Economic reforms and industrial policy in a panel of Chinese cities

Simon Alder, Lin Shao and Fabrizio Zilibotti
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Lin Shao: Washington University in St. Louis

Journal of Economic Growth, 2016, vol. 21, issue 4, No 1, 305-349

Abstract: 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.

Keywords: China; Economic growth; Economic reforms; Industrial policy; Special economic zones; Productivity (search for similar items in EconPapers)
JEL-codes: H72 L52 O25 O38 O53 P21 R11 (search for similar items in EconPapers)
Date: 2016
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Citations: View citations in EconPapers (155)

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Working Paper: Economic Reforms and Industrial Policy in a Panel of Chinese Cities (2013)
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DOI: 10.1007/s10887-016-9131-x

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