Firm Heterogeneity,Selection Effect And The Spatial Distribution Of Industries

This paper aims at explain and verify the dynamics and mechanism of the spatial distribution of industries based on firm heterogeneity,then reconsider and propose proper policy strategy.For this purpose,it carries out as following technological path,"theory exploring→practice summarizing→theoretical→analyzing→empirical verifying→policy advising".(i).Systematically comparing and exploring current research on the dynamic mechanism of he spatial distribution of industries,summarizing its evolving paths and possible defection, thus to find proper breakthrough point and provide theocratical support.Traditional Location Theory and New Economic Geography has provided two explanations:Endowment advantages based on natural and geographical conditions and pecuniary externalities based on dynamic agglomeration. Direction-turned traditional Economic Geography has provided one explanation from rather small geographical sense,that is:knowledge spillover or technology externality. Despite the above two explanations differ in some sense,it has two commons:both are external drive force for firms and both take heterogeneous or representative firm as basic condition, which are apparently against with the practice:the inner factor should be the very fundamental fore rather than external ones;diversification and differentiation are the basis features of firms. Beyond above recognition may cause base bias or defections in theory structure.The newly emerged New New Economic Geography has provided new explanation for this,that is,research shows that firm heterogeneity will cause firm’s location choice difference.(ii).Systematically summed the historical path,current trace and basic pattern for the spatial distribution of industries,analyzed its evolving rules,exploring the difference between theocratical recognition and practical situation,thus to provide the practical background and support.It found that China’s spatial distribution of industries had two fundamental features,unbalancing and dynamic evolving. Feather work show that the "Core-Periphery" structure of spatial distribution of industries is dual-coupled by industry share and productivity.This is essentially different from one dimension of industry share by traditional theory.(iii).It proposed the logic framework and theoretical path for the whole dissertation on the basis of above theoretical and practical summarizing,and planned to extend from two view points in terms of firm homogeneity and heterogeneity. (iv).Analyzed and compared the dynamic mechanism in term of above two viewpoint by theoretical models,it put fro ward the hypothesis to-be-verified. It firstly analyzed the mechanism in homogeneous firm and found that the three traditional forces including endowment advantage,pecuniary externality and institution and policies,which work through economic linkages(E-linkages) in terms of market exchange of materials and services, were external ones.Firm homogeneity caused the lack of interaction inside the firm.It secondly analyzed the dynamic mechanism with heterogeneous,in which selection is the new driving force that is based on the competitive thresholds in terms of productivity difference. Then it extended to discompose heterogeneity in two dimension thus to verify how the "threshold" work through,which is both differed and linked by Knowledge linkages(K-linkages) with E-linkages. And finally,it compared the above dynamics and mechanism and proposed the hypothesis to be checked,that is,the relation between the industrial spatial distribution and productivity showed as quadratic or inverted U shape. That means with the increase of productivity in the center,the spatial trajectory of industrial distribution showed to be:agglomerating in the beginning and then dispersing.It should be pointed out that the starting point of evolving began from a imbalanced point in either models.(v).It then verified the core mechanism with econometric and case analysis and supported the above hypothesis.Using panel model,it firstly checked the factor of the dynamic with homogeneous firm including endowment,pecuniary eternality and policy,which turned out to be in accordance with our expectation. The it checked the case with heterogeneous firm with China’s panel data,in which the lagged quadratic term of productivity instrumented the selection mechanism(inverted U shape).The result valid supported the hypothesis,with which it calculated the threshold in China that turned up around2002.The lagging may be caused by the firm’s adapting capability and the overestimation of the labor productivity,(vi).Finally it summed the core ideas,theoretical innovation based on above analysis and expected the future research. In the policy suggestions,it analyzed the policy model and effects in term of the two different mechanisms and found the existing "pollution haven" effect and the extending of regional disparity,which is not properly explained by the traditional mechanism. Therefore,it is necessary to rethink the regional and industrial policy,which has to have proper industry allocation in regions as well as correction of institution arrangement,thus to guide labor allocate resource in more efficient way. (vii)Though it has achieved the goal we set in the beginning,it is still a primary work in term of theoretical model,empirical verification and policy research.Then the future direction will be further extending over above three dimension,eg:econometric methods(using dynamic panel),proper instrument variables(there might have more fit ones),data(in rather long time period or more complete date like firm level ones). According to the above two policy directions,it needs more policy research in heterogeneous firm condition,thus to reflect the rules of industrial distribution and to support the whole productivity activities.