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Entrepreneurship and industrial clusters: evidence from China industrial census

Xiwei Zhu, Ye Liu, Ming He, Deming Luo and Yiyun Wu ()
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Xiwei Zhu: Zhejiang University
Ye Liu: Zhejiang University
Ming He: Xi’an Jiaotong-Liverpool University
Yiyun Wu: Zhejiang University

Small Business Economics, 2019, vol. 52, issue 3, 595-616

Abstract: Abstract This article studies the synergy effect of entrepreneurship on China’s industrial cluster. We propose an extension to Duranton and Overman’s (The Review of Economic Studies, 72(4), 1077–1106. https://doi.org/10.1111/0034-6527.00362 , 2005) method which enables us to delimit industrial cluster in space. A cross-sectional model is identified with historical measures of local entrepreneur potential in the spirit of Chinitz (The American Economic Review, 51(2), 279–289, 1961). Alternatively, we use lagged cluster and entrepreneurship variables to mitigate the endogeneity problem. We find that measures of entrepreneurship contribute significantly to the cluster formation, the cluster size, and the cluster strength. The causality remains strong even when we control for lagged cluster variables. Out of the factors proposed by the NEG theory, access to sea ports, light industry, localization economies, urban population density, and market potential are generally found to benefit cluster. Most of the results are robust to alternative measures of entrepreneurship and instrumental variable.

Keywords: Entrepreneurship; Industrial cluster; Spatial distribution; Synergy effect (search for similar items in EconPapers)
JEL-codes: D21 L26 L60 M13 R11 R30 (search for similar items in EconPapers)
Date: 2019
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