Spatial Agglomeration,Scale Threshold and Innovation——Evidence from China Manufacturing Census

As a typical spatial economic phenomenon,the impact of industrial agglomeration on technology innovation mainly originates from the geographical proximity effect. Geographical proximity not only reduces the risk of innovation activities,but also facilitates the transfer and communication of knowledge,especially tacit knowledge,thereby expanding the innovation network and promoting the innovation output. Specialization spillover and diversification spillover are two important affecting channels of spatial agglomeration.However,the importance of specialization and diversification agglomeration for knowledge production and dissemination is not consistent. In addition to using different samples,measuring methods and variables,the previous literature primarily neglects scale difference effect( enterprise scale and agglomeration scale) on the agglomeration externality, thereby producing a seemingly contradictory conclusion.The paper proposes an analysis framework of spatial agglomeration,scale threshold(enterprise scale and agglomeration scale) and technology innovation and utilizes China's manufacturing industry enterprise census data to examine the scale threshold impact of spatial agglomeration on technology innovation after controlling human capital and city scale variables. The empirical results show that specialized externalities and diversified externalities are conducive to technology innovation within enterprises,and the spillover effect depends on the scale threshold. For the scale threshold,the impact of specialized externalities and diversified externalities on enterprise innovation is not linear. The agglomeration of small and medium-sized city tends to specialize,while the agglomeration of large city tends to diversify. The smaller the city scale,the more important the specialized externalities ‘ effect on enterprises' technology innovation is. The larger the city scale,the more important the diversified externalities ‘ on enterprise' technology innovation is. Lager enterprise' innovation activity is relatively independent. However,anti-risk ability of small enterprise is weak. The innovation activity is highly dependent on good external environment conditions,especially at the industry diversification level. Specialized externalities and diversified externalities in the eastern region are obvious. However,these externalities are not significant in the central and western regions. The results indicate that the reason of empirical conflicts the agglomeration effect in previous literature is because of inability to control the scale of enterprises and the agglomeration effect.Our findings have important implications for regional industrial policy and innovation policy.In smaller areas,the government should focus on supporting industry specialization and encouraging enterprises to collaborate with each other in order to accelerate internal knowledge spillover. In larger areas,the government should encourage industry diversification in order to facilitate the communication and cooperation between industries. The government should formulate different industry and innovation policies according to enterprises of different scales. The government should provide a favorable policy environment to promote industry diversification and the exchange of knowledge and technology in different industries.