Can the establishment of state-level urban agglomeration stimulate enterprise innovation?—Taking Yangtze River Delta and Pearl River Delta as an example

Abstract

This study uses a quasi-experimental method, Geographic Regression Discontinuity Design (GRDD), to evaluate the actual effect of establishing Yangtze River Delta and Pearl River Delta urban agglomerations on enterprise innovation. GRDD is a design in which a geographic boundary splits the units into treated and control areas in an as-if random fashion, and the shortest distances from each enterprise’s location to the boundary of urban agglomeration calculated by ArcGIS are considered as the running variable. The actual effect can be identified by the probability of receiving treatment jumps discontinuously at the known cutoff. It is shown that the establishment of Yangtze River Delta and Pearl River Delta urban agglomerations can significantly improve the enterprise innovation, and this outcome is verified by rigorous robustness tests including the placebo test with pseudo-boundary, the bandwidth sensitivity test, the parametric test with different functional forms and the extreme value test. Further, the influence mechanisms of state-level urban agglomerations promoting enterprise innovation are explored by Staggered DID. It is confirmed that the urban agglomeration construction can promote enterprise innovation through financial support and regional coordination channels.