The impact of industrial spatial agglomeration on the quality of export products under trade facilitation reform: evidence from China

Feng Zhang, Lei Wang, Le Wei and Zongsen Zou ()
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Feng Zhang: Qingdao University of Technology
Lei Wang: Pudong Development Bank
Le Wei: Qingdao University of Technology
Zongsen Zou: Qufu Normal University

Review of World Economics (Weltwirtschaftliches Archiv), 2025, vol. 161, issue 4, No 10, 1599-1636

Abstract: Abstract Based on the quality heterogeneity model, this study introduces trade facilitation into the theoretical framework of the impact of industrial spatial agglomeration on the quality of export products. Utilizing data from Chinese industrial enterprises and customs from 2008 to 2014 and employing a two-way fixed effects model, it explores the synergistic effects of agglomeration and trade facilitation on the quality of export products. The study finds: (1) Overall, agglomeration contributes to the upgrading of export product quality, with the relationship showing an inverted U-shape after adding a quadratic term; trade facilitation inhibits the improvement of export product quality and weakens the positive effect of agglomeration on export product quality. (2) The conclusions remain robust when using different measures of agglomeration and trade facilitation, sub-indicators of trade facilitation, adding FTA dummy variables, and using instrumental variables to control for endogeneity. (3) Heterogeneity tests reveal that there is still room for agglomeration in the eastern region to promote export quality improvement; trade facilitation is beneficial for improving the quality of export products for low-income destination countries; agglomeration and trade facilitation significantly affect the export quality of private and foreign enterprises only; agglomeration has a higher positive impact on the quality of export products for general trade enterprises, while the negative impact of trade facilitation on them is not significant.

Keywords: Trade facilitation; Agglomeration; Export product quality; Two-way fixed effect model (search for similar items in EconPapers)
JEL-codes: F12 F13 F14 (search for similar items in EconPapers)
Date: 2025
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DOI: 10.1007/s10290-025-00597-1

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