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Economic reforms and industrial policy in a panel of Chinese cities


Alder, Simon; Shao, Lin; Zilibotti, Fabrizio (2016). Economic reforms and industrial policy in a panel of Chinese cities. Journal of Economic Growth, 21(4):305-349.

Abstract

We study the effect of place-based industrial policy on economic development, focusing on the establishment of Special Economic Zones (SEZ) in China. We use data from a panel of Chinese (prefecture-level) cities from 1988 to 2010. Our difference-in-difference estimation exploits the variation in the establishment of SEZ across time and space. We find that the establishment of a state-level SEZ is associated with an increase in the level of GDP of about 20 %. This finding is confirmed with alternative specifications and in a sub-sample of inland provinces, where the selection of cities to host the zones was based on administrative criteria. The main channel is a positive effect on physical capital accumulation, although SEZ also have a positive effect on total factor productivity and human capital investments. We also investigate whether there are spillover effects of SEZ on neighboring regions or cities further away. We find positive and often significant spillover effects.

Abstract

We study the effect of place-based industrial policy on economic development, focusing on the establishment of Special Economic Zones (SEZ) in China. We use data from a panel of Chinese (prefecture-level) cities from 1988 to 2010. Our difference-in-difference estimation exploits the variation in the establishment of SEZ across time and space. We find that the establishment of a state-level SEZ is associated with an increase in the level of GDP of about 20 %. This finding is confirmed with alternative specifications and in a sub-sample of inland provinces, where the selection of cities to host the zones was based on administrative criteria. The main channel is a positive effect on physical capital accumulation, although SEZ also have a positive effect on total factor productivity and human capital investments. We also investigate whether there are spillover effects of SEZ on neighboring regions or cities further away. We find positive and often significant spillover effects.

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Additional indexing

Item Type:Journal Article, refereed, original work
Communities & Collections:03 Faculty of Economics > Department of Economics
Dewey Decimal Classification:330 Economics
Uncontrolled Keywords:China; economic growth; economic reforms; industrial policy; special economic zones; productivity
Language:English
Date:December 2016
Deposited On:24 Nov 2016 12:41
Last Modified:04 Dec 2016 06:28
Publisher:Springer
ISSN:1381-4338
Free access at:Related URL. An embargo period may apply.
Publisher DOI:https://doi.org/10.1007/s10887-016-9131-x
Related URLs:http://www.zora.uzh.ch/87075/ (Organisation)

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