Impact of Productive Service Agglomeration on Urban Technological Innovation: Based on China's 19 Urban Agglomerations

Abstract

Urban agglomerations, emerging as pivotal spatial units, increasingly attract essential production factors—talent, technology, and capital—thereby transforming cities into innovation hubs. This study critically examined how productive service agglomeration, through the lens of agglomeration economies and externalities, acts as a catalyst for urban technological advancement. It investigated the spatial effects and underlying mechanisms by which productive service industry agglomerations impact urban technological innovation. Our findings reveal that both specialized and diversified agglomerations significantly enhance urban technological capabilities. However, diversified agglomerations might also negatively impact surrounding areas, revealing a complex spatial interplay. Importantly, while the aggregation of productive services boosts innovation by attracting R&D talent, it does not similarly influence the movement of R&D capital, thereby limiting further technological advancements. The effects of specialized and diversified agglomerations vary across different urban scales and regions. In China, although the productive service industry largely comprises lower-end sectors like finance, leasing, and business services, high-end tech industries remain underdeveloped, lacking robust growth momentum. This study underscores a critical gap in understanding the differential impacts of service industry agglomerations on urban innovation ecosystems and emphasizes the need for nuanced policy interventions to optimize these dynamics for sustainable urban and technological development.