How Efficient Is China’s Industrial Relocation from East to West? -Evidence from 20 Manufacturing Industries*

Zhou Qin 1 and Zhou Shijun
1School of Economics & Management, Southeast University, Nanjing, China
2School of Economics, Anhui University of Technology, Ma’anshan, China

 
Abstract: With the acceleration of the rise of central China and the western development drive, industrial relocation from China’s eastern region to the central and western regions is in full swing. However, does the relocation demonstrate industrial clustering effect? Empirical studies based on twenty two-digit manufacturing industries in 27 provinces from 2000 to 2009 demonstrate that industrial clustering effect appeared in central and western regions which had undertaken industrial relocation from eastern region; however, the studies do not show excessive administrative interference as evidenced by the significantly improved productivity of the relocated industries. Compared with non-labor intensive manufacturing industries, labor-intensive manufacturing industries are easier to form cyclic accumulative effects. Studies also revealed that improvement in supporting infrastructure, industrial chain and higher labor quality in non-agriculture employment during urbanization are significant for central and western regions to undertake industrial relocation.
Keywords: industrial relocation, agglomeration, returns to scale, Generalized Method of Moments (GMM)

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