Industrial Composition and Agglomeration Shadow: Evidence from China's Large Urban Systems

Abstract

New economic geography (NEG) raises the question why the "agglomeration shadow"effect is significant in some urban regions but not others. This study attempts to answer this question in the context of China by examining the impact of industrial composition of core cities on regional urban systems. Based on the model of urban location from NEG, this study attempts to examine the population growth of six core cities and their urban systems in China. We find services exert a significantly negative effect on market potential, while that of manufacturing is positive. The results are robust in different spatial scales and time spans. This suggests that strong centralizing and agglomerative effects of higher order service sector are more likely to cast an agglomeration shadow on noncore cities in China's regional urban systems. The differences in industrial composition can explain why an urban region centered on a large core city like Beijing is more likely to cast an agglomeration shadow on its surrounding cities compared to the Shanghai-centered urban region. The findings hold important implications for uneven development of regional urban systems and construction of metropolitan areas in China.