City-industry Growth in China

This paper investigates the relevance of the two leading theories for city-industry growth (i.e., specialization and diversity theories) in accounting for the fast yet uneven growth of industries in China's cities. Using the data set of 29 two-digit manufacturing industries in 231 China's cities for the period 1998-2005, we find that specialization promotes city-industry growth, whereas diversity has no effect at all. In addition, we find that specialization is important for the growth of mature industries in China, but diversity is crucial for the development of China's relatively fewer high-tech industries. Our study contributes to the literature by examining the relevance of the specialization and diversity theories for a large and fast-growing developing economy