Effect Of Manufacturing Agglomeration On Producer Service Agglomeration

Industrial agglomeration can generate scale economy, innovation and competition effects, promoting industry development. Producer service spatial agglomeration not only helps enterprises reduce transaction costs and share resources, but also promote technological progress and improve industrial competitiveness of producer service. Hence, the development of producer service needs agglomeration. Nowadays, compared with developed countries, the overall development of producer service in China still lags behind and the upgrading of manufacturing urgently needs the development of producer service. Therefore, the study of the producer service agglomeration has important practical significance to promote industrial development. And in this article, what we focus on is:the current situation of producer service agglomeration in China, what factors play an important role in producer service agglomeration and as the most closely related industry, how manufacturing affects producer service in spatial agglomeration.In analyzing the current situation of China’s producer service agglomeration, we do a deep research from both industrial and regional aspects with a lot of data and choose location quotient and location Gini coefficient as the measure of industry agglomeration. The results show that, from the industrial perspective, although the overall clustering level of producer service is a little lower than consumer service, it still shows a significant agglomeration trend. While from the regional perspective, producer service agglomeration has occurred in most Chinese provinces and in three major regions, eastern areas have the highest extent of producer service agglomeration, followed by the western region.About the effect of manufacturing agglomeration on producer service agglomeration, we think there exists two aspects, on one hand, the clusters of manufacturing in the region will intensify competition among enterprises and push forward them improve product quality and promote the deepening of specialization, resulting in attracting producer service agglomeration. On the other hand, due to the limited resources within space and different preferences for clustering space, manufacturing may divert resources and inhibit the agglomeration of producer service. After the further empirical study in panel data model, results show that from the national perspective, improving manufacturing agglomeration can significantly promote producer service agglomeration. However, from the regional perspective, manufacturing cluster in the Midwest is preventing agglomeration of producer service.Meanwhile, in order to explore other factors of producer service agglomeration, we build a five-dimensional framework, involving market demand, factor conditions, competitive environment, urbanization and government influence. Trough comparing different impacts of various factors in different regions, we find that from the national perspective, the level of human capital, urbanization, proportion of non-state ownership and regional location all show a significantly positive correlation with producer service agglomeration. While from the regional perspective, the non-state ownership will improve producer service agglomeration in all three areas. However, the size of government shows different impacts. Government behavior in eastern region will attract producer service agglomerating. Administrative intervention in the Midwest will suppress agglomeration of producer service. Therefore, improving the competitive market environment, and promoting the coordinated development of manufacturing and producer service should be the main focus areas of industrial policy formulation.