Spatial Agglomeration, Economic Growth And Welfare:Theory And Evidence

Simon Kuznets, who is the Nobel Prize winner in Economics, has pointed out that the spatial agglomeration of economic activity accompanied by modern economic growth is the most significant features. Nowadays, as the extensive development of the information technology revolution and globalization, the phenomenons of spatial agglomeration and economic growth have been becoming increasingly prominent. From the world-wide perspective, the most important manifestation of spatial agglomeration is urbanization, asMumford, an American urban history experts, has pointed out:"The whole world has becom a single city in many ways". On the other hand, the rapid global economic growth is accompanying with the above phenomenon.Now let us focus on China, since its economic reform from1978, China has got a remarkable economic miracle, with the average annual growth rate of9.8%, which has attracted world-wide attention. In the meanwhile, the spatial distribution of economic activity has also undergone a significant change, a core-peripheral structure in China is becoming more and more obvious. The two stylized facts of the real world prompt us to think about the following questions:(1) what is the internal mechanism of the spatial agglomeration? That is to say, which factors determine spatial agglomeration?(2) what is the relationship between the spatial agglomeration and economic growth?(3) how does the spatial distribution of economic activity affect the welfare of the residents?This dissertation aims to answer the above questions. We firstly sort out the existing literature in the field of the new economic geography, and give brief comments. Then based on the existing theoretic framework, we explore an empirical study of the determinants of the agglomeration of China’s manufacturing industries, which provides empirical evidence from China for new economic geography. Thirdly, based on endogenous growth theory and new economic geography, we develop a two-regions-three-sectors general equilibrium model, which aims to analyze the influences of the knowledge spillovers and spatial agglomeration on long-run growth. Then we respectively explore empirical studies from trans-regional level, trans-industrial level and dynamic external perspective to verify the relashionship between spatial agglomeration and economic growth, which thereby furher enrich the contents of field. Finally, we attempt to analyze the effects of spatial distribution of economic activity respectively from theoretic and empirical perspective, which identifies important direction for future research in spatial economoics.The main conclusion of this dissertation can be summarized as follows:(1)The empirical study on the formation mechanism of the industrial agglomeration shows that the proxies for natural resource endowment, Marshallian externalities, home market effect positively influence the agglomeration of China’s manufacturing industries, while the proxy for local protectionism obstructs industrial agglomeration.(2) The dynamic model of new economic geography shows that while the spatial distribution of economy is in the case of symmetric balance, the efficiency of the interregional knowledge spillovers leads to the different long-run growth rate, and the asymmetry of knowledge spillovers also causes different long-run growth rate, whlie there is no obstacle between the interregional knowledge spillovers, the long-run economic growth rate will reach a maximum; while the spatial distribution of economy is in the case of core-peripheral structure, the long-run growth rate is greater than other situations, that is to say, the spatial factor has very important impact on economic growth, while is no obstacle between the interregional knowledge spillovers, the spatial factor will have not any impact.(3) Chapter5explores an empirical study of the effects and mechanism of industrial agglomeration on TFP. The resaults show that from the perspective of the whole industry, industrial agglomeration mainly promote TFP through technical efficiency, while sub-industry shows that the effects of industrial agglomeration on TFP differ among different industries. In addition, from the mechanism of industrial agglomeration, we also find industrial agglomeration promote technical efficiency mainly through Marshall’ s external economies.(4) Chapter6conducts an empirical study of the relashionship between spatial agglomeration and economic growth using China’s provincial panel data from1991to2010. The results show that spatial agglomeration has significantly positive effects on China’s provincial economic growth,which survive from various robustness checks. In addition, the results of sub-regional regression show the role of spatial agglomeration on China’s provincial economic growth depends on the dimension of the geographic location (coastal or inland areas).(5) Chapter7estimates the effect of dynamic externalities on regional industrial economic growth using a large sample of panel data including Chinese28provinces and21industries. From the whole country we find that the effect of specialization and diversity on industrial economic growth is nonlinear, while local competition don’t have significantly effect. Further analysis in the robustness check indicates that the effects of dynamic externalities on industrial economic growth depends on types of industry and the dimension of geographic location. That is to say, the effect of specialization mainly exists in traditional labor-extensive industries, while effect of diversity mainly exists in high-tech industries.(6) This dissertation analyzes theoretically and empirically the welfare effects of the spatial distribution of the economic activity, which shows that the spatial agglomeration can enhance the residents’subjective well-bing who live in urban areas, while reduce the rural residents’subjective well-bing.