Impact of special economic zones on firm performance

Xiaoying Li, Xinjie Wu and Ying Tan

Research in International Business and Finance, 2021, vol. 58, issue C

Abstract: The establishment of special economic zones (SEZs) is one of the critical policies to promote economic growth. However, the relationship between SEZs and firm performance is still unclear. Using China Industrial Enterprise Database (CIED) from 1998 to 2007, this paper investigates the influence of firm location on its performance mainly from two channels: selection effect and agglomeration effect. The results suggest that firms in SEZs have better performance on average than firms outside SEZs. One reason for the productivity effect is selecting firms with higher productivity to enter the zone and firms with lower productivity to exit the zone. Agglomeration is another critical channel, and the effects are heterogeneous. Both firms in the zones and firms outside the zones gain spillovers from the zones, with the former being larger than the latter. Firms gain larger agglomeration effects from a cluster of the same industry than across industries.

Keywords: Firm location; Firm performance; Selection; Agglomeration (search for similar items in EconPapers)
JEL-codes: O18 O47 P25 R58 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (2)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:riibaf:v:58:y:2021:i:c:s0275531921000842

DOI: 10.1016/j.ribaf.2021.101463

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