Beyond the borders: Estimating the effect of China's Bonded Zones on innovation and its spillovers

Guanfu Fang, Tiantian Gao and Peng Xu

China Economic Review, 2024, vol. 83, issue C

Abstract: This paper investigates the direct and spillover effects of place-based industrial policies on firm innovation activities, with a focus on the establishment of Bonded Zones (BZs) in China. By exploiting the temporal, spatial, and industrial variations in the policy, we demonstrate that the establishment of BZs promotes significantly patent applications and citations of firms in leading industries located within and outside of BZs. We also provide suggestive evidence that the innovation spillovers are mainly due to competition among firms within and outside of BZs, namely, the Marshallian externalities.

Keywords: Bonded zones; Innovation; Place-based program; Spillover effect (search for similar items in EconPapers)
JEL-codes: L52 O31 P25 R58 (search for similar items in EconPapers)
Date: 2024
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Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:83:y:2024:i:c:s1043951x2300189x

DOI: 10.1016/j.chieco.2023.102104

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