Influences of production and R&D agglomeration on productivity: Evidence from Chinese electronics firms

Chih Hai Yang, Hui Lin Lin, Hsiao Yun Li

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20 Scopus citations

Abstract

As China adopts a government-supported agglomeration model to develop high-tech industries, it is crucial to examine whether the spatial concentration of manufacturing and R&D activities enhance firm-level productivity. Based on a panel dataset of Chinese electronics firms from 2005 to 2007, the calculated Ellison-Glaeser (EG) index indicates that both production and R&D activities are highly spatially concentrated. Crucially, we find that production agglomeration has a positive relationship with firms' productivity, especially for smaller firms. In contrast, R&D agglomeration seems to negatively relate with productivity. It implies that the possible congestion effect and/or free rider problems erode the benefit derived from knowledge spillovers.

Original languageEnglish
Pages (from-to)162-178
Number of pages17
JournalChina Economic Review
Volume27
DOIs
StatePublished - Oct 2013

Keywords

  • Agglomeration
  • Productivity
  • R&D
  • Spillover

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