Industrial Agglomeration Effect Of Theoretical Analysis And Empirical Testing

Since the reform and opening up, China's economic development have made remarkable achievements, the people's income and the country's total economic output were significantly improved, stronger national strength has made China an important country in the world. Reviewing the thirty years of development, China's economic growth path has been dependent on the rapid development of manufacturing industry. The fast development of extensive industrial has changed it from large agricultural country into an industrial power, and made it the "world factory". In the division of the three industries, the primary industry is limit to the absolute dependence on the land and the tertiary industry is limit to the absolute dependence on manpower. On the comparison, the organization of the secondary industry is special. The timing and space in the production has degree of freedom and regional imbalance is very easy to form a local agglomeration effect, which is the practical problem now.After 30 years of the industrialization, the regional pattern of inter-industrial agglomeration has formed. Benefiting from location, policies and other factors, coastal areas have higher degrees of industrial concentration. All kinds of elements go into these areas, forming the economic growth pole, while the central and western regions are lagging behind due to various factors of industrial development. In the beginning of economic development, this imbalance can produce a certain positive effect, but now, it has become the bottleneck of China's further economic development, and increase social disharmony. Therefore, it is an important issue to make a nationwide relocation of industrial or partial adjustment.This paper mainly analyzes the relevant theory of industrial agglomeration, especially for two-zone model of Krugman, and interprets this empirical model to analyze the effect of inter-regional industrial agglomeration effect of various factors and the direction of the impact. On the one hand, the empirical conclusions of this paper provide evidence for the transaction cost theory of economic geography from China. On the other hand, this paper also confirm the fact that the relationship between the wage level and the industrial clustering effect differs from different transportation costs, which was derived from the two regional models. Finally, based on theoretical and empirical analysis, policy recommendations will be made out.