Modern service industry agglomeration and its influencing factors: spatial interaction in Chinese cities

From the perspective of spatial interaction, the impact of the modern service industry’s agglomeration on today’s increasingly connected cities is worth studying. This study uses a spatial econometric model to test the development trends and factors influencing the modern service industry’s agglomeration in the Yangtze River Delta city group. The results show that the industry has the highest agglomeration in leasing and business and the lowest in education. The overall concentration of the industry is generally low, implying a more fragmented distribution. Moreover, the agglomeration has a significant positive spatial correlation with economic development, knowledge intensity, and city size. However, it has a negative correlation with information technology level and transportation infrastructure, inconsistent with existing research. This study argues that the development of the information technology level and transportation infrastructure in a city could lead to the ‘virtual agglomeration’ of the modern service industry and gradual decentralisation in geographical distribution. This is a new paradox that city groups may face when improving their infrastructure and developing modern services. This study uses the spatial interaction perspective to propose policy recommendations for promoting the modern service industry’s agglomeration and coordinated regional development.