Industry Agglomeration and Externalities:the Case of China

This paper did some research of externalities,which affects Chinese industrial agglomeration,and provided empirical evidence on the relation between labor productivity and industrial specialization and industrial diversity.By the study we find four points:There is a strong evidence that externalities had great effects on China industrial agglomeration,no matter in static or dynamic process;Statically,industrial specialization and diversity enhance the labor productivity;Dynamically,industrial specialization baffles the improvement of labor productivity while there is a weak evidence of the effect of industrial diversity on the labor productivity statistically;As for region development disparity,there are three obvious levels of region labor productivity,but the rate of region productivity growth converged over time.This paper implies strong political meaning.If force the integration process and transfer some industries,now huddle in the east coastal areas to interior areas,it will make an significant and first step to shrink regional disparity and keep regional economics in harmonious development.