Un-equilibrium Research on Industry Agglomeration in China

The scale of industry agglomeration has a right level. This text constructs an model based for 20 industries in China manufacture industry for the period 1999-2003, using LS estimation methods. The results indicate that China industry agglomeration level is un-equilibrium, and the actual industry agglomeration level is affected significantly by the initial industry agglomeration level and the long-run industry agglomeration level. The empirical model distinguishes long-run effects from initial effects and estimates the rate of adjustment when agglomeration deviates from its long-run equilibrium level. But the adjustment speed to the long-run seems to be faster in China than in most Western studies. The analytic results mean the difference in industry agglomeration level between the initial and the long-run will disappear average is 6.85 years.