Assessing agglomeration economies in the Yangzi River Delta, China : a bayesian spatial econometric approach

This paper estimates the elasticity of labor productivity with respect to employment density, a widely used measure of the agglomeration effect, in the Yangtze River Delta, China. A spatial Durbin model is presented that makes explicit the influences of spatial dependence and endogeneity bias in a very simple way. Results of Bayesian estimation using the data of the year 2009 indicate that the productivity is influenced by factors correlated with density rather than density itself and that spatial spillovers of these factors of agglomeration play a significant role. They are consistent with the findings of Ke (2010) and Artis, et al. (2011) that suggest the importance of taking into account spatial dependence and hitherto omitted variables.

Agglomeration and firm-level productivity : a Bayesian spatial approach

This paper estimates the impact of industrial agglomeration on firm-level productivity in Chinese manufacturing sectors. To account for spatial autocorrelation across regions, we formulate a hierarchical spatial model at the firm level and develop a Bayesian estimation algorithm. A Bayesian instrumental-variables approach is used to address endogeneity bias of agglomeration. Robust to these potential biases, we find that agglomeration of the same industry (i.e. localization) has a productivity-boosting effect, but agglomeration of urban population (i.e. urbanization) has no such effects. Additionally, the localization effects increase with educational levels of employees and the share of intermediate inputs in gross output. These results may suggest that agglomeration externalities occur through knowledge spillovers and input sharing among firms producing similar manufactures.

Some practical guidance for the computation of free trade agreement utilization rates

The literature on the use of free trade agreements (FTAs) has recently been growing because it is becoming more important to encourage the use of current FTAs than to increase the number of FTAs. In this paper, we discuss some practical issues in the computation of FTA utilization rates, which provide a useful measure to discover how much FTA schemes are used in trade. For example, compared with the use of customs data on FTA utilization in imports, when using certificates of origin data on FTA utilization in exports, there are several points about which we should be careful. Our practical guidance on the computation of FTA utilization rates will be helpful when computing such rates and in examining the determinants of those rates empirically.