Economic Effects Of Urban Agglomeration In China Based On The Perspective Of Externalities

After the reform and opening up,the rapid progress of urbanization has become an important driving force of economic development in China.The number of cities,the population size and economic strength in cities grow substantially.Then,how does the concentration of production factors such as labor,capital,land,technology and ideas in cities impact on economy?This paper examines the economic effects caused by urban agglomeration in China from the perspective of externality.Is there a causal relationship between urban agglomeration and labor productivity?The paper uses panel data of 204 cities in China during 2003-2011 and establishes spatial econometric models,to investigate the labor productivity effect caused by economic agglomeration in cities.The research shows that:after controlling capital stock,industrial structure,human capital,fiscal expenditure and infrastructure,economic agglomeration in cities has a significant positive effect on labor productivity;there are differences in the effects between cities,that labor productivity effect of economic agglomeration in eastern cities is stronger than in western cities,weaker than in central cities;neighboring cities will promote each other in labor productivity,namely the existence of spatial spillover of labor productivity,which is most obvious in eastern cities.How will the functional specialization which producer services agglomerate in core cities while manufacturing,mining,construction and other production sectors agglomerate in peripheral cities impact economy?This paper uses panel data of 16 cities in Yangtze River Delta city group during 2003-2011,to estimate the economic growth effect caused by urban functional specialization.The research shows that:after controlling variables of capital stock per capita,human capital,government behavior,and foreign direct investment,urban functional specialization impacts on economic growth positively,and the growth effect caused by service functional specialization is stronger than by production functional specialization.Does the positive externality generated by urban agglomeration promote the growth of manufacturing industry?This paper uses panel data of 21 industries in Yangtze River Delta city group during 2003-2011 to estimate the growth effect caused by manufacturing agglomeration.The research shows that:both specialization level and spatial concentration degree of manufacturing industry in Yangtze River Delta city group show a downward trend;controlling the growth rate of capital,the population size of city group and other variables,specialization level can promote the growth of manufacturing industry,while spatial concentration degree has an inhibitory effect on the growth of manufacturing industry;growth effect caused by manufacturing agglomeration mainly exists in non-resource-dependent industries,while in resource-dependent industries insignificantly.Is creative class agglomeration in cities beneficial for innovation?To answer the question,this paper builds a creative person living choice model,to expose the theoretical mechanism that creative class agglomeration promotes urban innovation through technological externalities,and then,uses panel data of 20 large cities in China during 2007-2012 to test the theoretical mechanism.The research shows that:in the full sample estimation,after controlling technological externality variables such as human capital,foreign direct investment and foreign trade,and other environmental variables,creative class agglomeration significantly promotes urban innovation;regressions based on city or period subsample show that the causal relationship between creative class agglomeration and urban innovation is robust;using temperature as an instrumental variable to deal with endogeneity of creative class agglomeration,the estimation result is still robust;Shapley value decomposition based on regression reveals that both class agglomeration and human capital are the most important factors to promote urban innovationDoes urban agglomeration push forward export expansion of cities?Using panel data of 204 cities in China during 2005-2011,and building a simultaneous equations model to deal with endogeneity,this paper finds the symbiotic mechanism that both urban agglomeration and export reinforce and promote each other.The research shows that:externalities generated by urban agglomeration is good for export,and export expansion will also further promotes urban agglomeration;the symbiotic mechanism of urban agglomeration and export is strongest in eastern cities,and export effects caused by urban agglomeration in central and western cities are significantly positive,while urban agglomeration effect caused by export insignificant;after the financial crisis in 2008,weak external demand weakens urban agglomeration effect caused by export;The symbiotic mechanism of urban agglomeration and export in large cities is stronger than in small and medium cities.Will urban agglomeration impact location choice of firms,leading to further agglomeration in the industrial level?This paper explores the influence of industrial diversity and industrial specialization on cultural industry agglomeration,using panel data of 35 large and medium cities in China during 2003-2011.The research shows that:industrial diversity has a positive effect on cultural industry agglomeration in eastern and central cities,and has no significant effect on western cities,while industrial specialization suppresses cultural industry agglomeration in eastern cities,and promotes in central and western cities.The conclusions of this paper imply that,reasonable usage of externality generated by urban agglomeration is advantageous to the healthy development of urban economy in China.Economic policies in cities should grasp the following principles:making full use of the positive externality,to achieve development with agglomeration;adjust regional policies,to obtain balance from agglomeration;accelerate division of labor in city groups,to realize coordinated development of a region;pay attention to innovation and ideas,to improve quality and competitiveness of cities.