Abstract:

“Core-Periphery” model is the core theory of Economic Geography and Regional Economics. Existing papers have shown that agglomeration of economic activities will bid up local wages, which may result in the dispersion of local companies, called “centrifugal forces”. In this paper, we find that the increasing of knowledge spillovers and market potential can strength the “centripetal forces” for local companies, and especially important for R&D activities or industries, which more reliance on knowledge, information and market atmosphere. Then we use empirical data of different provinces to analyze how these two forces, hedging each other, affects regional R&D agglomeration. These findings may be explanatory to industries relocation and R&D agglomeration has occurred in many places. Besides, it is meaningful to help policy-makers understand how to optimize regional industries distribution and to enhance economic transformation and upgrading.