Do Place-Based Policies Work? Micro-Level Evidence from China's Economic Zone Program
47 Pages Posted: 26 Jul 2015
Date Written: July 3, 2015
Exploiting two geo-coded firm censuses, this paper examines the impact of China's Special Economic Zones on economic activity in the targeted areas. We find that economic zones have a positive effect on employment, output and capital, and increase the number of firms. We also find that firm births and deaths play a larger role in explaining the zones' effects than incumbents and relocations. Finally, a zone's effectiveness depends on a program's features. Capital-intensive industries exhibit larger positive zone effects than labor-intensive ones. Location characteristics such as market potential and transportation accessibility are not critical factors in enhancing the program effects.
Keywords: Place-based Policies; Relocation; Market Potential; Special Economic Zones
JEL Classification: H2, J2, O2, R3
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