Proximity Matters: Inter‐Regional Knowledge Spillovers and Regional Industrial Diversification in China

Abstract

The effects of knowledge spillovers from neighbouring regions on regional industrial diversification should not be overlooked. Here we are referring to not only intra-industry knowledge spillovers from neighbouring regions, but also the spread of knowledge from related industries in neighbouring regions. This paper also develops an analytical framework that pays more attention to the role of institutional proximity between regions and how it is associated with geographical and cognitive proximity, and acknowledges that institutional proximity may generate asymmetric effects in the process of inter-regional knowledge spillovers. Using the Chinese custom database during 2002-11, we confirm that knowledge spillovers from neighbouring regions play a key role in regional industrial diversification. More importantly, inter-regional knowledge spillovers are likely to occur more efficiently if two regions have similar institutional contexts. It is also shown that institutional proximity could generate asymmetric effects in inter-regional knowledge spillovers.

Spillovers across industries and regions in China’s regional economic diversification

“…At the regional level, Acemoglu et al (2015) found that spillover effects are sizable, accounting for about 50% of the quantitative impact of an expansion in the local state capacity. By analysing China's custom data, He et al (2019) found that knowledge spillovers play an important role in industrial diversification, and spillovers are more efficient if two regions have larger institutional proximity.…”

Changing institutional context and regional industrial dynamics: New evidence from the establishment of administrative approval centers in China

“…Industrial dynamics can be seen as a process of new industry creation, industrial evolution and growth, and decline of industry (Malerba, 2007). Since the main goal of the AAR and the establishment of AACs is to attract new firms and new industries, we only study new industry creation here, which has also been the focus of a large body of literature (Boschma & Capone, 2016; Boschma et al., 2013; Buenstorf et al., 2015; He et al., 2019). Our findings suggest that the establishment of AACs has a positive effect on new industry creation.…”

“…The path of regional industrial dynamics thus has been a key issue in economic geography and regional studies (Isaksen, 2014). A large body of literature has attributed regional economic development and regional industrial dynamics to various region-specific assets: firm agency (Simmie, 2012), institutional context (Dawley, 2014), local social contexts (Martin, 2010), local and trans-local knowledge spillovers (He et al, 2019), innovation and R&D activities (Lin et al, 2011), and environmental regulations (Ambec et al, 2013;Bommer, 1999).…”

Cultural barriers, institutional distance, and spatial spillovers: Evidence from regional industrial evolution in China

“…(2017), He et al. (2019), and Alonso and Martín (2019) find that spatial spillover between neighbor regions is a significant driving force for industrial evolution. In particular, with the rising economic complexity and increasing dependence of industrial evolution on the spatial network of collaboration, inter‐regional collective learning through regional interaction has become a major avenue for enhancing regional development.…”

“…A vast body of evidence has generally confirmed that spatial spillover, an important opportunity window to promote the evolution of local industries, has a positive impact on regional development. Boschma et al (2017), He et al (2019), and Alonso and Martín (2019) find that spatial spillover between neighbor regions is a significant driving force for industrial evolution. In particular, with the rising economic complexity and increasing dependence of industrial evolution on the spatial network of collaboration, inter-regional collective learning through regional interaction has become a major avenue for enhancing regional development.…”