How do manufacturing and producer service agglomerations affect urban innovation differently? Empirical evidence from China

Abstract

Despite the growing body of literature on the influence of industrial agglomeration on urban innovation, no consensus has been reached on the mechanism of the spillover effect. This empirical study exploits heterogeneity in spillover effects between manufacturing and producer service agglomerations on urban innovation based on a sample of 262 prefecture-level cities in China. We find some intriguing and new findings: (1) The threshold effect can be identified for the spillover effect of manufacturing agglomeration but not for that of producer service agglomeration. (2) Manufacturing and producer service agglomerations have opposite decomposition indirect effect. (3) The spatial spillover effect of industrial agglomeration can be restrained by absorptive capacity of nearby cities. This study not only provides empirical evidence for the reconciliation of the debate on the effect of manufacturing and producer service agglomeration, but also has important policy implication for reconsidering the role of industrial agglomeration in urban innovation.

Exploring the effect of industrial agglomeration on income inequality in China

“…First, the robustness test is performed by selecting other indicators as explanatory variables and the independent variable manufacturing industrial agglomeration ( magg ) is replaced with manufacturing employment density ( mden ) which is the ratio of manufacturing employment to the area. Furthermore, based on the empirical evidence of Zhang et al [ 56 ], including the one-period lagged independent and control variables can alleviate the potential endogeneity problem. Thus, the robustness is also tested by adopting the one-period lagged manufacturing industrial agglomeration ( magg t −1 ) instead of manufacturing industrial agglomeration.…”

The Relationship between High-Tech Industrial Agglomeration and Regional Innovation: A Meta-Analysis Investigation in China

“…Instead, it may be affected by various factors such as economic development level, regional layout, and foreign investment. For example, Zhang et al discovered that different levels of regional development lead to the gradual weakening of the spillover effect of industrial agglomeration due to the siphoning effect of surrounding cities, which ultimately manifests as a diminishing regional innovation effect [31], while Kekezi and Klaesson pointed out that spillover effects of knowledge-intensive industry agglomeration diminish with increasing geographical distance and may impose adverse impacts on innovation after crossing the municipal margins [32]. Wang and Wu suggested that foreign investment can enhance the competitiveness among local enterprises, promote the output of innovative achievements, and thus improve regional innovation capacity [33].…”