Agglomeration economies and firm R&D efforts: an analysis of China’s electronics and telecommunications industries
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China is on the way toward an innovation-oriented economy as well as a manufacturing powerhouse. R&D investments play a central role in improving China’s industrial competitiveness. This study conducts empirical analysis to test the role of agglomeration economies in R&D efforts using plant-level data of the electronic and telecommunication equipment manufacturing industry in 2007. Statistical results suggest that both localization and urbanization economies significantly affect firm R&D. Downstream sectors are the major driving force of business R&D. Downstream firms are more likely to generate externalities than upstream ones. Upstream and midstream agglomerations even generate negative externalities due to preemption.
JEL ClassificationD22 L63 O32 R12
The authors would like to acknowledge funding from the Natural Science Foundation of China (Nos. 41271130 and 41071075) and the constructive comments and suggestions of the anonymous referees and the editor. The errors remain those of the authors.
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