How Does Industrial Agglomeration Affect Exports? Evidence from Chinese Province-Industry Panel Data

Abstract

Industrial agglomeration is currently an important mode of industrial organisation in China’s regional economic development. Many provinces rely on their favourable resource and location advantages to formulate corresponding industrial agglomeration policies. Industrial agglomeration policies produce agglomeration effects, which enable enterprises in the agglomeration area to gain external advantages such as labour, resources and technology, effectively improving productivity and promoting sustainable local economic development. Based on the inter-provincial industry panel data from 2008 to 2017, the static benchmark regression model and dynamic GMM model are constructed to study the relationship between industrial agglomeration, labour productivity and exports, and to explore their interaction mechanism and practical effects. The study shows that, firstly, industrial agglomeration in China significantly contributes to industrial exports. However, in the long run, industrial agglomeration has a positive and then negative effect on industrial exports, with an inverted U-shaped curve. Secondly, the relationship between industrial agglomeration and industrial exports is negatively influenced by labour productivity. Finally, based on the perspective of regional heterogeneity, the impact of industrial agglomeration on exports is not significant in industrial base regions, but shows a significant promotion relationship in non-industrial base regions. Moreover, the impact of industrial agglomeration on industrial exports is not significantly different between coastal port regions and non-coastal port regions. Based on the research results, this paper puts forward targeted policy recommendations such as changing the competition model, increasing the introduction of talent and adjusting the industrial structure.