Industrial Co-agglomeration And Coordinated Development Of Regional Economy:Based On Spatial Economics

Coordinated development of regional economy is playing an increasingly important role in China’s economy in the 13th Five-Year Plan and further period. Along the rapid development of China’s economy, the economic aggregate has increased dramatically throughout the country. However, the economical gap between the west and the east of China has become increasingly large due to the unbalanced regional economic development. The eastern coastal area gradually become economic development central and middle-west become peripheral economy after varies of production factors agglomerate at eastern coastal area. Efforts have been made to promote the coordinated economy early at 9th Five-Year Plan period and announced several related polices to narrow the regional development gap. However, the contradictions of imbalanced development of economic became sharper since 1990s: on the one hand, income gap become greater. On the other hand, the production efficiency disparity of labor force has not been noticeably improved. Moreover, synergy and co-agglomeration become the future development trend is another obvious stylized facts. The economically developed countries/regions were formed systematic "two wheel drive" development model of modern service industry and advanced manufacturing. Industrial co-agglomeration becomes the optimal strategy to optimize industries layout and improve local economy.China announced related policies to further propel the synergetic development of model service industry and advanced manufacturing because of the pivotal role of development of industrial co-agglomeration in economic improvement. Urban areas positively develop modern productive service industries to make city industrial structure transit from manufacturing industries with "single wheel driven" stage to manufacturing and productive service industries with "two wheels driven" stage. Urban areas issued related preferential policies, in some case, lead manufacturing industries and productive service industries to locate in local areas.For a long time, the constant enlargement of the income or productivity gap between regions forcing us to rethink the issues on the coordinated development of regional economy in China. Do we ignore some important variables or mechanisms which causing the analysis of the topic is not sufficient? Can industrial co-agglomeration promote the coordinated development of regional economy? Unfortunately, existing studies on "industrial co-agglomeration" and "coordinated development of regional economy" are still belong two fields. Therefore, it has important theoretical and practical significance to research on the relationship between industrial co-agglomeration and coordinated development of regional economy.The paper circles the realistic background and uses spatial economic theory to analyze the two distinguish factors of industry co-agglomeration and the important topic of coordinated development of regional economies. By using spatial economics theory, this paper formulates a theoretical analysis framework of "industrial co-agglomeration, spatial structure adjustment, and coordinating economic development". The paper mainly analyzes how industrial co-agglomeration positively impact income and productivity, and the spatial spillover effect of industrial co-agglomeration. The challenge of coordinated development of regional economics at present was comprehensively analyzed by using Chinese empirical data. Combing with our national conditions, new practical development idea of using adjusted and optimized spatial structure to promote industry co-agglomeration, in turn bring a coordinated development of regional economies were put forward. Empirical analysis on industrial co-agglomeration and coordinated development of regional economies of Yangtze River Delta City Group shows amount of cites’ coordinated development is increasing which supports the viewpoints of this paper and provides useful guidelines of co-agglomerate implementation paths. Finally, the paper formulates a three dimensional policy system of "industry linkage, spatial linkage and system linkage" spatial structure which leads industrial co-agglomeration to purple coordinated development of regional economies.After systemically theoretical and empirical analysis, the following conclusions were formed:Theoretical aspects:Firstly, interactive mechanism exits between industrial co-agglomeration and spatial structure. Theoretically, two different spatial structures should be formed because of the disequilibrium conditions (Fujita & Thisse,2012). On the one hand, high hierarchical urban spatial structure exits. In this case, the vertical connection between two sectors provides powerful force for industrial co-agglomeration. It is beneficial to locate the final product division in the urban areas because of abundant resources. Meanwhile, the city space scale will be expanding with the population increases in size under the condition of spatial continuity, but no new cities will be formed. Welfare aspect:level of welfare increases when population increases at equilibrium; however, it decreases after population reaches a certain point. On the other hand, flat urban spatial structure exits, In this case, there is a limit for the population. Flat urban spatial structure stays at equilibrium when the population level lowers than the limit; however, it reaches at disequilibrium when the population level excesses the limit and new cities will be formed in some specific areas. Welfare aspect: a population limit exists at the equilibrium level. Labor force welfare level keeps increase when the population level lower than this limit. However, new cities will enter into another equilibrium point to increase labor force welfare level when population excesses the limit.Secondly, after combine Redding & Venables(2004), Fally et al.(2010) and Ciccone & Hall (1996) with this paper’s framework, it shows industrial co-agglomeration brings positive impact on income and productivity through integrating of heterogeneous linkage and incorporating immediate product sector.Empirical aspects:Firstly, Chinese producer services and manufacture industries co-agglomeration level shows typical "core-periphery" economic geography according to a statistics analysis by using data across Chinese urban cities in year 2004-2012 and modified E-G index which can reflect both the "collaborative quality" and "collaborative height". Meanwhile, urban cities income and productivity have similar economic structures and geographical features. Moreover, according to Moran’s I index, Chinese urban wages and productivity present characteristics of spatial correlation and distance attenuation. Thus, an adequate empirical analysis needs to consider spatial dimensions and select the appropriate spatial econometric model to get more accurate and robust results.Secondly, the empirical analysis of the positive effect of industrial co-agglomeration on wages and productivity shows the following effects:1) spatial dependence exits between these two factors. With consideration of the spatial dimensional, the empirical analysis verifies the positive effect of industrial synergies and co-agglomeration on wages and productivity, and spatial spillover effects exist as well. Neighborhood wages and productivity improvement can promote local wages and productivity.2) The positive relationship between co-agglomeration and wages shows regional disparity and the heterogeneity of occupations. This provides useful wages guidelines for different regions and occupations.3) The positive relationship between co-agglomeration and productivity shows regional disparity and the heterogeneity of regions. The regional disparity indicates that the economy development of the Central and Western regions is mainly investment driven while the Eastern regions is transforming to innovation-driven stage. The relationship between co-agglomeration and productivity is not identical to all occupations while different occupational co-agglomeration has different impact towards enhancing efficiency.Thirdly, the spatial spillover effect on cities’labor productivity and income shows the strongest effect works within a distance of 300 kilometers. In another word, the increase of urban industrial co-agglomeration of any city that is within 300 kilometer away from the local area will increase the "income" and "productivity" of this local area. Therefore, industrial development and co-agglomeration should not be limited to a single city but coordinate at a larger spatial extent, especially under the case of urban crowding effect. At the same time, building the industrial group of economic coordination is feasible because the size of the spatial space around 300KM coincide with the size of urban agglomeration. The establishment of industrial co-agglomeration spillover effect of spatial boundaries provides a scientific basis for breaking the limit of administrative divisions to promote industrial coordination development.Fourthly, the case studies about Yangtze River Delta industrial co-agglomeration and coordinated regional economic development further verify the above conclusions. Meanwhile, the "industrial-spatial-systematic" three-dimensional features of urban agglomeration has important implications for the formulation of this paper’s policy system.Finally, the paper formulates a three dimensional policy system of "industry linkage, spatial linkage and system linkage" for spatial structure adjustment:industry linkage level, industrial policies should aim at strengthening the linkage longitudinal extension and transverse expansion, and enhancing industry co-agglomeration with "collaborative quality" and "collaborative height", so as to promote the development of urban agglomeration; spatial linkage level, the construction of transport infrastructure can optimize and adjust the spatial structure of urban agglomeration, reducing the transportation cost effectively making the inter-city elements and products flow freely, promoting the industry linkage; system linkage level, policies should break the limit of administrative divisions to lead the industry linkage and spatial linkage, achieving the integration of industry, transportation and market by urban integration mechanism design.Compared to previous studies, this paper has achieved four following progress: (1) Research perspective. By using spatial economics theory, this paper focuses on the industrial co-agglomeration and formulates a theoretical analysis framework of "industrial co-agglomeration, spatial structure adjustment, and coordinating economic development", making the theoretical relationship between industrial co-agglomeration and coordinating development of regional economy clear; (2) Theoretical contribution. Studies on interactive mechanism between industrial co-agglomeration and spatial structure and industrial co-agglomeration effect are limited. Based on the classic spatial economics model, this paper’s theoretical and empirical results complement the previous theory by forming the "phenomenon, mechanism and effect" study strand; (3) Empirical contribution. This paper conducted a modified E-G index to measure the industrial co-agglomeration level. And considering the nonhomogeneous space and spatial dependence in China, this paper utilized spatial econometrics approach to avoid empirical results bias; (4) Research conclusion. It is completely feasible that utilizing the adjusted and optimized spatial structure to promote industry co-agglomeration, in turn bring a coordinated development of regional economies. This paper first proposed the policy system of "industry linkage, spatial linkage and system linkage", which provides a new practical development idea for improving the regional income and productivity.