Trade Liberalization And The Location Of Manufacturing Industry

With the extension of international division, the world is cooperating and become a whole society. However, different parts of the world did not enjoy a synchronous development and flourishing. Economic activities start to concentrate in a few areas. "Agglomeration", that is, the spatial factor of economic activities attracts our attention. In this way, what about the relationship between trade liberalization and agglomeration? How do they affect each other?According to the basic core—periphery system modeling by Paul Krugman, in open economy, international trade may change the internal economic geography of a country. In this way, a complex core—periphery system involving several hierarchies is enhanced step by step. While the research of NEG theory has obtained a great success, the empirical study shows to be inadequate. Thus, here we use the data of 31 provinces in China to do an empirical research, depict the industry agglomeration of china and explain the relationship between trade liberalization and industry agglomeration in China.The results imply that the development of industry in China is out of balance. Most of the industries concentrate in the core area of economic activities and the core—periphery system exists in China. Moreover, the econometric analysis proves that, in China, trade liberalization affects the industry agglomeration positively, conspicuously and stably. That is, the preferential trade policies become the beginning of agglomeration and trade liberalization promotes it in the accumulation process. As a result, the industry concentrates in Yangtze River Delta, Bohai gulf and Pearl River delta.