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How Does Agglomeration Promote the Product Innovation of Chinese Firms?

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  • ZHANG Hong-yong
Abstract
This study empirically analyzes the effect of agglomeration economies on firm-level product innovation (new products), using Chinese firm-level data from 1998 to 2007. In terms of new product introduction and new product output, Chinese firms benefit from urbanization economies (as measured by the number of workers in other industries in the same city and by the diversity of industries in the same city). Conversely, there were no positive effects of localization economies (as measured by the number of other workers working for neighboring firms in the same industry and in the same city). These results suggest that, in China, urbanization economies play an important role in fostering product innovation by urban size and diversity.

Suggested Citation

  • ZHANG Hong-yong, 2014. "How Does Agglomeration Promote the Product Innovation of Chinese Firms?," Discussion papers 14022, Research Institute of Economy, Trade and Industry (RIETI).
    • Handle: RePEc:eti:dpaper:14022
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    8. Luong Vinh Quoc Duy & Damien Cassells, 2022. "Agglomeration and innovation effort: A longitudinal study on small and medium manufacturing enterprises in Vietnam," Review of Development Economics, Wiley Blackwell, vol. 26(3), pages 1252-1268, August.
    9. Tianjiao Xia & Xiaohui Liu, 2017. "Foreign competition, domestic competition and innovation in Chinese private high-tech new ventures," Journal of International Business Studies, Palgrave Macmillan;Academy of International Business, vol. 48(6), pages 716-739, August.
    10. Wei Han & Ying Zhang & Jianming Cai & Enpu Ma, 2019. "Does Urban Industrial Agglomeration Lead to the Improvement of Land Use Efficiency in China? An Empirical Study from a Spatial Perspective," Sustainability, MDPI, vol. 11(4), pages 1-22, February.
    11. Wei Zhao & Chao Zhu & Yaoyao Zhu, 2022. "The Comparative Advantage of Cities and Innovation Value Chain: Evidence from China," Sustainability, MDPI, vol. 14(6), pages 1-14, March.
    12. Tianling Zhang & Panda Su & Hongbing Deng, 2021. "Does the Agglomeration of Producer Services and the Market Entry of Enterprises Promote Carbon Reduction? An Empirical Analysis of the Yangtze River Economic Belt," Sustainability, MDPI, vol. 13(24), pages 1-21, December.
    13. Zhang, Dongyang & Zhuge, Liqun & Freeman, Richard B., 2020. "Firm dynamics of hi-tech start-ups: Does innovation matter?," China Economic Review, Elsevier, vol. 59(C).
    14. Pushkarev, A. A., 2018. "Cluster analysis of regional innovation activity in Russia in 2010-2015," R-Economy, Ural Federal University, Graduate School of Economics and Management, vol. 4(1), pages 10-17.
    15. INADA Mitsuo, 2019. "Promotion or Liberalization: The Effect of Targeted Investment Policies on FDI Inflows," Discussion papers 19071, Research Institute of Economy, Trade and Industry (RIETI).
    16. Guan, JianCheng & Pang, Lanxin, 2017. "Industry specific effects on innovation performance in China," China Economic Review, Elsevier, vol. 44(C), pages 125-137.
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    19. Wei, Wei & Zhang, Wan-Li & Wen, Jun & Wang, Jun-Sheng, 2020. "TFP growth in Chinese cities: The role of factor-intensity and industrial agglomeration," Economic Modelling, Elsevier, vol. 91(C), pages 534-549.
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    JEL classification:

    • L60 - Industrial Organization - - Industry Studies: Manufacturing - - - General
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes

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