Research On Factor Agglomeration Effects On Economic Growth

The evolution of world economic shows that the geographic location of economic activityand economic growth are highly correlated. However, the geographic location of economicactivity was long ignored in the mainstream of economic growth model. In recent years, with thedevelopment of new economic geography created by Krugman, spatial analysis of economicactivity gradually ho economic literature, if a fog beginning to emerge as an important dimensionto explain economic growth. The concerntration of economic activities are based on the elementsmobility. The elements mobility can not only optimize the spatial structure of economic system,but also promote economic growth. From the current situation of China’s regional development,the elements of labor, financial capital, FDI and technology in China are obviousnon-equilibrium distribution. Therefore, it is the key to systematic study the geographicdistribution of elements and the different effects of elements aggomeration.Based on the new economic geography theory, the paper explore the relationship ofelements aggomeration and economic growth from heterogeneity labor, financial capital, FDIand technology. Combined with the actual distribution of Chinese elements, the paper useempirical and normative methods to research diffirent effects of elements agglomeration.Firstly, the paper use labor core-periphery model, human capital spillovers model, financialcapital created model, vertical correlation effects model and innovation model to explain theprocess of elements agglomeration. It shows that labor agglomeration can create market effectsand forward-backward effects; human capital spillovers play a vital role; endogenous creation offinancial capital make the financial capital increasing returns to scale; the vertical correlationbetween multinational companies and technology innovation spillovers promote technologyaggomeration.Secondly, the paper empirical analyze the normal labor agglomeration effects withsimultaneous equations, and shows that with different level of regional labor agglomeration theeffects of labor agglomeration display U-shaped in east, middle and west region. In addition, thestudy also show that there is threshold effects between economic growth and laboragglomeration, when the concentration levels below the threshold econimic growth will promoteaggomeration, otherwise it will impede the gathering process. The analysis of human capitalagglomeration shows that human capital effects and spatial spillovers can promote regionaleconomic growth. There are significant differences among east, middle and west regions. Spatialspillover effects depend on the spatial distance.Thirdly, financial agglomeration influence regional economic growth. This paper use panelsmooth transition regression model and error correction model to analyze the effects of financialagglomeration based on the data from1995to2009. The paper shows that there is significantsmooth transition relationship, and the threshold is1.396; the effects of financial agglomerationhave significant cross-section heterogeneity, the eastern areas are in the high regime, central and western regions are in the smooth transition phase; the long-term effects of financialagglomeration and human capital are significant, both the long-term and short term effects ofinvestment in fixed assets are significant, and the opening up policy in different regions shouldtake into account regional characteristics.Fourth, the relationship between FDI agglomeration and regional growth is nonlinear. Thepaper uses panel smooth transition regression models to empirical analyze the relationship basedon the panel data of Chinese province. The paper shows that there is smooth transitionrelationship between FDI agglomeration and regional growth, and the threshold is0.145; theeffects of FDI agglomeration have significant cross-section heterogeneity, the eastern areas are inthe high regime, central and western regions are in the smooth transition phase; the effects ofFDI agglomeration are the interaction of agglomeration economics and agglomeration cost. Theeastern regions’ effects maintain stable after achieving high regime, and central and westernregions’ effects continue to rise. The conclusion could provide a useful reference inunderstanding the role of FDI agglomeration.Lastly, the paper measured the degree of technology agglomeration and empirical analysisof technology agglomeration effects and spatial diffusion and back effects. The results show thatthe ability of technology agglomerated is significant difference in China, the stronger technologyagglomeration is, the more obvious the effects are. Spatial diffusion between the technologyagglomeration centers is stronger than peripheral regions. There is significant diffusion thattechnology agglomeration centers influence peripheral regions.The innovation of this paper consists of four aspects:(1) the establishment framework forregional economic growth from a spatial perspective based on factors of production. Made fromthe perspetive of heterogeneity of labor, financial capital, FDI and technology to study therelationship between economic growth and factor spatial activity;(2) Made the perspetiveof heterogeneity of labor with different labor skills to ananlyze different agglomerationeffects. Using a simultaneous equations to solve the problem of endogeneity oflabor concentration for ordinary labor, and spatial filtering model for humancapital accumulation;(3) Using smooth transition regression model and the error-correctionmodel to analyze the threshold effects of financial capital, and FDI agglomeration;(4) Usingspatial panel econometric model to analyze the technology agglomeration, diffusion andbackward effects.