Develop A New Model Of Economic Geography: The Comparative Advantage And Industrial Agglomeration Theory And Empirical

Since the reform and opening-up, along with the development strategy foreconomic globalization and regional differentiation, the phenomenon of thespatial concentration of Chinese industry has become increasingly prominent, sothat the difference between the economic development of Eastern and WesternChina has formed a “core-periphery” structure, with Eastern coastal China as thecenter and Western China as the periphery. But nowadays, the excessiveindustrial agglomeration in Eastern China has caused a shortage of productionelements, a rise of product costs and a decline of accumulative effects, whichnot only has a strong impact on the industry sustainable development in EasternChina, but prevents Western China from casting off its extensive and low-levelindustrial structure. In addition, in recent years, the downturn of externaldemand, the disappearance of labor dividend and evolution of comparativeadvantage have forced China’s economy to Lewis Turning-Point rapidly, whichcertainly will aggravate the development and evolution of industrialagglomeration and then produce a significant impact on the structure upgradingof regional industry. Therefore, after seeing clearly the status quo and trend ofthe spatial agglomeration of China’s manufacturing industry, to explore itsformation mechanism and influencing factors will be of great significance toboosting the upgrading in regional value chain or the upgrading of the industrialstructure. This paper constructs a development model and theoretical model ofnew economic geography with the evolution of comparative advantage included,with3corollaries obtained: Corollary1: the greater the comparative advantageof the technological level in a region is, the more likely for industrialagglomeration to occur in the region; corollary2: the greater the capitalcomparative advantage in a region is, the more likely for industrialagglomeration to occur in the region; corollary3: when the capital comparativeadvantage in a region is less than equilibrium value, the labor comparativeadvantage will be higher, and industrial agglomeration will be more likely to occur in the region; when the capital comparative advantage in a region isgreater than equilibrium value, the labor comparative advantage will be lower,and industrial agglomeration will be more likely to occur in the region. Build athreshold panel data measurement model based on the theoretical model, and use31inter-provincial industrial panel data between1990and2011to focus onanalyzing the spatial features of the evolution of comparative advantage andindustrial agglomeration. Empirical results indicate: in the early stage ofeconomic development, labor comparative advantage has a positive influence onspatial agglomeration, but after physical capital stock reaches a certain thresholdvalue, labor has a negative impact on spatial agglomeration. Labor endowmenthas an inverse U-shaped relationship with industrial agglomeration, and underthe influence of physical capital stock, there is a significant threshold effectbetween the concentration index of labor and industrial agglomeration, whichexactly verifies the theoretical model that is built in this paper. Therefore, thispaper suggests:(1) use the external economy and scale economy of industrialagglomeration to lead technical progress into its direction and promote theevolution and upgrade of industrial cluster with the help of necessary policies;(2)facilitate the conversion of simple labor comparative advantage into humancapital advantage;(3) attract foreign direct investment and fully absorb FDItechnology spillover effect, to better promote regional technology improvementand economic development;(4) facilitate factor mobility and release the variousdistortions which restrict factors from free mobility in institutional aspect.