Do Place-Based Policies Work? Lessons from China's Economic Zone Program

Jin Wang ()
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Jin Wang: Associate Professor， Division of Social Science and Public Policy, Hong Kong University of Science and Technology

No 2019-34, HKUST IEMS Thought Leadership Brief Series from HKUST Institute for Emerging Market Studies

Abstract: In the right environment, Special Economic Zones (SEZs) are an effective policy tool for attracting foreign direct investment (FDI) and increasing employment. There are large agglomeration benefits. The majority of FDI attracted by Chinese SEZs creates new activity rather than being diverted or reallocated from other non- SEZ areas. Due to poorly-developed institutions and markets in emerging China, SEZs provided better institutions which improve economic efficiency. The economic gains substantially outweigh the costs. But SEZs tend to cause more relocation distortions than agglomeration benefits in developed economies with better institutions and in areas that already have SEZs.

Keywords: china; global economic power (search for similar items in EconPapers)
Pages: 4 pages
Date: 2019-10, Revised 2019-10
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