Urban Agglomeration, Firm Performance, and Global Value Chain in China

Wenxiao Wang and Shandre Thangavelu
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Wenxiao Wang: Zhongnan University of Economics and Law
Shandre Thangavelu: Sunway University, The University of Adelaide

No DP-2024-14, Working Papers from Economic Research Institute for ASEAN and East Asia (ERIA)

Abstract: This study examines the relationship between city agglomeration and firm-level performance of global value chains (GVCs) in China. Using a novel dataset of night-time light data and survey data from Chinese manufacturing firms, the dynamic changes of urban agglomeration in China are studied, analysing their impact on firm-level productivity, GVC participation, and GVC upstreamness. The results highlight that the concentration of economic activity in urban areas can lead to productivity gains for firms, especially in the upstream stages of GVCs, which is characterised by higher value-added activities and better access to knowledge and technology. The study also finds that urban agglomeration promotes industrial specialisation and human capital spillovers, further improving the upstreamness of firms in GVCs. Firms in larger cities also tend to be more productive, participate more in GVCs, and are closer to the final demand of GVCs.

Keywords: city agglomeration; global value chains; productivity; upstreamness; GVC participation (search for similar items in EconPapers)
JEL-codes: F14 F23 (search for similar items in EconPapers)
Date: 2024-06-18
New Economics Papers: this item is included in nep-cna, nep-cse, nep-eff, nep-geo, nep-sbm, nep-tid and nep-ure
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