The Effects Of Agglomeration On The Total Factor Productivity Of China’s Tourism Industry

Currently, the national economy has entered "the New Normal". Traditional industry is facing insufficient effective demand and overcapacity and other issues. Tourism has a long industrial chain, and low environmental pollution, etc., known as "green industries" and "smokeless industry". Enhancing the development of tourism industry is a way to achieve the aim of industrial upgrading and a breakthrough of restructuring in many countries and regions. CPC Central Committee and the State Council and governments at all levels realize the important role of tourism in "maintaining growth, expanding domestic demand, adjusting structure, promoting employment". And a series of policies and measures have been putting forward to promote tourism development. Thanks to these promoting policies, tourism has not only become new growth points of consumption, but also become a new investment highlights. According to the statistics, the first half of 2015, the actual investment of tourism industry amounts to 301.8 billion RMB, higher than the growth rate of investment in tertiary industry by 16 percent, and higher than the national growth rate of fixed asset investment by 17 percent.Though new tourism projects have been launched in many provinces, some scholars criticize China’s tourism industry is taking a high input, low output path of development (Lin Yuanyuan,2010). Scholars believe that the current development of China’s tourism industry rely mainly on exploiting tourism resources, having the problems of single product structure, lack of facilities, low operating efficiency. In a word, China’s tourism industry is in the extensive mode of growth. Due to the limited nature of the cumulative elements, in order to realize the sustainable development, tourism industry should not only rely on the extensive factor growth, but also rely on the increase of productivity. Therefore, the State Council issued the "Opinions on Promoting the Reform and Development of tourism" ([2014] 31), aiming to change the mode of development of tourism in the transformation and upgrading, increase the quality and efficiency, promote tourism product diversification, and focus on resources and energy conservation and environmental protection in tourism development, changing the development mode from extensive to intensive.In this paper, the author takes total factor productivity as the measuring variable of the efficiency of tourism industry. Factor Productivity Total (TFP) is defined as the "surplus", which cannot be explained by the capital, labor and other tangible factors of production. The sources of total factor productivity include technological innovation, organizational innovation, management innovation, etc. In March 2015, Premier Li Keqiang referred to "increase R & D investment, improve the total factor productivity"in the Government Work Report, which is the first time for the Chinese government to refer the "total factor productivity" concept in the government work report. In "the New Normal", it is difficult to rely on tangible capital and labor input of production factors to stimulating the tourism industry growth. It can be said that the improvement of total factor productivity is the only driving force for the sustainable development of the tourism industry in the New Normal, and can effectively improve the quality of tourism development.Alfred Marshall (1890), founder of the neoclassical economics, believed that agglomeration could improve productivity. He thought agglomeration enhanced the productivity mainly by three ways:first, formation of the major supplier of specialized teams; second, formation of the labor pool; third, and knowledge spillovers. Michael E. Porter (1998), representatives of the new theory of competitive advantage, referred that the agglomeration would be an innovative way for the development of small and medium enterprises, as it linked isolated firms to each other in an innovative way, thereby, integrating their natural advantages and endowments to the fullest extend and upgrading the industry overall productivity and competitive advantage. Paul R. Krugman (1991), the representative of the New Economic Geography, believed that agglomeration is an important factor affecting the productivity. Specifically, agglomeration enhances productivity by spillover of knowledge and information, sharing infrastructure and other elements of labor and capital resources, expanding the forward and backward. Agglomeration is an inevitable trend in the development of a free market economy. It brings scale effect, the cyclic cumulative effect, technology diffusion effects and innovative incentive effects, etc., which effectively enhance the productivity of the industry.Compared with other industries, the tourism industry has the nature of being agglomerated (Feng Weihong,2009). The tourism industry involves many industries. There are horizontal relationships among them. Catering, hospitality, transportation, sightseeing, shopping, entertainment, are a whole. If any problem occurs in any part, it will affect the overall experience of tourists. For that reason, Michael E. Porter refers that tourism industry is one of the most suitable industries for cluster development, and the agglomeration effect in tourism industry is very obvious. In practice, there are many famous tourism clusters, such as the eastern city of urban tourism, New York-Washington-Boston as the center; ecological tourism zone in northeast Australia, Great Barrier Reef as the center; the ski fitness tourism Agglomeration District, the Alps as the center, etc.. China’s tourism industry is under way of development, there is a phenomenon of industrial agglomeration, such as there are nearly twenty theme parks around the Shenzhen overseas Chinese town, including the Beautiful China, the World Window, China Folk Culture Village, Happy Valley, etc.. In Suzhou, there are cultural tourism agglomeration areas around the ancient river.At present, what is the extent of provincial tourism industry agglomeration? Can agglomeration enhance the efficiency of tourism industry? What is the mechanism of agglomeration for tourism industry? Do the threshold characteristics and spatial spillover effect exist in China’s tourism industry? The answers to the above question are conducive to a more clear understanding of the current state of China’s tourism industry, and it is heipful for China’s tourism industry to achieve quality and efficiency, also find practical ways to upgrade.In order to solve the above problems, the core contents and related research conclusions are summarized as follows:Research Content One:Situation of China’s tourism industry agglomeration and productivityBased on the study and contrast of various measures of industrial agglomeration and productivity, the author selects the location quotient as the measure of the degree of agglomeration, and selects TFP (Total Factor Productivity) as a measure of China’s tourism industry productivity. The author takes 2001--2013 panel data of 30 provinces as samples. Using Data Envelopment Analysis of two inputs (capital investment, labor input), single output-oriented investment of China’s tourism industry to measured and decomposition the total factor productivity. The results are as followed:first, there is trend of agglomeration of China’s tourism industry. But the degree of agglomeration is low in most provinces. Only in Beijing, Shanghai, Zhejiang, Guangdong, Hainan, Chongqing, Yunnan, Xinjiang, the location quotient of tourism industry in those eight provinces are greater than 1, showing a clear trend of industrial agglomeration. Secondly, in terms of productivity of China’s tourism industry, in the year of 2001--2013, the average growth rate of total factor productivity of China’s tourism industry is 5.5%. The TFP is further decomposed into technical progress and technical efficiency rate. We find that in the year of 2001--2013, the technological advances achieve a growth of 8.7%, but the technical efficiency suffers degradation of 3%. The technical efficiency is further decomposed into pure technical efficiency and scale efficiency, pure technical efficiency degradation is 2.2%, efficiency scale degradation is 0.8%, exactly equal to the degradation in technical efficiency. It reveals the following three points:First, in the period of 2001--2013, the growth of China’s tourism industry TFP is mainly propelled by technological progress; secondly, technical efficiency of China’s tourism industry is relatively low, the technology has not been fully utilized. Third, there is no economy of scale of China’s tourism industry.Research Content Two:The effects and mechanism of agglomeration on China’s tourism TFP growthThis paper using a least squares method, the fixed effects model, instrumental variable method and the system generalized method of moments to estimate the effects of agglomeration on the TFP of China’s tourism industry, and the author also explore the effects of agglomeration on various components of TFP (technical progress and technical efficiency), in order to find ways and mechanisms of agglomeration affecting the TFP growth of the tourism industry. The main results are as followed:First, agglomeration has a significant positive affect on the TFP of the tourism industry at the provincial level, with a higher degree of agglomeration corresponding to an increase in TFP. Second, agglomeration was insignificant in relation to tourism’s technological progress. Third, agglomeration has a significant positive impact on tourism’s technical efficiency. The mechanism whereby agglomeration influenced TFP was mainly by improving technical efficiency rather than technical progress.Research Content Three:threshold effect of agglomeration on TFP of China’s tourism industryIn Chapter 5, the author uses the panel threshold regression method to study the effect of the agglomeration on the growth of the total factor productivity growth. The results show that: first, agglomeration has a threshold effect on the growth of total factor productivity growth, and when the level of agglomeration exceeds a certain level, which is higher than 1.1937, the promotion effect of agglomeration on the total factor productivity growth of the tourism industry will be decreased. Second, decomposing the total factor productivity into technological progress and technical efficiency, the threshold effect of the agglomeration on the two are investigated. The results show that there are threshold effect of the agglomeration on the technological progress and technical efficiency, that is, when the agglomeration exceeds a certain level, the promotion effect of agglomeration on the technological progress and technical efficiency will fall.Research Content Four:spatial spillover effect of agglomeration on the growth of TFP of China’s tourism industryIn Chapter 6, the spatial factors are taken into the model, and the mechanism of agglomeration on TFP of China’s tourism industry is further explored. The results show that the spatial spillover effect of agglomeration on the growth rate of total factor productivity is not obvious. Specifically, the improvement of the level of industrial agglomeration in a province, and cannot effectively promote the growth of the total factor productivity growth in the neighboring provinces. The reasons may be:China’s tourism industry is still in the initial stage of development, the degree of industrial agglomeration is relatively low, only a small part of the provinces have a clear industrial agglomeration trend. Therefore, the spatial spillover effect of agglomeration on the total factor productivity is limited. In addition, the regional cooperation of tourism in our country is insufficient, which leads to the cost advantage and innovation advantage of industrial cluster cannot be shared among different provinces.Based on the above research contents and main conclusions of the four aspects, policy recommendations are as followed:for the government, the government should adhere to the policy direction of promoting tourism agglomeration. Second, the government should actively guide the cooperation among the tourism enterprises. Third, the government should support the establishment and development of local tourism enterprises in information and capital. Fourth, the government should control the scale of fixed assets investment. Fifth, the government should actively promote regional cooperation in tourism. For tourism enterprises, they should improve the efficiency of using the existing technology from the aspects of management innovation, organization innovation, cultural innovation, and strengthen the cooperation between each other.