Please use this identifier to cite or link to this item: http://hdl.handle.net/10419/230369
Authors: 
Chen, Liming
Hasan, Rana
Jiang, Yi
Year of Publication: 
2020
Series/Report no.: 
ADB Economics Working Paper Series No. 616
Abstract: 
This paper presents evidence on the spatial distribution and effects of urban agglomeration on firm innovation. It uses a unique dataset that consistently defines city boundaries and identifies firms' innovation-related activities across 25 developing countries in Asia. We find firm innovation to be highly concentrated at the city level. We also find substantial gains from increases in city population in terms of firms' propensity to introduce process and product innovations and undertake research and development (R&D) activities. These gains remain even after addressing concerns regarding endogeneity through the use of historical population data as instruments. In addition, we present evidence that knowledge spillovers are an important channel through which agglomeration effects occur, specifically through the presence of top-tier universities in a given city and by raising the effectiveness of firms' R&D efforts. These findings confirm the existence and significance of urban economies of scale in augmenting the knowledge flows that generate innovation.
Subjects: 
agglomeration economies
innovation
knowledge spillovers
JEL: 
O30
R11
O10
Persistent Identifier of the first edition: 
Creative Commons License: 
https://creativecommons.org/licenses/by/3.0/igo/
Document Type: 
Working Paper

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