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Technological Innovation Agglomeration, Pecuniary Externalities and Regional Productivity Growth
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TitleTechnological Innovation Agglomeration, Pecuniary Externalities and Regional Productivity Growth  
AuthorZhang Lihua, Chen Weizhong and Lin Shanlang  
OrganizationSchool of Economics and Management, Tongji University, Shanghai;; 
Key WordsAgglomeration Effects; TFP Growth; Pecuniary Externalities 
AbstractThe reason for spatial agglomeration is the agglomeration effects associated with it. As a form of external scale economy, agglomeration effects can bring various benefits to economic agents. However, agglomeration effects will evolve over time, which means that it will have different effects according to different levels of agglomeration degree. This paper incorporates the positive and negative effects of agglomeration into one single framework and then reveals how the net agglomeration effects would change with agglomeration degree by introducing the concept of pecuniary externalities. Empirically, we utilize the panel data set for 286 Chinese cities form 2005 to 2009 to test the “inverted U-shaped” relationship between the degree of technological innovation agglomeration and regional productivity growth rate. Results show that there is significant quadratic relationship between regional total factor productivity (TFP) growth rate and degree of regional technological innovation agglomeration. This means that after a threshold level, the regional TFP growth rate will decrease with the increase of innovation agglomeration degree. We also carry out the regression for east, middle and west part of China respectively. Theses results show that the degree of technological innovation agglomeration of cities in the west part of China is too low to have significant impact on regional TFP growth, which illustrates that there is also a threshold value for agglomeration effects to arise. 
Serial NumberWP298 
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