 The Spillover effect of export processing zonesWeixiao Wu, Chang Hong and Andrew Muhammad China Economic Review, 2020, vol. 63, issue C Abstract: China has established many Export Processing Zones (EPZs) to support exports in a few industries with the support of local government. These industries can be defined as the pillar industries of an EPZ. We use a difference-in-difference approach to study the spillover effect of an EPZ on the adjacent firms outside the zone, using a sample of 42 Chinese cities with their first EPZs being founded during 2000–2005. We find that EPZs improve the performance of surrounding firms near the zone, with the impact being larger for firms in the pillar industries that the EPZs particularly favor. We also find that the magnitude of spillovers depends on the distance between a firm and the nearest EPZ: pillar-industry firms can receive higher premium by locating close to an EPZ, and this impact is the opposite for non-pillar industry firms. We examine the potential heterogeneous effects and find that the spillover effects are bigger for larger EPZs and EPZs designed to promote high-tech industries. We also find that domestic firms benefit more from the EPZ policy compared to their foreign counterparts. Keywords: Export processing zone (EPZ); Spillover effect; Difference-in-differences (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:63:y:2020:i:c:s1043951x20300754 DOI: 10.1016/j.chieco.2020.101478 Access Statistics for this article China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu More articles in China Economic Review from Elsevier |
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