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Research Seminars & Workshops @ IRES


Dr Li Pei
Institute of Real Estate Studies, National University of Singapore

Agglomeration Benefits: When the Helping Hand and the Grabbing Hand Meet


Date:

14 December 2011, Wednesday

Time:

12.30 pm – 2.00 pm

Venue:

RMI Executive Seminar Room
21 Heng Mui Keng Terrace, Level 4


Abstract

While there are lots of theoretical and empirical studies delving into the nature and sources of agglomeration economies, few focus on the political factors that may facilitate or obstruct this process. Using China as a case, this paper investigates to what extent industrial agglomeration effects would be dependent on the way in which political institution works. To this end, the premises underlying the helping hand story are re-examined based on a large firm-level dataset and detailed information on China's county governance for the period of 2000 to 2008. Our results show that China's decentralization reform is not a silver bullet of sorts for securing and maintaining effective discipline on the local government. In contrast, some arrangements enhance the predator-prey interactions between bureaucrats and firms. Hence, the overly simplistic view of agglomeration effects without a careful study of the context can be harmful to policy.

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