TY - JOUR
T1 - Relatedness economies, absorptive capacity, and economic catch-up
T2 - Firm-level evidence from China
AU - Howell, Anthony
N1 - Publisher Copyright:
© 2019 The Author(s) 2019. Published by Oxford University Press on behalf of Associazione ICC. All rights reserved.
PY - 2020/4/1
Y1 - 2020/4/1
N2 - This paper examines the effect of agglomeration economies on firm productivity and the role of absorptive capacity in China. Taking into account the transitioning economy context, I further exploit the gradual and spatially uneven implementation of market-oriented reforms to track the relative importance of firms' absorptive capacity for economic catch-up. The three main results are as follows. First, firms exhibit higher productivity when located in an area with a denser network of related activities, particularly for firms with higher absorptive capacity. Second, the sources of the productivity gains are driven by externalities that arise from better access to inputs, similar workers and technological-related knowledge spillovers. Third, the role of absorptive capacity becomes more important for boosting productivity following more versus less intensive market-oriented economic reforms. These findings have important policy implications for transitioning economies and suggest that market reforms promote efficiency improvements related to performing actual R&D as well as encourage firms to seek out external sources of knowledge in order to attain market competitiveness.
AB - This paper examines the effect of agglomeration economies on firm productivity and the role of absorptive capacity in China. Taking into account the transitioning economy context, I further exploit the gradual and spatially uneven implementation of market-oriented reforms to track the relative importance of firms' absorptive capacity for economic catch-up. The three main results are as follows. First, firms exhibit higher productivity when located in an area with a denser network of related activities, particularly for firms with higher absorptive capacity. Second, the sources of the productivity gains are driven by externalities that arise from better access to inputs, similar workers and technological-related knowledge spillovers. Third, the role of absorptive capacity becomes more important for boosting productivity following more versus less intensive market-oriented economic reforms. These findings have important policy implications for transitioning economies and suggest that market reforms promote efficiency improvements related to performing actual R&D as well as encourage firms to seek out external sources of knowledge in order to attain market competitiveness.
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U2 - 10.1093/icc/dtz050
DO - 10.1093/icc/dtz050
M3 - Article
AN - SCOPUS:85118779664
SN - 0960-6491
VL - 29
SP - 557
EP - 575
JO - Industrial and Corporate Change
JF - Industrial and Corporate Change
IS - 2
ER -