亚开行-城市群与企业创新：来自亚洲的证据（英文）-2020.7-41页_1mb

Summary of "Urban Agglomeration and Firm Innovation: Evidence from Asia"

Core Content

This paper investigates the relationship between urban agglomeration and firm innovation in 25 Asian developing countries using a unique dataset. It provides empirical evidence on how city size and density influence the likelihood of firms engaging in innovation activities, including process innovation, product innovation, and research and development (R&D). The study also explores the mechanisms through which urban agglomeration affects innovation, such as knowledge spillovers and the presence of top-tier universities.

Main Viewpoints

• Urban agglomeration significantly enhances firm innovation.
• Innovation is spatially concentrated within cities, with a few cities accounting for a large share of innovative firms.
• The effect of city population on firm innovation is positive and substantial, even after controlling for endogeneity.
• Knowledge spillovers, particularly from top universities, play a crucial role in the agglomeration effects on innovation.
• Firms in larger cities are more likely to engage in product and process innovations and R&D activities.
• The effect of agglomeration varies by country development level and institutional context.

Key Information

Data Overview

• The study uses World Bank Enterprise Survey (WBES) data from 2012 to 2016, covering 21,857 firms across 25 Asian countries.
• Natural cities are defined using nighttime light (NTL) satellite imagery from 1992 to 2016, which allows for consistent city boundary definitions.
• Geocoded firm locations are used to map firms to natural cities, with 87% of WBES firms successfully matched to natural cities.
• Population data is sourced from LandScan at approximately 1-km resolution, and historical population data (1950–1959) is used as an instrumental variable to address endogeneity concerns.

Innovation Measures

• Process innovation: 49.3% of firms reported introducing new or improved processes.
• Product innovation: 35.7% of firms introduced new or improved products or services.
• Main market product innovation: 20.5% of firms introduced products or services that were new in their main market.
• Firm R&D: 24.4% of firms invested in R&D activities.
• Firm innovation: 56.3% of firms engaged in either process or product innovation.

Firm Characteristics

• Young firms (operating for <10 years): 20.9% of firms.
• Small firms (≤50 employees): 64.5% of firms.
• FDI firms (≥10% of employees from foreign direct investment): 6.1% of firms.
• Manufacturing firms: 65.7% of firms.
• Headquarters: 41.3% of firms are headquartered in their respective countries.
• Skilled worker share: 34.8% of firms have a significant share of skilled workers.

Empirical Strategy

• The study employs a probit model and instrumental variable (IV) estimation to assess the causal effect of city size on firm innovation.
• Historical population data (1950–1959) is used as an instrument to address potential endogeneity issues in city population.

Main Results

• Baseline estimates show that an increase in city population raises the probability of firms engaging in process innovation by 3.9 percentage points, product innovation by 4.8 percentage points, and R&D by 2 percentage points.
• IV estimates confirm these results, with similar magnitudes of effect.
• Robustness checks support the findings, showing that the agglomeration effect remains significant even when controlling for various factors.
• Heterogeneity is observed across development levels and countries, with agglomeration effects present in both low and lower-middle-income and upper-middle-income countries, as well as in China, India, and ASEAN.

Channels of Agglomeration Effects

• The presence of top universities is a significant knowledge spillover channel.
• R&D effectiveness varies by city size, with larger cities showing stronger innovation outcomes.
• Geographic matching between firms and natural cities is used to analyze these channels effectively.

Conclusion

The study confirms that urban agglomeration economies are significant in fostering firm innovation in Asia. It highlights the importance of knowledge spillovers and urban density in enhancing innovation outcomes. These findings are particularly relevant for developing countries, where firms may not be at the global technological frontier but still benefit from urban agglomeration in their innovation processes.

References

• Romer, P. M. (1986). "Increasing Returns and Long-Term Growth." Journal of Political Economy.
• Jaffe, A. B. (1989). "Reallocation, Productivity, and Aggregate R&D." Journal of Political Economy.
• Duranton, G., & Puga, D. (2004). "What Do We Learn from the Spatial Distribution of Innovations?" Review of Economics and Statistics.
• Ayyagari, S., Demirguc-Kunt, A., & Maksimovic, V. (2011). "Innovation and the Performance of Firms." World Bank Policy Research Working Paper.
• Paunov, J. (2016). "Firm Innovation and the Role of the Environment." Journal of Economic Surveys.
• Paunov, J., & Rollo, M. (2016). "Innovation in Developing Countries: A Review." Journal of Economic Surveys.

Tables and Figures

• Table 1: Summary statistics of firm and city variables.
• Figure 1: Geographic distribution of natural cities by population size.

Notes

• The term "city" refers to natural cities, defined by NTL satellite imagery.
• $ denotes US dollars.
• The ADB does not guarantee the accuracy of data used in this paper.
• The Creative Commons Attribution 3.0 IGO license applies to this work.