Spatial agglomeration and firm productivity: Does trade status matter?

This study uses micro-level panel data from Chinese manufacturing firms to investigate the impact of spatial agglomeration on firm productivity, taking a firm's engagement in international trade into consideration. Embracing firm heterogeneity in trade status, we find that non-exporters benefit from urban agglomeration through manufacturing specialization, whereas little effect of local specialization on productivity is found among exporters. The findings are driven mainly by processing exporters involved in straightforward assembly. These findings increase the understanding of heterogeneous productivity gains from urban agglomeration and the spatial economy in China.