Industry agglomeration and firm productivity in China: does highway access matter?

Guo, Minjia (2025) Industry agglomeration and firm productivity in China: does highway access matter? PhD thesis, University of Glasgow.

Abstract

Using detailed GIS and firm-level data, this thesis investigates the effect of highway access on within-industry agglomeration, coagglomeration and firm productivity in China during the period 1998-2007. In order to address the potential endogeneity problem and shed light on causality, this study constructs three types of time-variant instruments for the highway access variable, including the historical routes, least cost path network and straight line network.

This study finds that highway access positively affects within-industry agglomeration, and the results are consistent with IV estimations. The improved highway access enhances agglomeration for downstream industries by increasing their flexibility in location choices. Additionally, input-output adjusted highway access promotes within-industry agglomeration by lowering transportation costs for accessing inputs and outputs from other industries.

Regardingtheeffectsofhighwayaccessoncoagglomerationofindustrypairs,thisstudyfinds that better highway access increases coagglomeration at the province and city levels, but the effect is insignificant at the county level. The positive effect of highways on coagglomeration is larger for industry pairs with a lower share of state-owned enterprises, for related industries, and for those with input-output linkages.

The results indicate that highway access has a positive effect on firm productivity, with a 1% change in highway access yielding a 0.018% increase in firm TFP. Four channels are investigated, including within-industry agglomeration, coagglomeration, export, and innovation. This study finds that highway access affects firm productivity through the channels of within-industry agglomeration, coagglomeration, and exports, while the innovation channel is less significant.

• Item Type: Thesis (PhD)
• Qualification Level: Doctoral
• Subjects: H Social Sciences > HB Economic Theory
• Colleges/Schools: College of Social Sciences > Adam Smith Business School > Economics
• Supervisor's Name: Ding, Professor Sai and Yoshimoto, Dr. Hisayuki
• Date of Award: 2025
• Depositing User: Theses Team
• Unique ID: glathesis:2025-84837
• Copyright: Copyright of this thesis is held by the author.
• Date Deposited: 29 Jan 2025 09:26
• Last Modified: 29 Jan 2025 12:17
• Thesis DOI: 10.5525/gla.thesis.84837
• URI: https://theses.gla.ac.uk/id/eprint/84837