Analysis On The Contribution Of Industry Cluster To Economic Growth

Industry cluster formed during the process of economic development. As theeconomy grows, industry cluster emerges, which brings not only strong regionalcompetitiveness, but plays an important role in regional economic growth. This paperwill discuss the contribution of industry cluster to economic growth based on researchon manufacturing industry in Jiangxi province.First, the paper will introduce theories on economic growth, industry cluster aswell as its ensuing scale economic effect, spill effect of technology and knowledge aswell as effect of constant innovation. Then the paper will analyze economic growth inJiangxi province for more than a decade in terms of economic aggregate andindustrial structure. At last, by analyzing industry cluster in28types of manufacturingfor the last14years in Jiangxi province and applying entropy index in calculation, thepaper reaches the conclusion that industry cluster has existed and is still expanding inJiangxi Province，and high industry cluster occur in the manufacturing and processingof non-ferrous metal.In order to observe the contribution of industry cluster to economic growth, thepaper will build a VAR model, by selecting typical industries as representatives ofindustry cluster and industry non-cluster respectively and using growth rate asdependent variable, to research into their separate contribution to economic growth byimpulse response function and variance decomposition. As the result shows,non-cluster industry contributes much less than cluster industry, therefore confirmingindustry cluster’s role in promoting economic growth. According to imperial studies,although industry cluster can contribute to economic growth, but at some point it mayfluctuate and even harm economic growth. Based on those results, the paper offerssome advice, concerning applicable policies on increasing contribution of industrycluster to economic growth, which will bear reference to more scale effect inmanufacturing industry in Jiangxi province and to other regional economic growth.