| Economic activity takes place in a specific geographical space. Economic analysis without spatial dimensions has been criticized castle in the air by Walter Alsard who is western regional science and spatial economics pioneer. Agglomeration of economic activity reflects the spatial dimension of economic activity, is one of the most remarkable phenomena in the world economy,and its derivatives has become a research focus in industrial economics, regional economics and other fields. The new economic geography of growth theory is the economic concentration and endogenous economic growth both economic activities linked together to build a capital creation model, global spillover model, local spillover models between classical model portrayed economic position and economic growth circular causality. And micro level, agglomeration to enhance productivity by promoting technical or knowledge spillover within the region and further stimulate Innovative power of economic growth. Reform and opening up of China brought opportunities for leaping development in manufacturing industry. On the basis of full use of our comparative advantage in labor resources, China becomes a world factory because of the rapid development of China’s labor-intensive manufacturing, which leading to sustain and rapid economic growth in China.First, China’s manufacturing industry passive participation in the international division of labor, the value locked into a low-value chain and hard jumped to high-value chain. Second,China’s manufacturing industry has yet to get rid of path dependence of extensive development mode. The main feature of manufacturing development is scale expansion and price competition,lack motivation of technological innovation, process innovation and product innovation. Because of resource constraints of environmental factors, the proportion of the working-age population decline and labor prices, original manufacturing expansion mode is not sustainable, also incompatible with our intensive economic growth requires. Reconstruct manufacturing competitive advantage, improve manufacturing productivity and avoid manufacturing hollowing, upgrade manufacturing value and optimize the manufacturing the structure, rationalize manufacturing space layout, which has become an inevitable path to further development and support sustained economic growth. However, in the development process of China’s manufacturing industry is also facing some prominent problems. As the continued driving force of economic growth technological innovation is not an isolated existence, technological innovate and diffuse at a lower cost in the industrial agglomeration area. Industrial agglomeration also promotes innovative and technology integration symbiosis research collaborative innovation. In order to get manufacturing competitiveadvantage, transform manufacturing development paradigm, promote sustained economic growth,industrial agglomeration become optional path constraint solving environment problems facing the manufacturing industry and macroeconomic. For this purpose, this paper focus on the effect of economic growth from the manufacturing industry agglomeration and manufacturing productivity enhancing effects of agglomeration to verify agglomeration economies effects and trying to build a framework for economic analysis study agglomeration effects.The main work of chapters 1 and 2 is to build a literature review and theoretical analysis framework. Base on classic location theory, externality theory, new economic geography theory and the theory of heterogeneous enterprise this paper built on theoretical framework. The paper hackle results of previous studies from the point of view traceability from industrial agglomeration,economic growth effect of industrial agglomeration and productivity growth effect. These two chapters establish Theoretical basis and literature reference for further research. Thesis chapter 3measure the provincial regional manufacturing agglomeration of 30 provinces, using global and local Moran index confirms our global spatial autocorrelation and spatial heterogeneity of manufacturing agglomeration, analyzing factors affecting the level of agglomeration with MESS model and reveals that the regional technology gap, Marshall externalities and dependence on foreign trade are significant positive role in promoting regional manufacturing agglomeration.Chapter 4 of the paper empirically analyze manufacturing agglomeration effects on economic growth in three dimensions, the first dimension is interaction relationship between agglomeration economic growth, the second is spillover effect of manufacturing agglomeration on growth, and the third is heterogeneity effect of manufacturing on economic growth. Based on interactive and cycle mechanism new economic geography build both static and dynamic panel simultaneous equation model using Chinese provincial regions data. Empirical analysis of static perspective confirms prominent mutual causality and mutually reinforcing interaction mechanism. Hewer, in the dynamic perspectives relationship between manufacturing agglomeration and growth is no longer significant. Based on the new economic geography theory, this chapter constructs econometric equation between manufacturing spatial agglomeration GDP per capita, as well as economic growth. The spatial dynamic panel data model is used to test direct and spatial spillover effects of manufacturing agglomeration. Following conclusions can get from empirical analysis.Manufacturing Agglomeration has significant direct and spatial spillover impact on GDP per capita,the long-term spatial spillover effect higher than the direct effect. Manufacturing Agglomeration has significant direct impact on economic growth, and the spatial spillover effect is just significant in short-term.This chapter using PSTR model for empirically analyze the nonlinear effect of agglomeration externalities on economic growth, these three externalities include specialization,diversification and competitiveness. With the improvement of economic development, the effect of specialization on economic growth transition to significant positive smoothly from negative effect,the effect of diversification on economic growth transition from significant negative to significantpositive smoothly. While the economic reach a higher level, the positive effects of diversification and specialization on economic growth can coexist.Chapter 5 of the paper using GML index measure of provincial regional environmental TFP growth, identify spatial association characteristics of environmental TFP growth using global and local Moran index, analyze evolution trends of environmental TFP with kernel density estimation.Based on employment density and labor productivity equation proposed by Ciccone and Hall, this paper constructs static and dynamic panel simultaneous equation model for interactive relationship between manufacturing agglomeration and labor productivity. The static panel simultaneous equation shows that manufacturer agglomeration and labor productivity are mutually causally correlated. Result of dynamic panel simultaneous equation shows, after considering the role of the dependent variable lags, the manufacturing industry agglomeration is not conducive to enhance labor productivity, employment density increases still has a positive role in improving labor productivity, labor productivity is still conducive to enhance the level of manufacturing agglomeration. This chapter building spatial panel and spatial dynamic panel models for empirical analysis of manufacturing agglomeration on the environment TFP growth, this chapter found that both these models have confirmed the effect of manufacturing spatial agglomeration on the environmental TFP growth was significantly positive effect. The positive effect of central and western regions is higher than eastern coastal area. Therefore Manufacturing gradient transfer will help improve the overall environment of TFP. Based on PSTR model, this chapter inspects the heterogeneity effect of agglomeration specialization, diversification and competitive externalities on TFP growth. Empirical results of adding control variables show that specialized agglomeration externalities enhance environment TFP greatly in moderate per capita capital stock situation, while at lower or higher per capita capital stock situation competitive externalities positive effect on environmental TFP growth is the strongest.In Chapter 6, based on inter-provincial manufacturing agglomeration, economic growth and environmental TFP growth and other relevant data, panel threshold models are mainly used to test Williamson hypothesis about economic performance and manufacturing agglomeration. The relationship between manufacturing TFP growth and economic growth is nothing to do with the stage of economic development. The effect of agglomeration on environmental TFP growth is subject to agglomeration level constraints. There is an optimal range of agglomeration formanufacturing TFP growth. The influence of agglomeration on GDP per capita is restricted by the level of economic development and manufacturing agglomeration, when the area at the lower and middle stages of economic development the manufacturing agglomeration has a significant positive effect on GDP per capita, when the region at a higher stage of economic development the positive effect of agglomeration on per capita GDP is no longer significant affected by crowding effect, and with the improvement of manufacturing agglomeration the positive effect of manufacturing agglomeration on GDP per capita decline. Similarly, there is a threshold effect ofmanufacturing agglomeration on economic growth, when the region is in the early stage of economic development manufacturing has a significant positive effect on economic growth, when economic development level reaches a critical value the effect direction of manufacturing agglomeration on economic growth revere. Finally, Chapter 7 summarizes this paper, get conclusions theoretical and empirical analysis, and obtain the relevant policy implications based on empirical analysis conclusions.
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