The Agglomeration And Export:Theory,Fact And Explanation

Firms do not operate in a void. On the contrary, the unevenness of international trade in geography and the spatial agglomeration of exporters has been a significant feature accompanied by the fact that China’s export has been growing rapidly and continuously. The studies on the spatial agglomeration of Chinese exporters, however, are obviously not sufficient from micro perspectives. This paper contributes to this work from both theoretical and empirical aspects.(1) Theoretically, we rationalize the mechanisms through which the spatial agglomeration influences the behavior of exporters from the perspectives of contract enforcement, export information barriers and credit constraints.(3) Empirically, based on the coordinate data and the DO method, this paper captures a type of new agglomeration of exporters in China. Namely, firms exporting to same destination tend to agglomerate in China, the home market.(3) Employing regression analysis, we, from the perspective of export barriers, successfully explain the agglomeration across destinations in China. We find that firms selling to countries with worse business regulations, a different ideology and a dissimilar language tend to cluster significantly more. This paper not only provides a novel technical explanation to the spatial distribution of China’s export firms, but also reveals a potential survival rule for exporters conquering tough export markets.