City–industry growth in China

This paper investigates the relevance of two leading theories of city–industry growth (i.e., specialization and diversity theories) in accounting for the fast yet uneven growth of industries in Chinaʹs cities. Using a comprehensive dataset of manufacturing industries in 231 Chinaʹs 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 Chinaʹs relatively new and fast-growing 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.