation and collectively promote high-quality economic advancements in the Grand Canal region.

Effect of Environmental Courts on Pollution Abatement: A Spatial Difference-in-Differences Analysis

This paper investigates the impact of environmental courts on pollution abatement at the city level, utilizing the establishment of environmental courts in China as a quasi-experiment. A spatial difference-in-differences model is employed to control for the influence of environmental courts on neighbouring non-pilot cities. The results underscore the effectiveness of environmental courts in reducing industrial pollutant emissions, evident in both the pilot areas and adjacent non-pilot areas. The influence of environmental courts on pollution abatement is more pronounced in cities characterized by stronger environmental regulations, higher level of economic agglomeration, and higher level of openness. Mechanism analysis shows that environmental courts promote environmental supervision by governments, public participation in environmental protection, and expenditure on environmental governance by firms. In summary, this paper unveils the tangible effects of environmental courts on pollution abatement and elucidates the mechanisms underpinning this relationship. These findings provide timely implications for regulators concerned with environmental protection.

Investigating economic synergy in the spatial structure of Tehran metropolitan region

Economic synergy is essential in functional polycentric metropolitan regions due to their high collaborative potential between area centers and subcenters, which results in greater competition. Our results indicate that, based on the theory of economic geography, economic activities in metropolitan regions tend to be concentrated and agglomerated initially due to economies of scale, before intentionally decentralizing due to diseconomies of scale arising from agglomeration. The spatial structure of metropolitan regions also tends to be morphologically polycentric, although there is evidence for a tendency toward functional polycentricity as well. Tehran metropolitan region has attracted industrial workshops over time due to the economies of scale and agglomeration economies, which in turn have increased functional centralization and spatial concentration in the region. Yet in recent decades, after the implementation of spatial policies of economic synergy, both the rate of specialization and diversification in the region's production structure have gradually increased; this can be considered a result of spatial policies of economic synergy. The example of Tehran's illustrates how policing strategies can promote a region's transition from monocentric to functional polycentric, enhancing the economic role of medium‐sized cities, creating specialized centers and clustered enterprises, and supporting network interaction between urban centers.

The Spatial Structure and Influencing Factors of the Tourism Economic Network in the Yangtze River Delta Urban Agglomeration

The optimization of a tourism economic network is critical in the promotion of the high-quality development of a regional tourism economy. In order to explore the spatial network structure of the tourism economy of the Yangtze River Delta urban agglomeration and its influencing factors, this study used a modified gravity model and social network analysis methods for evaluation and analysis. The results show the following: (1) the spatial network of the tourism economy in the Yangtze River Delta urban agglomeration in 2016–2021 was characterized by significant non-equilibrium; however, that trend has weakened, and the tourism connections are now stronger in economically developed regions. (2) The density of the network structure was slightly strengthened. The structure of the tourism economy network shows an obvious core–periphery distribution pattern. The external radiation of the center city was enhanced, and the core area of the network expanded. (3) The concept of the “small world” is characterized by a significant evolution from five major associations to four major associations during the study period. (4) The quadratic assignment method (QAP) of regression analysis showed that tourism service reception capacity, tourism information flow, tourism resource endowments and transportation convenience make a significant contribution to the formation of the spatial network of inter-city tourism economic connections. The results of this study can provide a theoretical basis for the optimization of the tourism economic network of urban agglomerations and the scientific decision-making underpinning tourism economic cooperation.

대규모 감염병 이후 회복탄력적 역세권 골목상권 구축을 위한 기계학습모형 기반 업종 다양화 전략

Since the outbreak of COVID-19, the contraction of daily external activities has caused a direct economic impact on alley market districts, and it is necessary to build a resilient alley market to prevent the collapse of the local economy. This study aims to derive a market diversification system by analyzing the cluster classification and industry specialization of the market through the pre- and post-COVID-19 sales of alley markets in subway station areas. Based on the flow of sales, the study classified commercial districts into four types: active, recovering, maintaining, and declining. Through the analysis of the LQ index, we found that the more specialized the market, the more it declines and is disadvantaged by the post-COVID-19 agglomeration economy. Furthermore, the diversification index, a machine learning-based diversification system, was established in order to build a resilient market district by deriving the recommended industries for each market. The findings can be used as a basis for providing diversification strategies and as a method for constructing resilient alley markets to promote connectivity between industries in social disaster situations.

From agglomeration to dispersion: How does China's noncapital functions' relief affect regional development?

AbstractAgglomeration economies can bring about positive externalities, while excessive agglomeration backfires. However, existing literature on place‐based policies mainly focuses on policies that enhance agglomeration economies. Few studies discuss dispersion policies coping with the negative externality from excessive agglomeration. Owing to the unclear effects of dispersion policies, we conduct empirical research on the noncapital function relief (NCFR) policy, which is implemented to decrease the agglomeration in Beijing, the capital of China, and promote the development of surrounding areas. Exploiting the difference‐in‐difference model, we find that the NCFR policy implementation significantly facilitates the economic growth of the surrounding areas of Beijing. Changes in the distribution of new firm entry and population are two main channels, while no significant effect on the productivity is found. Furthermore, areas that are less‐developed could benefit more from the NCFR policy. Our findings may enlighten other developing countries in urban economic management.

Simulating the interrelationships among population, water, ecology, and economy in urban agglomerations based on a system dynamics approach

China's urban agglomerations (UAs) gather most of China's population and economy, but they also facing serious water resources crisis and ecological risks. How to manage the interrelationships among the population, water, ecology, and economy (PWEE) in UAs is crucial for the future of China's urbanization development. Based on the system dynamics (SD) approach, we constructed an SD model for simulating the interrelationships among PWEE in UAs, elucidating the intricate nonlinear relationships between elements of the PWEE system through causal feedback processes and model equations. In addition, we take the Tianshan North slope urban agglomeration (TSNSUA) as an example, which is a representative area where water resources crisis and ecological risk coexist, and designed five scenarios to dynamically simulate the balance of water supply and demand under the high-density population and economic agglomeration, as well as the potential ecological environmental effects in the process of urban spatial expansion. Our findings include: (1) The existing water resources conditions of TSNSUA can continue to support the current population and economic growth rates. If the future development plan follows the status quo continuation scenario, the phenomenon of insufficient water supply will not occur on the premise that the water supply capacity remains at its current highest level. (2) TSNSUA's future urban spatial expansion is predicted to have less overall impact on the ecological environment, and the carbon peak target by 2030 has an opportunity to be achieved. (3) Appropriately reducing the proportion of agricultural water, while strengthening water-saving and ecological protection measures, can ensure that TSNSUA's population and economy maintain a medium to high growth rate. Based on scenario comparison, our recommendation to policymakers is to establish the development objectives of TSNSUA based on the comprehensive development scenario.

Combining agglomeration economies and endogenous growth without scale effects

ABSTRACT Increasing returns to scale is essential to both spatial economics and macroeconomic growth. Spatial externalities imply external local increasing returns that generate an uneven spatial distribution of economic activity. While non-rival knowledge also implies increasing returns – in order to endogenise growth – this is not a spatial micro-foundation. Spatial theories of growth must be carefully specified to avoid unintended conclusions about the spatial economy and scale effects. This is demonstrated with a spatial endogenous growth model without scale effects that includes a spatial mechanism that facilitates agglomeration economies for innovation. In this class of models that combine spatial mechanisms with endogenous growth without scale effects, local increasing returns to scale imply that productivity, growth and interest rates are functions of the economy’s spatial distribution, but not its scale.

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.

Research on the Spatial Disparities and Convergence of Guangdong’s Urban Economy Based on Industrial Agglomeration and Industrial Proximity

Understanding the spatial differences and evolutionary characteristics of urban economy and exploring the impact of industrial agglomeration and industrial proximity on urban economic convergence are the bases for scientifically formulating policies for coordinated regional economic development. This study used QGIS 3.10.10 software and the Theil index to analyze the spatial distribution characteristics and regional disparities of urban economy. Then, a spatial econometric model was constructed to analyze the convergence and influencing factors of Guangdong’s urban economy. The results indicate that from 2006 to 2020, Guangdong’s urban economy grew rapidly and the degree of economic agglomeration gradually weakened, but its economic pattern always maintained the “Core-Edge” structural feature. The interval disparities between the Pearl River Delta Urban Agglomeration (PRD) and the edge area have always been greater than the intra-regional disparities, so they are main source of disparities in Guangdong. In Guangdong’s urban economy, σ-convergence and β-convergence coexist. The conditional β-convergence rate is 0.96~1.53%, and the half-life cycle is 45.4~72.36 years. Compared to the PRD, the economic disparities in the edge area are smaller but the convergence speed is faster and the half-life cycle is shorter. Both industrial agglomeration and industrial proximity have a significant impact on the economic convergence of Guangdong’s cities. Among them, industrial agglomeration has a positive impact, while industrial proximity has a negative impact. There is spatial heterogeneity in the impact of industries on economic development. Industrial agglomeration has a positive impact on the overall economic development of Guangdong, but it is not significant within the regions. Industrial proximity has significant negative externalities in the PRD region, and its impact is not significant in the edge area.

Examining the Impact of China's Digital Economy on Carbon Emissions Intensity: Mechanisms, Regional Variations, and Policy Implications

Reducing carbon emissions is imperative for achieving sustainable development. Given China's rapid growth in its digital economy, it is necessary to explore the impact of digital economy on emissions intensity. This study employs China’s provincial panel data and uses the fixed effect model to examine this impact. The results reveal that digital economy can drop carbon emissions intensity, and the finding remains robust after conducting various endogeneity treatments and sensitivity analyses. This study also explores the mechanisms underlying this effect and finds that the expansion of the digital economy reduces carbon emissions intensity by enhancing green innovation capacity and promoting economic agglomeration. Additionally, we consider electricity consumption of digital economy, and the analysis reveals regional heterogeneity, with the emissions intensity reduction effect being significantly stronger in regions with green power generation compared to non-green power generation regions.

How does economic agglomeration affect carbon emissions at the county level in Liaoning China?

China's regional economic development has become a regional agglomeration model. The implementation of urbanization strategies promotes spatial concentration and catalyzes economic agglomeration. Due to the heterogeneity of economic development at various spatial scales, economic agglomeration has different environmental externalities. Peak carbon and carbon neutrality make it vital to explore these externalities in China's urbanization process, especially at smaller scales. This study uses a long time series of macro data for 42 counties in Liaoning Province and constructs a dynamic spatial panel Dubin model to assess the impact of economic agglomeration on carbon emissions, showing that agglomeration and emissions exhibit an “inverted N-shaped” curve at the county level. There is a threshold of emission increases and reductions for economic agglomeration. When economic agglomeration exceeds a threshold, it shows a significant emission reduction effect. After further decomposition of spatial effects, economic agglomeration affects carbon emissions through two channels: the direct and the indirect effect with urbanization as a mediator. There are also spillover effects of economic agglomeration on carbon intensity, meaning that economic agglomeration impacts carbon emissions in the region and surrounding areas. The results provide a reference for development guidelines and emission reduction policies at the county level, emphasizing the need to balance the economy and the environment in county regional development.

Industry 4.0, servitization, and reshoring: A systematic literature review

The goal of this literature review is first of all to help define, characterise and contextualise the phenomena that make up Industry 4.0 (I4.0), the servitisation of manufacturing and re-shoring; and secondly to explore the strong interactions between them. We conduct a systemic literature review to identify, synthesise, assess and interpret the findings of past studies to address the research question analysed here. Industry 4.0 technologies (I4.0Ts), and particularly increased digitisation, has made for the configuration of new business models and the servitisation of the economy in the context of a new paradigm of competition. This digital servitisation is conducive to networking and enhances the role of proximity. Together with other concurrent factors (changes in relative costs, agglomeration economies, the skills and expertise in data management required by I4.0Ts) this is favouring re-shoring. Technology is always present to a greater or lesser degree as an explanatory factor in re-shoring. The increasing cognitive complexity of technical solutions is enhancing proximity constraints. More frequent, more intense contacts are needed between customers and suppliers in a production set-up that is increasingly customised.