Spatial Concentration of Manufacturing Firms in China

37 Pages Posted: 23 Jul 2014

See all articles by Steven Brakman

Steven Brakman

University of Groningen - Department of Economics; CESifo (Center for Economic Studies and Ifo Institute)

Harry Garretsen

Utrecht University - School of Economics; CESifo (Center for Economic Studies and Ifo Institute); Radboud University Nijmegen - Department of Economics

Zhao Zhao

Independent

Date Written: July 22, 2014

Abstract

Applying the methodology developed by Duranton and Overman (2005, 2008), we analyze localization and dispersion of firms in China. Using a unique and detailed dataset on manufacturing firms in China, we are able to follow the changes in location patterns of firms between 2002 and 2008. Our analysis shows that firms in China are more localized than in the UK or Japan. Localization is comparable to that in the US, and takes place at relative small scales that are consistent with the size of Chinese cities. Localization increases rapidly, even in the relative short period between 2002 and 2008, especially new entrants localize. Private firms, firms from Hong-Kong, Macao and Taiwan, and foreign firms are more localized than state-owned firms. Our findings are consistent with the notion that China is increasingly liberalizing its economy, enabling (profit seeking) manufacturing firms to benefit from agglomeration economies.

Keywords: spatial concentration, China, manufacturing firms, localization

JEL Classification: F230, R120, L700

Suggested Citation

Brakman, Steven and Garretsen, Harry and Zhao, Zhao, Spatial Concentration of Manufacturing Firms in China (July 22, 2014). CESifo Working Paper Series No. 4872. Available at SSRN: https://ssrn.com/abstract=2469739

Steven Brakman (Contact Author)

University of Groningen - Department of Economics ( email )

P.O. Box 800
9700 AV Groningen
Netherlands
+31 50 363 3746 (Phone)
+31 50 363 3730 (Fax)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

Harry Garretsen

Utrecht University - School of Economics ( email )

Kriekenpitplein 21-22
Adam Smith Building
Utrecht, 3584 EC
Netherlands
+31 0 30 253 9810 (Phone)

CESifo (Center for Economic Studies and Ifo Institute)

Poschinger Str. 5
Munich, DE-81679
Germany

HOME PAGE: http://www.cesifo.de

Radboud University Nijmegen - Department of Economics ( email )

Nijmegen, 6500 HK
Netherlands
+31 24 361 5889 (Phone)
+31 24 361 1846 (Fax)

Zhao Zhao

Independent ( email )

No Address Available

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