High-Technology Zones, Misallocation of Resources among Cities and Aggregate Productivity: Evidence from China

Laiqun Jin, Xiuyan Liu and Sam Hak Kan Tang
Additional contact information
Laiqun Jin: School of Business, Ningbo University
Xiuyan Liu: School of Economics and Management, Southeast University
Sam Hak Kan Tang: Business School, The University of Western Australia, http://www.web.uwa.edu.au/person/samhakkan.tang

No 21-11, Economics Discussion / Working Papers from The University of Western Australia, Department of Economics

Abstract: Recent literature has been debating the performance of high-technology zones (HTZs) in developing countries. This paper contributes to this debate by examining how national HTZs in China affect the allocative efficiency of resources among Chinese cities as well as China’s total factor productivity (TFP) growth. This paper has two key findings: Firstly, results show that resource misallocation among cities reduces China’s TFP growth by 4.5%. In the absence of national HTZs, China’s TFP loss would have been higher by about 1.5%. Secondly, we find that China’s national HTZs improve the allocative efficiency of capital among cities by channelling capital to where there is a shortage. Interestingly, we find little evidence of productivity growth driven by technical efficiency following the establishment of HTZs. The positive effect of national HTZs on allocative efficiency can be found in cities located in the Eastern and Central regions and cities without an administrative designation.

Keywords: High-technology zones; Misallocation of resources; Total factor productivity; China (search for similar items in EconPapers)
JEL-codes: O11 O53 (search for similar items in EconPapers)
Pages: 50
Date: 2021
New Economics Papers: this item is included in nep-cna, nep-eff and nep-ure
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