Perspectives from Spatial and Neoclassical Economics
Edited by Masahisa Fujita, Satoru Kumagai and Koji Nishikimi
10. Economic opening and industrial agglomeration in China Zhao Chen, Yu Jin and Ming Lu INTRODUCTION 10.1 Since the launching of economic reform in late 1978, China has been integrating into the world economy at a pace as remarkable as its economic growth. While the role of economic opening in growth and inequality in China has widely been studied (Kanbur and Zhang 2005; Wei and Wu 2001; Zhang and Zhang 2003; Wan et al. 2007), little has been published on how economic opening and industrial agglomeration are related in China. Industrial agglomeration is signiﬁcant for economic eﬃciency and regional development, and given the fact that regional disparity is now a great concern in China, a clearer understanding of the pattern and causes of industrial agglomeration would have great implications for policy-makers. This chapter sheds some new light on how Chinese industries have been gradually relocating and concentrating under the impact of economic forces and relevant policies, particularly economic opening. Fujita and Hu (2001) and Kim and Knaap (2001) investigated some potential factors related to China’s industrial agglomeration; however, neither of these studies did further econometric work. Wen (2004) employed the theory of new economic geography to investigate the determinants of industrial agglomeration in China in 1992. Unlike Wen’s work, this chapter uses provincial panel data to ﬁnd out and investigate what factors contributed to industrial agglomeration in China, keeping an eye not only on new economic geography factors but also those of physical geography and government policies, especially...
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