Geographic Concentration Of Factors And The Development Of Manufacturing Industrial Clusters In China

Since China’s reform and opening-up,rapid development of industrial clusters in manufacturing sector has greatly promoted rural industrialization and urbanization.The key benefit of cluster-based industrialization in China is it helps promoting coastal economy,especially for rural areas.Although various studies have indeed looked into geographic concentration,they are unable to probe deeper into the geographic features of clusters based on conventional measures.Therefore,a few literatures baesd on Chinese data to analyse dynamic evolution of industrial clusters systematically.With very detailed data becoming available,economists have explored to develop distance-based methods in continuous space,which enables us to explore dynamic and performance of industial clusters on China’s firm-level.Meanwhile,geographical proximity facilitates resource utilization and produce size effect.Therefore,This dissertation addresses the following quentions: What is the evolution trend of China’s manufacturing industrial clusters since the reform and opening up? Whether and how the level of factors such as entrepreneurial talent,capital and land influence the dynamic evolution of industrial clusters? Does factor supply conditions affect the performance of firms within clusters?To answer the questions above,based on Belleflamme et al.(2000),fixed cost is added into the frame of the theoretical model,and this dissertation among the first to discuss the mechanism that the geographical concentration resulting from the reduced fixed cost and thus increasing firms’ profit.Meanwhile,this dissertation implements DO index of geogeaphic concentration at 4-digit code level with China’s firm-level survey data between 1998 and 2012.Then,the fourth chapter studies the dynamic evolution and overall characteristics of Chinese manufacturing industrial clusters.The findings include: Most industrial clusters in manufacturing sectors are located along the coastal provinces,eapecially in the Yangtze Delta and Pearl Delta,and the localized industries gradually shift from labor-intensive to capital-intensive and technologyintensive industries.At the same time,the geographical pattern of industrial clusters has not changed globally since 1998.That is,initial cluster density is closely related to the dynamic evolution of regional clusters,which means higher path dependence of clusters.Then,this dissertation studies the synergy effect of entrepreneurship on industrial clusters based on China’s economic and industrial reforms.The fifth chapter uses instrumental variable and lagged dependent variable to mitigate the endogeneity problem,and finds that measures of entrepreneurship contribute significantly to the cluster formation,the cluster size,and the cluster strength.Entrepreneurs play a pivotal role in the formation of industrial clusters,then Kinship and friendship facilitates transmission of knowledge by copying or counterfeiting.Therefore,a highly specialized and low-skilled industrial cluster came into shape in a matter of years.After that,in the perspective of capital factor,the concentration of capital will accelerate the evolution of industrial clusters.Then,easing credit constraints is a cruial channel for the growth of firms’ profitability.Regression results vertify that the key benefit of industrial clusters is it helps lessen the credit constraints facing the vast number of small and median private firms,which leading to lower financing costs and operating fees.Meanwhile,with lower capital requirements,firms can improve investment environment and increase capital allocation efficiency,thus boosting return on capital.Finally,based on the background of land policy,the seventh chapter focuses on the channels that industrial clusters could cultivate new growth drivers and improve land efficiency through development zones.As the government tightens the supply of land,firms in the east regions face the development dilemma of rising production costs,such as rising land rent and labor wages.While because of the relatively sufficient land supply and supportive policies,there presenting a relatively good development environment in the central and western regions.According to the current situation,the establishment of development zones has become the key policy motivation for industrial clusters to overcome land constraints and realize intensive development.On the one hand,development zones can play a demonstrative role in acctracting firms to gather around,thus optimizing land utilization efficiency,reducing the land cost disadvantage,and cultivating new industrial clusters.With the continuous development of industrial clusters,they would become the incubator of the development zones.That is,in order to implement intensive production,government integrates the local scattered industrial clusters into standard industrial parks.Based on this,the establishment of the development zone has a significant improvement in firms’ performance.Undoubtly,industrial clusters paly an important role in China’s industrization.However,some issues should be taken into account when considering further development of industial clusters.First,although the study signifies the critical role of entrepreneurship in the local industrial development,the nurturing role of entrepreneurs and the construction of supportive social capital are often ignored by local government.In addition,unreasonable industrial planning also hinders the development of industrial clusters and local economic growth.Therefore,the government shall enhance the nurturing role of the strong synergic relationship between entrepreneurship and cluster,lessen credit constraint,so that China’s industrial sophistication will occur in reasonal planning industrial parks.