Spatial Co-location Of Producer Services And Manufacturing

This paper introduces a concept of accessibilities of producer services and manufacturing, usingthe theory of industry interaction, industry integration, input-output industry vertical correlationtheory, the “core-periphery” theory as well as local market effect theory. Beside of proving theexistence of “co-location” between producer services and manufacturing, this paper discussesthe difference between these two industries in the co-location.This paper testes for theco-location empirically, combined with labor costs, knowledge intensity, transaction cost and theother factors which influence the co-location between these two industries. It establishes asimultaneous equation with city cross-sectional data and testes all the hypotheses we proposedsuccessfully. Particularly, It studies the industrial features and agglomeration features ofproducer services, aimed to illustrate the difference of the spatial co-location between these twoindustries. It finds that spatial co-location of producer services and manufacturing exists and theaccessibilities is the significant reason. Besides, the dependence of manufacturing agglomerationon the accessibility of producer services is strong, but not vice versa for the agglomeration ofproducer services. Lastly, spatial co-location of producer services and manufacturing aredifferent between cities with different level. The level of city is an important factor for theco-location, but not a direct one.