Industrial Clusters in the Long Run: Evidence from Million-Rouble Plants in China

43 Pages Posted: 12 Dec 2022 Last revised: 2 Jan 2025

See all articles by Stephan Heblich

Stephan Heblich

Munk School of Global Affairs & Public Policy and Dept. of Economics,

Marlon Seror

University of Quebec at Montreal (UQAM)

Hao Xu

China Construction Bank

Yanos Zylberberg

University of Bristol

Multiple version iconThere are 2 versions of this paper

Date Written: December 2022

Abstract

We identify negative spillovers exerted by large, successful manufacturing plants on other local production facilities in China. A short-lived alliance between the U.S.S.R. and China led to the construction of 150 "Million-Rouble plants" in the 1950s. Our identification strategy exploits the ephemeral geopolitical context and the relative position of allied and enemy airbases to isolate exogenous variation in plant location decisions. We find a boom-and-bust pattern in hosting counties: treated counties are twice as productive as control counties in 1982, but 30% less productive in 2010. The average other establishment in treated counties is unproductive, does not innovate, and charges high markups. We find that (over)specialization limits technological spillovers. This prevents the emergence of new industrial clusters and leads to a flight of entrepreneurs.

Suggested Citation

Heblich, Stephan and Seror, Marlon and Xu, Hao and Zylberberg, Yanos, Industrial Clusters in the Long Run: Evidence from Million-Rouble Plants in China (December 2022). NBER Working Paper No. w30744, Available at SSRN: https://ssrn.com/abstract=4299630

Stephan Heblich (Contact Author)

Munk School of Global Affairs & Public Policy and Dept. of Economics, ( email )

105 St George Street
Toronto, Ontario M5S 3G8
Canada

Marlon Seror

University of Quebec at Montreal (UQAM) ( email )

PB 8888 Station DownTown
Succursale Centre Ville
Montreal, Quebec H3C3P8
Canada

Hao Xu

China Construction Bank ( email )

Beijing, 100032
China

Yanos Zylberberg

University of Bristol ( email )

University of Bristol,
Senate House, Tyndall Avenue
Bristol, Avon BS8 ITH
United Kingdom

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