The New Geography of Manufacturing in China: The Internet and Manufacturing Agglomeration

Abstract

The Internet has profoundly affected the spatial structure of cities, but few relevant studies have investigated it from the perspective of manufacturing agglomeration. Using panel data of prefecture-level cities in China covering the period 2003–2019, this paper studies how the Internet affects manufacturing agglomeration. The results show that there is a U-shaped relationship between the Internet and manufacturing agglomeration, and the underlying channel can be the enhancement of market potential. Human capital can enhance the role of the Internet in promoting manufacturing agglomeration. The findings can contribute to a better understanding of the relationship between the Internet and urban spatial structure in developing countries.