Economic Geography, Industrial Agglomeration And Spatial Difference Of Total Factor Productivity

Since the Reforming and Opening, China has achieved great economic success that attracts worldwide attention. Regional economic growth and social development both in terms of scale, quality, social participation level and degree of reform are of no parallel in history. This great era also provides incomparable opportunities for economic theory and empirical researches. China’s regional development offers the richly endowed "nature experiments" conditions for market system innovation, theoretical breaking-through, empirical evidence study and economic policy proposals, in which the past three decades are exiting for all of us.Economic geography and industrial agglomeration are major sources of China’s long-term stable regional economic growth, they are also the major reasons of causing regional disparity increases. If the economic geography environment influenced and reshaped the local industries’spatial structure, industrial agglomeration would be the result of individual firms’ self-selection under the given circumstances, production environment and organizational patterns, etc. Regional economic development needs to consider the first and second nature’ endowment. Economic geography factors determine the local economic development comparative advantage. Industrial development needs of consider the spatial allocation efficiency and production organization patterns. Agglomeration economic level and patterns determine the development of local industrial competitiveness. City, industry and individual firms are not isolated in time and space. Economic geography and industrial agglomeration as the external production environment always affect the economic unit’ production performance and decision making.China’s economic growth is driven by regions while cities are the engine of regional economic growth. Spatial factors are playing the key role throughout the entire thirty years’ regional economic development path and historical evolution. From the spatial perspective, China’s Reform and Opening can be regarded as the history of economic geographic evolution. China’s economic geographic territory in different periods presented different spatial scale, market category, administrative division, which is distinctively different with other developing nations’ economic practice. Spatial division not only institutionally reshaped and influenced the factor distribution direction and means, but also provide differential market environmental implications for central-local governance and policy making. The implication of spatial division within market structure and governance relationship makes the Eastern region of China long enjoyed from preferential policies in the past thirty years, which also greatly changed China’s overall economic geographic territory.This dissertation argued that China’s regional economy growth strategy can be described and concluded as the following phrase:"Take the space for time, take the time for space". From the beginning of Reform and Opening, the central government initiated development regional development strategies:from the "Coastal Open Cities", and later period of time in advocating the construction of "Special Economic Zones" and, till recently the development of "National Economic and Technological Development Zones". According to the regional development situation, environment and local market demand, the central-local government strategically announced the regional preferential policies which are concluded as "let some regions develop first. in which to boost and drive the peripherals". Such strategic instructions are designed to make full use of the first mover advantage, seize the historical development opportunity, promote China’s gradual reform both in terms of economic institutions and economic geographic territory, realize the priority development strategy of develop the Eastern regions in order to boost and drive the development of the western regions. The use of spatial advantages to seize the development opportunities, in a long time greatly promoted the national economic growth and technical progress level. However, spatial preferential development policy exacerbated the market segmentation and regional disparities, in some sense, this kind of development is at the expense of exploiting the Middle and Western regions’resource advantage. Along with capital and technology accumulation, in the past ten years, the focus of China’s regional economic growth strategy has switched to Middle and Western regions. No matter the initiated development project of the Northeastern Old Industrial Base Development, the Great Western Development Strategy, or the Rise of the Middle Region, the regional development requirements for northeast, middle and western regional are gradually fulfilled by "capital, labor and technology" accumulation. Two decades of accumulation in the Reform and Opening process not only means national technology development with cyclical cumulative effect is strengthened, but also indicates that the development conditions for the less developed regions are met which enable them to take the "later mover advantage". With the expansion of domestic market demand, the deepening of reform and development of the Eastern region’s "spillover effect", China’s regional development strategy are gradually transferring from the resource intensive, labor intensive pattern to capital intensive, technology intensive strategic path. Regional industrial policy is progressively changing from the scale economy growth to the development of local industrial competitiveness.Many Chinese scholars studied Chinese economic geography and industrial agglomeration, which include the relationship between Chinese industrial agglomeration and regional economic growth, the sources and determinants of agglomeration economies, industrial agglomeration and local income disparities, local protectionism and regional specialization and so on. From various perspectives, these researches explained the characteristics and relationship between economic geography and industry agglomeration. While researches both consider the contributions from economic geography, industrial agglomeration on local economic growth, economic links between industries and firms productivity are still rare. Considering the existing tempo-spatial regional disparities, this dissertation is designed to take different angles in one constructive framework in which to analyze the impact of regional economic development in China and dynamic mechanism embedded. The dissertation argued that simply apply one spatial dimension or agglomeration economy feature to explain and answer the Chinese economy growth would cause overgeneralization problems, it’s research conclusion may have the bias both in terms of spatial applicability and analytical comparability. This dissertation aimed to provided one integrated and comprehensive analysis for the influences of China’s economic geography externalities on local production performance.Compare with the traditional studies on the relationships between new economic geography and economic growth, the dissertation provides more detailed analysis of the relationship between the above two issues. The object of this study are specifically referring from the economic geography to industrial agglomeration, from regional economic growth to market factor allocation efficiency and firms’production performance. The second research focus lies on the regional and urban total factor productivity estimation and decomposition. Estimate the influence and contribution of regional economic geography, industrial agglomeration on local production technology progress, technical efficiency, scale efficiency and factor allocation efficiency. In short, this dissertation studies the efficiency of spatial agglomeration.The third research focus of this dissertation is of examining the micro-foundation of agglomeration economy both in terms of degree and patterns. And, providing the macro-and micro-empirical evidence based on regional, city and firm level data. This study found that the dynamic source of China’s regional and provincial economic growth is of industrial upgrading and technological progress; the dynamic source of urban economic growth is of the factor input pattern, scale economy externality and spatial economic connections, and; the individual firms’ productivity is determined by its’ spatial market system, economic geography, industrial organizations externalities, etc.The structure of this dissertation is designed as follows:chapter one discusses the general research questions; chapter two provides relating literature and corresponding comments of different trends regarding the evolution of new economic geography; chapter three analyzes the relationships between regional total factor productivity, industrial agglomeration and economic growth from the regional and provincial macro-scope; chapter four investigate the contributions of agglomeration density externality on urban productivity growth; chapter five discusses the relationships among urban spatial connections, factor allocation efficiency and urban total factor productivity; chapter six provide both theoretical and empirical analysis in answering the influences of intra-urban spatial connection, inter-urban industrial organization patterns on urban and firm production efficiency; chapter seven considers the Chinese characteristics in real practices. Given the ongoing market institutional distortion from the realistic concern, this chapter provide mechanical explanation and empirical analysis for the influence of distortion on urban agglomeration economy, industrial agglomeration patterns and firm productivity growth. The last chapter concludes the whole dissertation and provides some constructive suggestions for policy making.