Theoretical and Applied Economics
No. 4 / 2021 (629), Winter
Productivity growth in Chinese cities: The agglomeration effect for cross-regional industrial structures
Wenzhou-Kean University, China
Fa-Hsiang CHANG
Wenzhou-Kean University, China
Abstract. Since industrial development patterns in China are different across regions and sectors, this paper firstly estimates total factor productivity growth rate through two-stage-least-square method and then investigates the effect of agglomeration in city-industry productivity growth for 7 sectors located in 101 Chinese cities over period 2005-2013, with consideration of cross-regional effect such as knowledge spillovers between regions. Our results indicate there is no significant effect of agglomeration on city-industry TFP if the impact of cross-regional effect on agglomeration are taken into considerations. From spatial Durbin model (SDM), cross-regional effect significantly inhibits the city-industry TFP growth resulted from diversification.
Keywords: China, TFP growth, Knowledge Spillovers, agglomeration externalities, spatial Durbin model.
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