Economic Agglomeration and Location Choice of China's Private Sector PPP Investment
LI Zhen1, SHEN Yanyan2
1. School of Business, East China University of Science and Technology, Shanghai 200237, China; 2. School of Economics, Hefei University of Technology, Hefei 230009, China
Abstract PPP has become one of the important tools for Chinese governments at all levels to relieve financial pressure and improve the quality of public services. Based on the micro data of China's private sector PPP investment in the World Bank PPI database and the economic characteristics data of 254 prefecture level cities, this paper studies the impact of economic agglomeration on the location choice of private sector PPP investment. The results show that there is an inverted U-shaped relationship between economic agglomeration and private sector PPP investment location choice. After taking into account the endogenous problems and the impact of interference control policies, the results are still valid by using different economic agglomeration indicators and threshold effects. Further study finds that the PPP project cycle, the business environment where the project is located and the market potential will play a positive role in regulating the relationship between the two. Especially when economic agglomeration exceeds a certain degree, longer project cycle, good business environment and market scale can magnify the “scale effect” of economic agglomeration and alleviate the decline of private sector participation caused by excessive economic agglomeration. On the other hand, the proportion of private sector investment and the scale of project investment will enhance the “crowding effect” of economic agglomeration and play a negative role in regulating the relationship between them.
2022, Vol. 39 
