A Research On Effects Of Agglomeration On Total Factor Productivity Of Easten Region

For a long time, China’s manufacturing industry mainly rely on a lot of labor and capital to drive. the scale of China’s manufacturing industry is expanding behind this way. In this rough model of development, China’s manufacturing industry does play a certain amount of recovery,which has laid a very important foundation for the further transformation and upgrading of China’s manufacturing industry. With the changes of domestic and international economic environment, China’s manufacturing industry has a increasingly evident trend of diminishing marginal returns. The aging of the population makes cheap labor advantage has lost.When we compete with developed countries, we have fallen behind. Especially in the time of overall global economic downturn and the slow recovery of the situation, it is very diffcult for China’s manufacturing industry’s rapid development. Therefore, we must change the mode of economic development to improve production efficiency of the entire industry.So we can break the current development of China’s manufacturing bottleneck. And for the eastern region of our country, whether the level of economic development, the agglomeration level of manufacturing or the level of technology innovation is more advanced than the Midwest region. Researching on the impact of the relationship between eastern Manufacturing Agglomeration and Total Factor Productivity can play a very good reference for the undeveloped western regions.The paper is based on the classical theory of past research and important documents, and sort out various effects mechanisms of agglomeration on TFP growth of, such as the mechanism of human capital, physical capital mechanism, the mechanism of technological progress, market efficiency mechanism and external economic mechanism. This paper estimates the 11 eastern provinces’ manufacturing agglomeration level and TFP levels, and analyze the relationship between them. Further considering the premise of spatial factors, we estibshment spatial panel econometric model to empirically analysis the relationship between the two. The results show that, China’s manufacturing industry has a whole higher level of agglomeration in addition to individual provinces in eastern.but due to geographical reasons resource endowments and economic conditions, there are some differences between provinces. In recent years, eastern China provinces and cities achieve a total enhance of TFP.But there are some differences among different regions. In recent years, through the trcck change of manufacturing agglomeration level and TFP level in esten regions, although the area of high levels’ agglomeration often have a faster improvement of TFP. but we will find there is no obvious linear relationship between the two behind the in-depth analysis.The paper establish spatial lag model with different weight matrix to research the relationship between manufacturing agglomeration and the TFP.The result shows that the region’s TFP have a significant increasement with the improvement of the region’s manufacturing agglomeration. Furtherly we find that there is a nonlinear relationship between the two by joining the quadratic index of agglomeration. And manufacturing agglomeration mainly through technical efficiency path to enhance the TFP. This may have occurred because the increasement of agglomeration level within certain limits is helpful to increase the degree of correlation between the industry, which is beneficial to save costs in all aspects of the business, improve efficiency of resource use. When a regional economic agglomeration level is below a certain threshold, the higher the degree of agglomeration, the faster of region’s TFP enhancement. on the contrary, when the agglomeration level exceeds the threshold, productivity levels will reduce gather along with the deepening of regional manufacturing agglomeration.Finally, this paper based on theoretical analysis and empirical results, for how to effectively improve the eastern manufacturing TFP, coordinating manufacturing and industrial layout to achieve coordinated development,putforward corresponding policy and suggestion.