eThesis - Kauppakorkeakoulun sähköiset gradut

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Guangdong, the forerunner of implementing open door policies in China, has experienced the prevailing industrial agglomeration since 1990s. Previous research attributed this concentration to many factors other than international trade which is a key characteristic of Guangdong economic development. Based on the study of the manufacturing industry in Guangdong, this paper aims to find out whether international trade pushes industrial agglomeration. This paper will observe eleven manufacturing sectors in Guangdong over the 2000-2009 period and build the models with transformed measures of industrial agglomeration and international trade as well as two other factors. Next the models will be examined in different ways such as Cross-Section Weighted Least Squares (CSWLS), Two Stage Least Squares (2SLS) and Generalized Method of Moments (GMM). The finding of this paper is that international trade does have a positive impact on agglomeration at least in some sectors of manufacturing industry in Guangdong Province, China.