Place-Based Policies, Firm Productivity and Displacement Effects: Evidence from Shenzhen, China

Tinbergen Institute Discussion Paper 16-021/VIII

46 Pages Posted: 1 Apr 2016

See all articles by Hans Koster

Hans Koster

Vrije Universiteit Amsterdam, School of Business and Economics

Fang Cheng

Utrecht University

Michiel Gerritse

University of Groningen

Frank van Oort

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE)

Date Written: March 31, 2016

Abstract

We analyse the economic impacts of place-based policies that aim to enhance economic development by stimulating growth and productivity of firms in designated areas. We use unique panel data from China with information on manufacturing firms’ production factors, productivity and location, and we exploit temporal and spatial variation in place-based interventions due to the opening of science parks in the metropolitan area of Shenzhen. The identification strategy enables us to address the issues that (i) science parks are located in favourable locations and that (ii) high-productivity firms sort themselves in science parks. We find that productivity is approximately 15-25 per cent higher due to the policies. The results also show that local wages have increased in science parks. Weaker evidence suggests that displacement effects are sizeable.

Keywords: place-based policies, transitional economies, science parks, productivity

JEL Classification: H2, R3, R5

Suggested Citation

Koster, Hans and Cheng, Fang and Gerritse, Michiel and van Oort, Frank, Place-Based Policies, Firm Productivity and Displacement Effects: Evidence from Shenzhen, China (March 31, 2016). Tinbergen Institute Discussion Paper 16-021/VIII, Available at SSRN: https://ssrn.com/abstract=2757593 or http://dx.doi.org/10.2139/ssrn.2757593

Hans Koster (Contact Author)

Vrije Universiteit Amsterdam, School of Business and Economics ( email )

De Boelelaan 1105
Amsterdam, 1081HV
Netherlands

Fang Cheng

Utrecht University ( email )

Vredenburg 138
Utrecht, 3511 BG
Netherlands

Michiel Gerritse

University of Groningen ( email )

P.O. Box 800
9700 AH Groningen, Groningen 9700 AV
Netherlands

Frank Van Oort

Erasmus University Rotterdam (EUR) - Erasmus School of Economics (ESE) ( email )

P.O. Box 1738
3000 DR Rotterdam, NL 3062 PA
Netherlands

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