Enterprise heterogeneity, agglomeration model, and urban exports: Evidence from Chinese cities and micro enterprises

Abstract

Heterogeneous enterprise agglomeration is an important perspective in understanding urban exports and reshaping the new advantages of urban openness. This paper considers data from China’s industrial enterprises and municipality-level panel data from 192 cities to systematically examine enterprises’ heterogeneity, agglomeration patterns, and urban exports. The results reveal that: (1) the heterogeneity in enterprise productivity exhibits a significant promotional effect on urban exports in China’s central and northeastern regions, but not on its western regions; (2) specialized agglomeration positively affects exports in the central and western regions and in small and medium-sized cities, while diversified agglomeration significantly and positively impacts the eastern and northeastern regions and small and large cities; and (3) thresholds exist in determining the effects of agglomeration and sequencing on urban exports and their sequence by considering heterogeneity in enterprises’ productivity. This work provides important policy implications for the development of export trade in cities and countries by suggesting a focus on rational planning and adjustments to regional industrial policies, improvements to talent flow mechanisms, and construction of social infrastructures.

HIGHLIGHTS

• Heterogeneous enterprise agglomeration can shape exports from city-based businesses

• A new simultaneous model determines how to increase urban exports

• Heterogeneity can have various impacts in different Chinese regions and cities

• Increasing productivity and exports requires strategic planning for optimization

KEYWORDS:

• Heterogeneous enterprise
• urban export
• new economic geography
• agglomeration effect
• ranking effect

JEL Classifications:

• F061
• F290
• F14
• F23
• R15

Acknowledgements

The authors are very grateful for funding and support through the National Social Science Fund of China (13CJY033), Jiangsu Social Science Fund (18EYA005), and the Priority Academic Program Development of Jiangsu Higher Education Institute (PAPD).

Authors contribution

Wenwu Zhang: Data curation, Methodology, Software, Writing – original draft, Visualization, Writing – review & editing. Ruru Li: Conceptualization, Supervision, Validation, Methodology, Software, Writing – original draft, Writing – review & editing. Fei Zuo: Conceptualization, Supervision, Validation, Writing – review & editing.

Disclosure statement

No potential conflict of interest was reported by the author(s).

Notes

1 As the China City Statistical Yearbook only provides employment data for urban units in different industries, and generally lacks employment data for private-sector industries, this paper estimates its agglomeration indicators based on the number of employees in urban units.

2 According to the latest 2018 statistical data from the National Bureau of Statistics, the eastern, central, western, and northeastern regions are divided. The eastern region includes Beijing, Tianjin, Hebei, Shanghai, Jiangsu, Zhejiang, Fujian, Shandong, Guangdong, and Hainan. The central region includes Shanxi, Anhui, Jiangxi, Henan, Hubei, and Hunan. The northeastern region includes Liaoning, Jilin, and Heilongjiang, while the western region includes other provinces.

3 This paper divides city size according to population. Large cities have populations of more than five million, medium cities have populations between two and five million, and small cities have populations of less than two million.

Additional information

Funding

This work was supported by Social Science Foundation of Jiangsu [grant number 18EYA005].