Economic Agglomeration, Spatial Externalities And Regional Disparities

The problem of income disparity is always a theme of the economic growth theory and development economics. Meanwhile, it's also an important practical problem cared by policy makers of government. Since its economic reform in the 1970's, China has got the miraculous economic achievement, but this speed growth didn't implement regional balanced development. The binary spatial structure of China still exists, and even becomes more and more seriously. The persistent enlarge in regional disparity will bring negative effect on the long-term growth of overall economy and the social harmonies. Based on neoclassical economic growth framework, many scholars gave explanations to the mechanism of regional disparity in China from the views of factor endowments, economy structure, policy, and technology difference. However, because of the assumption of neoclassical economic growth theory being completely competition and constant returns to scale, these studies didn't find out the real mechanism of regional disparity. So, we tried to think of the causes of persistent enlarge in regional disparity from a new framework.By viewing simply from the practical world, we find an inevitable fact that is the regional disparity and economic growth difference of China have strong spatial (or geography) character. Therefore the following questions will be worth of thinking: what is the role that the geography, especially the new economic geography, influences on regional disparity and economic growth? We also observed that since 1978, China has got rapid economic growth and the regional income disparity has continued to enlarge, at the same time, the economic activities and industrial have continued to concentrate into the east. A core-peripheral pattern in China has been emerged. So, such questions will be answered: (1) what is the mechanism of Chinese industrial spatial distribution? That is to say, which factors determine the pattern of our industrial spatial distribution? (2) How does this industrial distribution pattern affect the overall economic growth and economic growth of core and peripheral?This dissertation aims to answer the above questions. We try to give a new explanation to regional income disparity from the view of industrial agglomeration on the base of the methods of new economic geography. This paper first describers the spatial distribution of economic activities since China's economic reform in 1978, then studies the mechanism of industrial agglomeration and the economic effects of economic agglomeration through the combinationof the theory and empirical analysis. This dissertation consists seven parts, and each part is organized as follows.Chapter One is introduction, mainly introducing the motivation, attention, approach, structure, innovation and shortage of this paper.Chapter Two is a survey of related research. We review some classical theory and empirical papers about the economic agglomeration mechanism and agglomeration-economic growth relationship of new economic geography, and then point out the future research directions.Chapter Three describes the spatial distribution pattern of Chinese economic activities and the evolution of this distribution pattern since China started its economic reform. We find that the economic gap between the east and the west continues to enlarge; the economic activities and industrial have concentrated into the east part of China which has advantageous geography and favorable policy.Chapter Four is about nature endowment, market potential and industrial spatial agglomeration in China. In this chapter, we first set a New Economic Geography model on the agglomeration of industry. Then basing on a panel data composed of 282 prefectures in China, we explore the causes of market potential, foreign market access and other factors on the distribution of industry of these prefectures. We arrived at the following conclusions that market potential and foreign market access had significant positive effects on the location quotient of industry; meanwhile, the first nature geography such as nature resources can also explain this industrial concentration. This discovery is in consistent with the conclusions of our model and present an empirical study based developing country's data to the new economic geography theory. Our study also gives a new explaination to the industrial spatial concentration in China.Chapter Five discusses economic agglomeration, market potential and labor productivity. In this chapter, basing on a prefecture panel data, we explore the nexus among the economic geography factors (such as market potential, people density, etc) and the non-farm labor productivity through a dynamic panel data approach. The results show that market potential and people density are positive and significant. Therefore, we think that, in order to narrow the regional gap, the government must encourage the economic activities and population cluster, in one hand, transferring the people into the east to shape some metropolises in the east; on the other hand, the government should adopt some measures to promote the spatial cluster of the internal of the west, for example, boosting the process of urbanization through offering support of policy.Chapter Six is about transport infrastructure, economic agglomeration and regional economic growth. This chapter, based on a panel data composed of 187 cities in China, explores the causes of economic agglomeration on growth rate of per capita GDP of these cities, arriving at the following conclusions: (1) the historical transport infrastructure of regions did have positive effect on its industrial agglomeration, (2) economic agglomeration had significant positive influence on the growth rate of per capita GDP, which is accordance with the conclusions of new economy geography, (3) agglomeration variable had endogeneity in our model of the relationship between agglomeration and economic growth. If we did not take the endogeneity of economic agglomeration into account in empirical works, it will have bias estimated results.Chapter Seven makes a summarization of this dissertation. This chapter summarizes our study and point out some proposals.To sum up, compared with the literature available, the innovations of this dissertation are summarized as follows:Firstly, this paper comprehensively and systemically describes spatial distribution of the aggregate and sector economic activities and the evolution of this distribution since China's economic reform. Secondly, compared with the studies used province data, we used the prefecture panel data to examine the mechanism of industrial agglomeration and the economic effects of economic agglomeration. Lastly, we considered the endogeneity of key variables in our regression models and adopted IV approach and GMM method to resolve the problem of endogeneity, and then we got more credible results.