Industrial Agglomeration and Development: A Survey of Spatial Economic Issues in East Asia and a Statistical Analysis of Chinese Regions

Abstract

In this article, we explore the issue of industrial agglomeration and its relationship to economic development and growth in the less‐developed countries of East Asia. We present theoretical arguments and secondary empirical evidence as to why we should have strong expectations about finding a positive relationship between agglomeration and economic performance. We also review evidence from the literature on the roles of formal and informal institutions in East Asian regional economic systems. We then focus specifically on the case of China. We argue that regional development in China has much in common with regional development in other East Asian economies, although there are also important contrasts because of China's history of socialism and its recent trend toward economic liberalization. Through a variety of statistical investigations, we substantiate (in part) the expected positive relationship between agglomeration and economic performance in China. We show that many kinds of manufacturing sectors are characterized by a strong positive relationship between spatial agglomeration and productivity. This phenomenon is especially marked in sectors and regions where liberalization has proceeded rapidly. We consider the relevance of our comments about industrial clustering and economic performance for policy formulation in China and the less‐developed countries of East Asia.

Analyzing Agricultural Agglomeration in China

“…The barycenter of each crop from 1981 to 2012 was calculated using Equation (1). As Figures 3 and 4 show, from 1981 to 2012, overall, the barycenter of cereals moved to the northeast from 113.6°E, 32.3°N in 1981 to 114.4°E, 35.5°N in 2012, although the specific path was more complex.…”

“…New classical economics considers that industrial agglomeration is determined by the division of labor in the economy and transaction efficiency, and it is based on an infra-marginal analysis of the division of labor [10]. Fan and Scott (2003) empirically analyzed the positive correlation between the Chinese manufacturing sector's industrial agglomeration and economic performance [1]. He, Pan and Sun (2007) found that the Chinese manufacturing sector is highly concentrated in the Pearl River Delta, Yangtze River Delta and the Bohai Rim.…”

“…Current research on agglomeration mainly focused on the manufacturing and service sectors [1][2][3][4]. Marshall (1890) explained the reason for the concentration of specialized industries in particular localities, and described three original and classic contributors: technology spillovers, a constant market for skilled workers, and sharing of infrastructure and materials with subsidiary industries [7].…”

“…In particular, the industrial concentration in manufacturing and service sectors has attracted the interests of scholars for nearly 30 years [1][2][3][4]. In addition, with the use of large specialized equipment in agriculture, the geographic agglomeration and specialized production in agriculture recently demonstrated their competitiveness [5].…”

Regional growth differences in China for 1995–2013: an empirical integrative analysis of their sources

“…Studies of regional growth in China have focused separately on agglomeration economies (e.g., Fan and Scott, 2003;Lu and Tao, 2009;Ke, 2010), exports and foreign direct investment (Wu, 2007;Hao and Wei, 2010;Dreger and Zhang, 2014), household amenity attractiveness (e.g., Liu and Shen, 2014), and housing supply (e.g., Wang and Zhang, 2014;Yuan and Hamori, 2014). Yet, there have not been any studies that have compared the relative importance of labor demand, labor supply and housing supply as sources of regional growth in China using multiple economic indicators as has been done for the US (Partridge and Rickman, 1999;2003;2006;Glaeser and Tobio, 2008;and Rickman and Wang, forthcoming).…”