Do Place-Based Policies Promote Local Innovation and Entrepreneurship?
52 Pages Posted: 13 Feb 2018 Last revised: 25 Feb 2020
Date Written: February 5, 2018
This paper explores how a prominent place-based policy in China, the national high-tech zones, affects local innovation and entrepreneurial activities. Relying on plausible exogenous variation in place-based policies caused by staggered establishments of national high-tech zones, we find that the establishment of national high-tech zones has positive effects on local innovation output and entrepreneurial activities. A number of additional tests suggest that the effects appear causal. Access to financing resources, reductions in administrative burdens, and talent cultivation are three plausible underlying channels through which national high-tech zones positively affect local innovation and entrepreneurship. Our paper sheds new light on the debate about the real effects of place-based government policies.
Keywords: Entrepreneurship, Innovation, National high-tech zones, Access to finance, Administrative burdens, Talent cultivation
JEL Classification: G24, G38, O38, L26
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