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Resource-Exhausted City Transition to continue industrial development

Yajie Sun and Wen-Chi Liao

China Economic Review, 2021, vol. 67, issue C

Abstract: Resource-rich locations often rely on exporting the resources to prosper, but resource depletion is a matter of time. An industrial transformation is necessary to sustain economic growth when the comparative advantage fades away. This paper concerns the Resource-Exhausted City Transition program, a large-scale place-based policy of the Chinese state government. It applies firm data and examines impacts on industrial development in places suffering from resource-exhaustion. Estimation shows that the program has stimulated capital investment largely and fostered employment and efficiency as well, leading to a boost in output. The program does not favor the resource sector with little comparative advantage. It facilitates an industrial upgrade by extending the value chain towards the downstream and stimulating higher value-add activities. Effects are heterogeneous among firms with different capital intensity, age, size, ownership type, or regions.

Keywords: Resource depletion; Resource-Exhausted City Transition program; Place-based policy; Industrial upgrade; Structure transformation (search for similar items in EconPapers)
Date: 2021
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DOI: 10.1016/j.chieco.2021.101623

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China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu

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