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The impact of pilot free trade zones on entrepreneurship: Evidence from a quasi-natural experiment in China

Zhaohua Li, Suqin Pang and Zhiyun Zhu

Socio-Economic Planning Sciences, 2024, vol. 92, issue C

Abstract: Exploiting China's pilot free trade zones (FTZs) as an exogenous shock of institutional quality improvement, this study explores the impact of FTZs on urban entrepreneurship. We find that cities with FTZs are associated with higher entrepreneurship. The positive influence of FTZs is more pronounced in western and northern cities, and cities with high administrative levels. The entrepreneurship in service industries is promoted significantly by FTZs. In addition, FTZs foster entrepreneurship by promoting opening-up upgradation of foreign investment and foreign trade and financial development. We also identify the spatial spillover effects and find that entrepreneurship responses to pilot FTZs are significantly stimulated in adjacent cities without FTZs. Last, we show that Shanghai FTZ and Fujian FTZ, rather than Tianjin FTZ and Guangdong FTZ, play a non-negligible function in encouraging new firm creation. This study has important implications for FTZ's planning and spurring economic growth in developing countries.

Keywords: Free trade zones; Entrepreneurship; Institutional quality (search for similar items in EconPapers)
JEL-codes: F13 L26 P33 (search for similar items in EconPapers)
Date: 2024
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:soceps:v:92:y:2024:i:c:s0038012123003130

DOI: 10.1016/j.seps.2023.101801

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