Economic Reforms and Industrial Policy in a Panel of Chinese Cities

66 Pages Posted: 19 Nov 2013

See all articles by Simon Alder

Simon Alder

University of North Carolina (UNC) at Chapel Hill - Department of Economics

Lin Shou

Washington University in St. Louis - Department of Economics

Fabrizio Zilibotti

Yale University; Centre for Economic Policy Research (CEPR)

Multiple version iconThere are 2 versions of this paper

Date Written: November 2013

Abstract

We estimate the effect on economic development of China's industrial policy, in particular, the establishment of Special Economic Zones (SEZ). We use data from a panel of 276 Chinese cities and prefectures from 1988 to 2010. Our difference-in-difference estimator exploits the variation in the establishment of SEZ across time and space. We find that the establishment of a state-level SEZ is associated with an increase in the level of GDP of about 20%, but not with a permanently steeper growth path. This finding is confirmed with alternative specifications and in a sub-sample of inland provinces, where the selection of cities to host the zones was based on administrative criteria. Decomposing the effect of SEZ on GDP into different channels shows that this worked mainly through the accumulation of physical capital, although there is some evidence of increasing productivity and human capital investments. Using light intensity as an alternative measure for economic activity confirms the positive effects of SEZ.

Keywords: China, difference-in-difference, economic growth, economic reforms, industrial policy, investments, satellite light, special economic zones, total factor productivity

JEL Classification: H72, L52, O25, O38, O53, P21, R11

Suggested Citation

Alder, Simon and Shou, Lin and Zilibotti, Fabrizio, Economic Reforms and Industrial Policy in a Panel of Chinese Cities (November 2013). CEPR Discussion Paper No. DP9748, Available at SSRN: https://ssrn.com/abstract=2356978

Simon Alder (Contact Author)

University of North Carolina (UNC) at Chapel Hill - Department of Economics ( email )

Chapel Hill, NC 27599
United States

Lin Shou

Washington University in St. Louis - Department of Economics ( email )

One Brookings Drive
St. Louis, MO 63130
United States

Fabrizio Zilibotti

Yale University ( email )

New Haven, CT 06520
United States

Centre for Economic Policy Research (CEPR)

London
United Kingdom

Here is the Coronavirus
related research on SSRN

Paper statistics

Downloads
0
Abstract Views
478
PlumX Metrics