Urban Agglomeration Economies Research Articles

The effects of digital economy on manufacturing resource allocation efficiency across Chinese cities: a spatial economic perspective

ABSTRACT The development of digital economy provides significant impacts on spatial distribution of industries. Using microdata from Chinese manufacturing enterprises and adopting a spatial economic perspective, this study reveals that the digital economy exerts non-linear impacts on resource allocation. As the level of urban digital economy improves, the efficiency of manufacturing resource allocation shows an inverted U-shaped trend, and high hierarchy cities exhibit higher critical values. The study finds a positive spatial correlation in manufacturing resource allocation efficiency across cities; however, the growth of digital economy in neighbouring cities may lead to backwash effects and impede local improvements in allocation efficiency. The mechanism analysis indicates that the digital economy primarily affects spatial resource allocation through urban agglomeration economies and diseconomies. Consequently, economic agents and policy makers in cities should consider the dual effects of ‘location optimization’ and ‘transforming the economy from substantial to fictitious’ during digital transformation processes to select optimal development paths and improve allocation efficiency.

Factors behind the resilience of rural startups

Rural areas are characterized by sparse population, low population density, remoteness, and population aging, which can discourage startups and undermine their financial performance, as the theory of urban agglomeration economies suggests. However, many studies have shown that companies created in rural areas survive longer than those created in urban areas, which seems contradictory. This paper aims to identify the factors that explain this rural resilience. We analyzed all of the startups founded in Spain over 10 years. We used statistical matching methods to test for the effect of the location while controlling for founding conditions and environmental factors. Our study confirmed that few startups are created in rural areas and they grow less, but their survival rate is slightly higher than those established in urban areas. We found that high subsidies, low operating costs, high labor intensity, a slow but low-risk growth pattern, and other foundational conditions and external factors contribute to explaining rural resilience. Nonetheless, additional factors, including the traits of rural entrepreneurs and the lack of alternatives to bankruptcy, as proposed by the entrepreneurial opportunity theory, also matter.

There’s no time like the present: path-dependent urban growth, agglomeration economies and congestion externalities in contemporary Athens

AbstractDespite a long settlement history, empirical investigations of the role of path dependency in the long-term evolution of human populations are scarce in Europe, and especially in the Mediterranean countries. Using spatially explicit econometric techniques, our study discusses the empirical evidence stemming from a quantitative analysis of the spatial distribution of population growth rates in 115 districts of metropolitan Athens (Greece) over one century, distinguishing path dependency from the impact of other socio-economic forces on long-term urban expansion. The empirical findings of this study clarify how path-dependent regulation of population growth was heterogeneous over time and space, and depends on the specific stage of the city life cycle. After an initial period when path-independent population expansion reflected the inherent impact of exogenous shocks, path-dependent growth was associated with compact urbanization governed by agglomeration and scale advantages. Path-dependent growth was less intense during suburbanization, when the population spread over larger areas.

High-speed rail network and urban agglomeration economies: Research from the perspective of urban network externalities

High-speed rail (HSR) has greatly promoted cross-regional economic activities, but few studies have been conducted from the perspective of urban network externalities (UNEs). Based on data from China from 2008 to 2019, this paper constructs an HSR operation network model to study the impact of the network position (NP) on urban agglomeration economies (UAEs) by jointly employing network and econometric analysis methods. The findings suggest the following: (1) Improvements to NP significantly enhance UAEs. Improving the comprehensive NP by 1% will increase urban output per capita by 193.5–226.8 RMB. The findings hold under several robustness tests. (2) The NP's facilitation of growth in UAEs is reflected mainly in national core cities, while the impact of peripheral cities reflects a “∽-shaped” curve as their distance from each nearest neighboring core city changes. (3) From the temporal-dynamic perspective, the NP's impact on UAEs appeared one year before the HSR line was opened and was fully realized three years after the opening of the HSR. (4) Investment agglomeration and expansions in borrowed size are the main mediating mechanisms whereby NP facilitates UAEs.

The social profitability of rural roads in a small open economy: Do urban agglomeration economies matter?

AbstractThe effects of a rural roads programme depend on labour mobility, how the programme is financed, and agglomeration economies. If financed by a rural poll tax and cross‐price effects and agglomeration economies are sufficiently small, the wage will rise, with some return migration. Taxes on trade act as countervailing distortions, yielding urban households some relief. Rural‐urban commuting promotes the exploitation of agglomeration economies; taxes on international trade are then inferior to a poll tax. The change in the value, at producer prices, of the rural sector's net supply vector can be a poor measure of the programme's social profitability.

Urban agglomeration economies and their relationships to built environment and socio-demographic characteristics in Hong Kong

Agglomeration economies have become commonplace globally as a means to promote productivity advantages in cities. Despite that previous studies have examined external determinants such as input resource, labor pooling, and knowledge spillovers, a small portion of literature aims at emphasizing the impacts from local contexts. This research therefore attempts to investigate the spatial variations of the sectoral agglomeration economies and their relationships to built environments and socio-demographics. By computing the location quotient (LQ) of sectoral employment in Hong Kong, the spatial distribution of agglomeration economies is measured at the level of District Council Constituency Area (DCCA). We then derive built environment and socio-demographic factors and evaluate their associations with the agglomeration economies using ordinary least squares regression (OLS) and geographically weighted regression (GWR) models. Our results exhibit a considerable spatial heterogeneity across economic sectors, highlighting that sectoral economies tend to be concentrated in a few particular regions. Further, the findings from regression analysis reveal that such clustering activities have distinct and close relationships with locational factors, suggesting that sector-specific agglomerations economies are preferential to various locational factors. Ultimately, data-driven geographical evidence is supplemented by this study to current literature for understanding local agglomeration economies in a metropolitan context. The implications from our research findings and policy recommendations for local and regional economic development are discussed.

A new analytical framework for urban size and policies

ABSTRACT This study develops a new comprehensive analytical framework for use in achieving optimal city size and conducting policy studies. The EE–EC framework simultaneously considers economic productivity, environmental pollution, and traffic congestion. We take Beijing as an example and perform a simulation analysis using this framework. We find that, in 2010, Beijing was 10% oversized and transportation and industrial policies were more effective than environmental policies for maximizing Beijing’s net urban agglomeration economies. The framework presented in this study is not only flexible in the sense that it can be easily applied to other cities, but also urgently needed by policy makers.

Increasing returns to scale in the towns of early Tudor England

Urban agglomeration economies make cities central to theories of modern economic growth. There is historical evidence for the presence of Smithian growth and agglomeration effects in English towns c.1450-1670, but seminal assessments deny the presence of agglomeration effects and productivity gains to Early Modern English towns. This study evaluates the presence of increasing returns to scale (IRS) in aggregate urban economic outputs—the empirical signature of feedbacks between Smithian growth and agglomeration effects—among the towns of 16th century England. To do so, we test a model from settlement scaling theory against the 1524/5 Lay Subsidy returns. Analysis of these data indicates that Tudor towns exhibited IRS—a finding that is robust to alternative interpretations of the data. IRS holds even for the smallest towns in our sample, suggesting the absence of town size thresholds for the emergence of agglomeration effects. Spatial patterning of scaling residuals further suggests regional demand-side interactions with Smithian-agglomeration feedbacks. These findings suggest the presence of agglomeration effects and Smithian growth in pre-industrial English towns. This begs us to reconsider the economic performance of Early Modern English towns, and suggests that the qualitative economic dynamics of contemporary cities may be applicable to premodern settlements in general.

Re-study on Chinese city size and policy formation

The past four decades, especially the first decade of the 21st century, have witnessed dramatic development in terms of industrialization and urbanization in China. In the process, both, urban agglomeration economies and diseconomies played important roles, although the latter has long been neglected by researchers. Taking economic productivity, environmental quality, and commuting costs into account, this paper re-studies the optimum size of Chinese cities. Based on three reasonable assumptions, we prove the existence and uniqueness of the optimum size in a particular city, which is affected directly by commuting costs, preference degree for environmental quality, as well as industrial structure. Using China's population census and urban yearbook data in 2000 and 2010, we find that city size imbalances in China are obvious. First-tier cities are oversized, while other cities are undersized, and this imbalance becomes more significant while considering urban environmental quality.

Water for Arid Regions: An Economic Geography Approach

This paper develops a two-region trade model to consider how the uneven allotment of water resources and the availability of interbasin water transfers affect the intraregional distribution of land between urban and agricultural use and the interregional distribution of the population when regions vary in natural amenities, agricultural productivity, and urban agglomeration economies. In each region, urban and agricultural sectors compete over a fixed quantity of land and agricultural goods face transport costs. Three different trade regimes for the agricultural good are considered: autarky, incomplete specialization, and complete specialization. Under autarky, a rise in the agricultural productivity of the water importing region increases the local urban sector. Once regions begin to trade, an increase in the agricultural productivity of the water importing region increases the urban sector in the water exporting region. An increase in natural amenities in the water importing region increases the local urban population driving agricultural production to the less productive water exporting region. Urban agglomeration economies have a small impact when the population is more evenly divided but large impacts when there are large population differences between regions. Reductions in the available supply of water increases both water and agricultural prices and may reduce the quantity of land devoted to agricultural production. A graphical example is presented to show the impact of the parameters on land use patterns, population size and regional prices. The model is then calibrated to reflect stylized facts for California.

Urban agglomeration economies and industrial energy efficiency

This study investigates the mechanism behind the effects of urban agglomeration economies on industrial energy efficiency in theory. On this basis, we match firm level data and panel data of 283 prefecture level and above cities from 2003 to 2010, and we use the dynamic spatial Durbin model to estimate the effects of urban agglomeration economies on industrial energy efficiency. The results reveal that in both the short and long term, the specialization and diversification agglomerations of industries do not have a significant effect on the city itself, but they do significantly reduce the energy efficiencies of the neighboring cities. Therefore, the free rider and “Race to the bottom” effects of industrial agglomeration on industrial energy efficiency exceed the demonstration and synergistic effects. Urban agglomeration has a significant negative spillover effect, and the long-term effect is greater than the short-term effect. Furthermore, we investigate the heterogeneity of the effects based on the industry subdivision. The homogeneity of the industrial structure between cities means that specialization and diversification do not produce the expected promotion effect on industrial energy efficiency in local and surrounding cities in the short and long term, but the degree to which this effect is inhibited differs.

Transport‐induced agglomeration effects: Evidence for US metropolitan areas

AbstractWhile the interaction between transport and agglomeration economies is widely accepted, there is insufficient research attempting at a direct empirical quantification. Using a balanced panel dataset for US metropolitan areas, we estimate a system of simultaneous equations to measure the indirect effect of urban agglomeration economies which arises through transport provision. Our findings suggest that public transit reinforces the effect of urban agglomeration, whereas road lane miles appear to weaken it. The results highlight the importance of public transit in supporting positive urban agglomeration externalities.

The effects of urban agglomeration economies on carbon emissions: Evidence from Chinese cities

This study expounded the mechanism of the effects of urban agglomeration economies on carbon emissions based on the theory of agglomeration economies. Based on the STIRPAT model, we built an econometric model. We then used the method of spatial econometrics to estimate the effects of urban agglomeration economies on carbon emissions through matching the firm-level data and panel data of 283 prefecture level and above cities from 2003 to 2010 in China. The results reveal that both specialization and diversification agglomeration can significantly promote carbon emission reduction in local and neighboring cities through the agglomeration externalities. Specifically, specialization agglomeration of low-end technology industry has significant reduction effects on carbon emission of local and neighboring cities in most cases, while the diversification agglomeration has increased it. The specialization and diversification agglomeration of midrange technology industry have increased the carbon emissions of the local and neighboring cities. Furthermore, the specialization and diversification agglomeration of high-end technology industry have significant carbon emission reduction effects in varying degrees for the local and neighboring cities.

Do city–county mergers in China promote local economic development?

AbstractMunicipal mergers have become a worldwide phenomenon in the past few decades, primarily advanced to exploit economies of scale. While most evaluations of municipal mergers have focused on the efficiency of local public goods provision, it is rare in the literature to explore how such mergers promote economic growth in a developing country context. This research investigates the economic consequences of a policy experiment of city–county mergers (che xian she qu) in China during the period 2000–2004. Using comprehensive datasets at city, county and firm levels, we present evidence that the merger significantly increases local economic development, and the magnitude of the effect depends on local endowments related to agglomeration forces. The results are robust to a number of different model specifications. We further verify that improved transport infrastructure and urban agglomeration economies after merger are potential contributors to the positive merger effects.

US regional population growth 2000–2010: Natural amenities or urban agglomeration?

AbstractUsing a spatial hedonic growth model, this paper empirically assesses the roles of natural amenities and urban agglomeration economies in US regional growth patterns from 2000 to 2010. Natural amenities and urban agglomeration are measured using the USDA Economic Research Service county classification codes. The general finding is that natural amenities and urban agglomeration both influenced regional growth. Yet, the natural amenity ranking is estimated to be positively related to increased productivity over the period rather than increased attractiveness to households. Urban agglomeration is positively related to increased amenity attractiveness to households. Within census regions, household natural amenity demand played a stronger role in non‐metropolitan areas.

Island city formation and urban island studies

Regional, national and global cities are disproportionately located on small islands and archipelagos. The ‘spatial turn’ within island and urban geography increasingly privileges abstract notions of space, yet the prevalence of big cities on small islands suggests that sensitivity to place‐specific spatial factors is necessary if we are to understand both islands and the urban. Whereas previous studies of island cities have tended to underplay the effect of either the island or the urban, the present paper advocates an urban island studies that seeks to explain why islands and cities are so strongly associated. The paper argues that benefits of island spatiality encourage the establishment of seats of government and trading posts on small islands: Territoriality benefits assist political and economic elites in maintaining local authority and projecting power outwards, defence benefits help protect local powerholders from external military threat and transport benefits make strategically located small islands ideal sites for port industries. Land scarcity caused by island spatiality subsequently leads to urban densification and powerful agglomeration economies, resulting in the formation and growth of island cities. Examples from island cities and urban archipelagos such as Copenhagen, Guangzhou, Hong Kong, Lagos, Macau, Mexico City, Mumbai, New York City, Paris, Tokyo and Zhoushan demonstrate that urbanisation and city formation occur in place as well as in space. Orienting toward urban island studies provides insight into both island and urban processes.

Agglomeration, Urban Growth and Infrastructure in Global Climate Policy: A Dynamic CGE Approach

This paper presents an integrated model of urban agglomeration economies within a computable general equilibrium (CGE) model of global economic activity, energy use and carbon emissions to explore the theoretical and empirical nature of the interdependence of cities and the world economy in a climate policy context. Based on calibration data for 74 major OECD agglomerations, the integrated model is used to gauge the long-term impact of: i) global carbon pricing on urban systems and the economic activity; ii) urban infrastructure development on the economic costs of curbing carbon emissions. Importantly, it is found that combining urban infrastructure and carbon pricing allows for stringent emissions reduction targets, while still avoiding the economic and welfare costs of the carbon price only.

Agglomeration and Job Matching among College Graduates

We study one potential source of urban agglomeration economies: better job matching. Focusing on college graduates, we construct two direct measures of job matching based on how well an individual’s job corresponds to his or her college education. Consistent with matching-based theories of urban agglomeration, we find evidence that larger and thicker local labor markets help college graduates find better jobs by increasing both the likelihood and quality of a match. We then assess the extent to which better job matching of college-educated workers increases individual-level wages and thereby contributes to the urban wage premium. While we find that college graduates with better job matches do indeed earn higher wages on average, the contribution of such job matching to aggregate urban productivity appears to be relatively modest.

Agglomeration and job matching among college graduates

We examine job matching as a potential source of urban agglomeration economies. Focusing on college graduates, we construct two direct measures of job matching based on how well an individual's job corresponds to their college education. Consistent with matching-based theories of urban agglomeration, we find evidence that larger and thicker local labor markets increase both the likelihood and quality of a job match for college graduates. We then assess the extent to which better job matching of college-educated workers increases individual-level wages and thereby contributes to the urban wage premium. We find that college graduates with better job matches do indeed earn higher wages on average, though the contribution of such job matching to aggregate urban productivity appears to be relatively modest.

MILITARY SITE’S CONVERSION MANAGEMENT PROCESS AND FIRM’S COMPETITIVENESS: ENTREPRENEURIAL EVIDENCES

The main goal of this study is to propose a decision-making approach to explore the relationship between military air bases’s conversion processes and firm’s competitiveness. During the past four decades the conversion of Defense air bases to new civilian uses played a central role in determining social and economic regional competitiveness, demonstrating that the management process have impacts on urban assets, agglomeration economies, urban infrastructures, labor and cost factors, development policies. Also Competitiveness, mainly that of Small and Medium Enterprises (SMEs), has constituted a very interesting research field over the past 20 years. Nevertheless the relevant impact on firm’s strategy and performance, few researchers in strategic management and governance have investigated the effectiveness of site’s conversion process to increasing firms competitiveness. The paper shows how the conversion processes on an integrated services area can create business opportunity, can facilitate entry in new markets, facilitate new innovation processes, facilitate new management, control and commercial services, increases business linkages and agreements for local firms (Business Networking). The study presents the case of conversion process of ex Nato Base of Comiso (Sicily), important military site in regional area characterized by high entrepreneurial development. Eempirical evidence of the case study consists of a European benchmarking conversion bases and of a survey of 48 local firms. Finally the study presents valuable conversion projects and strategic perspectives for managers, entrepreneurs and policy-makers.