Urban Agglomeration Construction and Corporate Cross-regional Investment: Empirical Evidence From China’s 19 Major Urban Agglomeration
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Urban Agglomeration Construction and Corporate Cross-regional Investment: Empirical Evidence From China’s 19 Major Urban Agglomeration
XU Chaoya1, ZHANG Weiguo2
1. School of Economics and Management, Southwest University, Chongqing 400715, China; 2. Institute of Rural Revitalization Strategy, Southwest University, Chongqing 400715, China
Abstract Based on the data of parent and subsidiary companies of listed firms on China’s Shanghai and Shenzhen A-share markets from 2003 to 2022, the paper uses the policy events of city agglomerations establishment formally approved by the State Council or provincial people’s governments as quasi-natural experiments, and employs the difference-in-differences method to explore the impact of urban agglomeration construction on corporate cross-regional investments. The results show that the construction of urban agglomerations significantly promotes firms’ out-of-region investments within these agglomerations, and it particularly encourages firms to establish subsidiaries in non-core cities. The heterogeneity analysis indicates that, compared with urban agglomerations in the development stage, the construction of urban agglomerations exerts a more pronounced effect on promoting out-of-region investment by firms located in mature and growth-oriented urban agglomerations. Additionally, compared with firms in technology intensive industries, the construction of urban agglomerations has a more significant impact on promoting out-of-region investment by firms in capital-intensive and labor’intensive industries. Moreover, the effect of urban agglomeration construction on firms’ out-of-region investment does not exhibit heterogeneity based on property rights. The mechanism analysis reveals that firms within urban agglomerations establish subsidiaries in non-core cities to seek lower production factor costs. Further analysis manifests that the construction of urban agglomerations can generate spillover effects on surrounding cities outside the agglomeration, attracting firms to set up subsidiaries in these peripheral cities. The conclusions provide empirical evidence on how to fully leverage the empowering role of urban agglomeration policies in the construction of a unified national market.
2025, Vol. 42 
