Abstract
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.
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Notes
Enterprises in this database make up over 90 % of the national manufacturing output value and each reports annual business income of more than five million. Thus, they are good representatives of China’s national sample.
The two-digit code for this manufacturing in database is 40.
The other four industries are: pharmaceutical manufacturing industry, aerospace manufacturing industry, computer and office equipment industry and medical equipment and instrument manufacturing industry.
Data come from China’s High-tech Industry Statistical Yearbook 2008.
Our empirical research can only present a net effect of these two features because R&D expense in 2007 is the only information on business R&D in our dataset and it is hard to identify the change in composition of firms conducting R&D with cross-sectional data.
Our database has already categorized existing firms into three parts and assigned value 1 for large companies, 2 for mid-scale firms and 3 for small setups.
This has already been categorized in our database.
This does not contradict the fact that upstream sectors are the least innovative. Upstream firms may invest less if there are no strategies of preemption.
They are defined as cities whose density or location quotient or industrial diversity is higher than the median value.
We allow multiple choices. That is why observations of treatment and control groups might be different.
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Acknowledgments
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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Zhang, P., He, C. & Sun, Y. Agglomeration economies and firm R&D efforts: an analysis of China’s electronics and telecommunications industries. Ann Reg Sci 53, 671–701 (2014). https://doi.org/10.1007/s00168-014-0638-9
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DOI: https://doi.org/10.1007/s00168-014-0638-9