Agglomeration Externalities and Regional Economic Performance: A Theoretical Model Based on Regional Opening

As the principal item to explain the causes of agglomeration, agglomeration externalities have been a focus of spatial economic research. In this study, a two-industry two-region model is constructed to depict the economic process in which regional opening results in agglomeration of the same industries and collaborative agglomeration of different industries(upstream-downstream industries), revealing that the enterprises choose to agglomerate under the condition of regional opening because they are motivated to obtain interests from different types of agglomeration externalities; the obtaining of the interests from agglomeration externalities has important implications for enhancing regional economic performance. On this basis, starting with the issue of regional industrial upgrading, this study purports to argue that the distinguishing of the three types of agglomeration externalities is very crucial for clarifying the whole theoretical thread "regional opening- agglomeration externalities- regional economic performance- regional industrial upgrading".