Regional Industrial Agglomeration Research Based On Human Capital

Chinese regional industrial agglomeration has became more notable since reform and opening up, more and more industries are concentrating on eastern provinces such as ZheJiang,JiangShu,GuangDong and ShangDongo This paper discusses why regional industrial agglomeration has happened and how the agglomeration developped by human capital approach, provides a new way tostudy industial agglomeration: incentive-----human capital-----enterprise-----industial agglomeration.This paper studies problems based on two theory: (1)human capital is supplied only under sufficient incentives: (2)enterprise is an market contract between financial capital and human capital, so it is reasonable that the probability of enterprise emergence depends on human capital supply. This paper show the following things: there exists intense competition between regions because of the regime of fiscal federalism, different regions provide human capital with different incentives, this means the incentives on human capital have geographical characteristics, so there exists regional feature in human capital supply, that leads to regional characteristics in enterprise emergence, it is natural that industries concentrate on the region providing sufficient incentives to human capital. The trend of industrial concentration maintains because of increasing returns by reason of externality of human capital.This paper point out that regional government can employ development stragety based on human capital, providing sufficient incentives to different kinds of human capital, increasing supply of regional human capital, promoting regional industial agglomeration.In the last section of this paper, we make an econometric analysis to study the influence of incentive factors on regional industial agglomeration. We find that the greater influence factors are the entrepreneurial human capital (positive) and regional government rent seeking activities(negative).