Abstract:

In recent years, increased attention has been given to the role of city networks in promoting economic performance. Nevertheless, the empirical evidence concerning urban network externalities and its transmission mechanisms is at best patchy. This study sets out to gain a better understanding of network externalities through the lens of corporate networks in China. Information on the headquarter and branch locations of China's top 500 public companies in 2017 are subjected to ownership linkage model to construct the urban network, resulting in a panel data with 265 cities in 2006 and 2016. Then the impacts of network linking strength and economic performance of partners on urban economic growth are quantitatively measured, and the dynamic mechanisms of network links that affect urban economic growth under the production fragmentation environment are discussed. Two conclusions are drawn. First, the transmission mechanisms of network embeddedness influencing urban economic growth in China have different effects. The analysis results of all samples show that the strength of network links has a profound impact on the quality of urban economic growth, but the impact of economic performance of partners is not obvious. This means that, in general, the transmission mechanisms of network embeddedness are to highlight the comparative advantages and economies of scale of cities, rather than to promote knowledge spillovers and technical progress. Second, the impact of network embeddedness on urban economic growth is heterogeneous in many dimensions. Cities in the eastern region, core position or with a large population size benefit more from the network competitive advantage and the knowledge flow system of "local buzz and global pipelines", while cities in the central and western regions, peripheral position or with a small population, bounded by lack of network competitiveness and "knowledge gatekeeper", increase the risks of low-end lock of industrial economy. In the future, the policy and governance of urbanization in China need to be adjusted accordingly. The Chinese government should promote network cooperation among cities on a larger spatial scale, and attach great importance to the multi-dimensional development gap between cities under the network environment.

Key words: production fragmentation, network embedding, transmission mechanism, economic growth, space of flows