The pathways from industrial agglomeration to TFP growth – the experience of Chinese cities for 2001–2010

Shanzi Ke and Yufeng Yu

Journal of the Asia Pacific Economy, 2014, vol. 19, issue 2, 310-332

Abstract: This paper employs a stochastic frontier production function to decompose total factor productivity (TFP) and examines the determinants of frontier technological progress, technical efficiency, and TFP growth across 262 prefectural and higher level cities in China for 2001–2010. The econometric analysis shows that industrial agglomeration, as a share of the national output, contributes to TFP growth through frontier technology and technical efficiency; industrial agglomeration, as a share of the local economy, enhances technical efficiency but is not conducive to technological progress. Spatial density of urban employment negatively affects the growth of technical efficiency and TFP. Overall, the differences in agglomeration economies explain more than one-half of the differences in TFP growth across China's cities. The results are stable in three sub-periods. Important policy implications are derived from the empirical findings. Smaller cities should develop an industrial base that passes a critical mass. Larger cities should continue to direct new development and relocate existing firms to planned, less congested industrial districts. Provincial and sub-provincial level cities should specialize and diversify in advanced producer services and headquarters economies, rather than manufacturing.

Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (9)

Downloads: (external link)
http://hdl.handle.net/10.1080/13547860.2014.880286 (text/html)
Access to full text is restricted to subscribers.

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:taf:rjapxx:v:19:y:2014:i:2:p:310-332

Ordering information: This journal article can be ordered from
http://www.tandfonline.com/pricing/journal/rjap20

DOI: 10.1080/13547860.2014.880286

Access Statistics for this article

Journal of the Asia Pacific Economy is currently edited by Leong Liew

More articles in Journal of the Asia Pacific Economy from Taylor & Francis Journals
Bibliographic data for series maintained by Chris Longhurst ().