The Impact Of Market Potential、Agglomeration Effect And Local Inputs On Industrial Development

The Yangtze River Delta in narrow sense,included15cities, has created more than20percent of industrial output with2percent national territory. Meanwhile, it has become a global manufacturing center, with the value added over the United Kingdom, France, Italy and some other developed countries, quite broadly in line with South Korea. In the process of Yangtze River Delta manufacturing development, there are three notable features:the first is large-scale and spatial agglomeration effects, the second is the home market effect, the third is different inputs of different cities, such as the Shanghai-Nanjing-Hangzhou high-tech industrial belt.Based on The New Economic Geography explanations on market potential and the industrial agglomeration, combined with the characteristics of the region, the author comprehensively analysis three kinds of variables on industry growth using panel data from fifteen cities manufacturing industry in the Yangtze River Delta provincial areas between2002-2009. They are industrial agglomeration (specialization and diversification), market potential (market scale and city level) and localization elements (infrastructure condition, labor and so on).This paper has three main innovations. The most important one is a breakthrough on the study of The Yangtze River Delta manufacturing framework, taking market potential into the research of industrial development, consider the market potential, industrial agglomeration and regional characteristics; The second one is the measure of market potential. The author innovates the measure of market size, backed by the city level variable, in order to more fully reflect the market potential; The third one is that this paper is based on the data at the city level, it’s a breakthrough because the previous studies is based on the data at the provincial level.The results show that:first, industrial supply and localization elements become important factors to promote economic growth in the Yangtze River Delta region, while the impact of the industry demand to economic growth is not significant. Second, the industrial supply function on the labor productivity improving is weak, while the industrial needs and localization elements on the labor productivity have certain effect because of different industrial types. Third, different from industrial growth, industrial demand played a large role in the improvement of labor productivity.The policy of this paper implications are as follows:first, in order to improve the economic growth, the regional agglomeration capacity of the industry should be enhanced, focusing on the improvement of specialization and production efficiency, strengthening industrial linkages within the region; Second, to enhance the capacity of regional needs, the inter-regional supply network has to be constructed to promote the efficient flow between supply and needs; Third, improve the urban infrastructure, and further promote the city information deeply; Fourth, according different city and different industrial characteristics, the compatible develop policy system should be made; Fifth, establish the regional urban agglomerations with reasonable and appropriate scale, so all the cities in the region can give full play.