Local Protectionism and Regional Specialization: Evidence from China's Industries

Bai, Chong-En; Du, Yingjuan; Tao, Zhigang; Tong, Sarah Y.

doi:10.2139/ssrn.404100

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Local Protectionism and Regional Specialization: Evidence from China's Industries

35 Pages Posted: 5 Jun 2003

See all articles by Chong-En Bai

Chong-En Bai

The University of Hong Kong - School of Economics and Finance; University of Michigan - William Davidson Institute

Yingjuan Du

The University of Hong Kong - School of Business

Zhigang Tao

The University of Hong Kong - School of Business

Sarah Y. Tong

National University of Singapore (NUS) - Department of Economics; National University of Singapore (NUS) - East Asian Institute

Date Written: May 2003

Abstract

This paper uses a dynamic panel estimation method to investigate the determinants of regional specialization in China's industries, paying particular attention to local protectionism. Less geographic concentration is found in industries where the past tax-plus-profit margins and the shares of state ownership are high, reflecting stronger local government protection of these industries. The evidence also supports the scale-economies theory of regional specialization. Finally, the overall time trend of regional specialization of China's industries is found to have reversed an early drop in the mid 1980s, and registered a significant increase in the later years.

Keywords: Local Protectionism, Regional Specialization, Scale Economy, External Economy

JEL Classification: F1, R12, P2

Suggested Citation: Suggested Citation

Bai, Chong-En and Du, Yingjuan and Tao, Zhigang and Tong, Sarah Y. and Tong, Sarah Y., Local Protectionism and Regional Specialization: Evidence from China's Industries (May 2003). Available at SSRN: https://ssrn.com/abstract=404100 or http://dx.doi.org/10.2139/ssrn.404100