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Industrial clusters in the long run: evidence from Million-Rouble plants in China

Stephan Heblich, Marlon Seror, Hao Xu and Yanos Zylberberg

No 7682, CESifo Working Paper Series from CESifo Group Munich

Abstract: This paper exploits a short-lived cooperation program between the U.S.S.R. and China, which led to the construction of 156 “Million-Rouble plants” in the 1950s. We isolate exogenous variation in location decisions due to the relative position of allied and enemy airbases and study the long-run impact of these factories on local economic activity. While the “156” program accelerated industrialization in treated counties until the end of the command-economy era, this significant productivity advantage fully eroded in the subsequent period. We explore the nature of local spillovers responsible for this pattern, and provide evidence that treated counties are overspecialized and far less innovative. There is a large concentration of establishments along the production chain of the Million-Rouble plants, which limits technological spillovers across industries.

Keywords: industrial clusters; agglomeration economies; specialization (search for similar items in EconPapers)
JEL-codes: R11 R53 J24 N95 (search for similar items in EconPapers)
Date: 2019
New Economics Papers: this item is included in nep-cna, nep-geo, nep-his, nep-lma and nep-ure
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