The Impact of Industrial Agglomeration on the Economic, Technological and Environmental Performance of China's Manufacturing Industry

Yuan, Shentu and Rosita, Hamdan (2026) The Impact of Industrial Agglomeration on the Economic, Technological and Environmental Performance of China's Manufacturing Industry. PhD thesis, Universiti Malaysia Sarawak.

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Abstract

Industrial agglomeration is a defining feature of China’s manufacturing sector, yet its multidimensional consequences remain insufficiently understood. Existing studies rarely integrate economic, technological, and environmental dimensions within a unified spatial econometric framework, often overlooking the trade-offs between competing regional objectives and the distinction between local impacts and spatial spillover effects. This thesis addresses this gap by systematically examining how industrial agglomeration reshapes regional manufacturing performance through both local and spillover channels. Using provincial panel data from 2008 to 2022 and spatial econometric models (e.g., the Spatial Durbin Model, SDM), this study evaluates the impacts of alternative agglomeration measures, including specialization, industrial concentration, and employment density. The results reveal a clear “triple-effect” pattern. Agglomeration generally enhances economic performance, but the spillover benefits are spatially uneven and geographically bounded. In contrast, higher agglomeration—especially in more concentrated configurations—is associated with weaker technological innovation, consistent with a spatial “siphoning effect” in which innovation-related capacity becomes more unevenly distributed across regions. Environmental impacts are heterogeneous: specialization-based clustering tends to improve local environmental outcomes, whereas high-density concentration can generate negative spillovers to neighboring regions, implying cross-regional governance externalities. The novelty of this research lies in constructing an integrated spatial econometric framework that jointly evaluates economic, technological, and environmental outcomes and clarifies why “one-size-fits-all” agglomeration policies may fail in a spatial economy. The findings support differentiated regional industrial strategies, improved spatial allocation of innovation factors, and stronger cross-regional environmental coordination to advance sustainable and high-quality manufacturing development in China.

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