The level of manufacturing industry reflects capital stock
level in the region, while prices of non-mobile factors are
determined by the industry of increasing returns to scale, which
means the manufacturing sector in developed regions can
provide greater economies of scale, so that the region's income
and consumption level can be improved(Krugman, 1991).
Baldwin, Martin and Ottaviano (2001) found that the spatial
agglomeration of regional economic activities would lower the
cost of innovation and stimulate economic growth, so that the
higher the concentration level of the manufacturing sector in a
region the more conducive to the creation of the capital in the
region.