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

Koster, Hans; Fang, Cheng; Gerritse, Michiel; Oort, Frank van

doi:10.2139/ssrn.2757593

Cited by 4 publications

(4 citation statements)

References 26 publications

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“…Second, this paper's findings are also relevant to the large strand of regional science literature that is devoted to studying the impact of spatially explicit regional policy and its role for economic development (Fontagne, Koenig, Mayneris, & Poncet, 2013;Kline & Moretti, 2014;Partridge, Rickman, Olfert, & Tan, 2015). In the Chinese context, several studies find that the economic development zone program, a popular place-based policy, improves firm and regional performance (Howell, 2019;Koster, Cheng, Gerritse, & van Oort, 2018;Zheng, Sun, Wu, & Kahn, 2017).…”

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confidence: 74%

Picking 'winners' in space: Impact of spatial targeting on firm performance in China

Howell

2020

Journal of Regional Science

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This paper examines the spatial patterns of China's industrial encouragement policy and its distributional impact on firm productivity. To this end, I develop separate proxies to measure three popular policy instruments (subsidies, tax holidays, and preferential access to loans). I first show that China's industrial support policies tend to exhibit a prominent spatial feature of targeting firms located in lagging cities with lower density. Taking into account potential endogeneity of industrial policy, unobserved heterogeneity and firm dynamics, quantile regression techniques show that more intense industrial support leads to: (a) a reduction in the productivity of lower‐performing firms, especially in denser cities; and (b) a small productivity gain for better performing firms but only in denser cities. Counterfactual analysis further reveals that pursuing an alternative, space‐neutral industrial encouragement policy would increase average productivity by 14–16%, in aggregate, but also contribute to significantly higher regional inequality.

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confidence: 74%

Picking 'winners' in space: Impact of spatial targeting on firm performance in China

Howell

2020

Journal of Regional Science

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“…In cities, local governments also allocate resources through providing land, public services, infrastructure and subsidies to firms in economic development zones. The policy of attracting investment has led to the concentration of industries in the economic development zones of the cities (Howell, 2019; Koster et al, 2016; Lu et al, 2019). Local governments in cities with a higher administrative status and cities with special economic development zones can attract firms in all positions of the industrial chain through regionally targeted policies (Lu et al, 2019).…”

Section: Literature Review and Research Hypothesismentioning

confidence: 99%

The heterogeneity of agglomeration effect: Evidence from Chinese cities

Wang

2020

Growth and Change

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Using annual surveys of industrial firms in China from 1998 to 2007, this paper applies the non‐linear least squares (NLS) method based on a grid search to analyse the effect of city size on firm total factor productivity (TFP). The results show that overall, the agglomeration effects in large cities, but not selection effects, significantly promote improvement in firm TFP. The optimal agglomeration scales of different industries differ as follows: those of capital‐ and technology‐intensive industries are larger than those of labour‐intensive industries. The agglomeration effects are also robust to different spatial areas without considering administrative boundaries. An inverted U‐shaped relationship exists between firm size and agglomeration effects, while the relationship between firm age and agglomeration effects is U‐shaped. State‐owned firms experience weaker agglomeration effects than non‐state‐owned firms. Cities higher in the administrative hierarchy and those with special economic zones have stronger agglomeration effects. However, cities higher in the administrative hierarchy and those with a larger economic development zone index can provide more resources to increase the survival rate of low‐productivity firms; thus, selection effects are not significant in Chinese cities.

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“…These papers used firm‐level data to assess whether the establishment of SEZs enhances firm productivity (Lu et al., 2019; Xi et al., 2021). The existing empirical studies find that SEZs creating shows significant and positive effects on firm productivity, firms in SEZs have higher productivity (Koster et al., 2019; Zheng et al., 2017). What's more, compared with policies that promote extra‐local linkages, SEZs with specific goals that focus on indigenous‐based learning factors show stronger influence on enhancing firm productivity (Howell, 2019).…”

Section: Introductionmentioning

confidence: 99%

Development zones and urban economic performance in China: Direct impact and channel effects

Wang

et al. 2022

Growth and Change

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Development zones constitute a special type of placebased policy that has been implemented worldwide. As an essential economic development engine, Chinese National Economic and Technological Development Zones (NETDZs) are perceived as a successful example. However, few studies have looked into the channel effects at work in development zones concerning industrialization and urbanization, despite the crucial nature of such effects with regard to sustainable development of development zones. Following a brief description of NETDZs and their theoretical mechanisms with urban economic performance, industrialization, and urbanization, this study used a simultaneous equation model to generate empirical evidence of the impact of the establishment of NETDZs on urban economic performance and its channel effects through industrialization and urbanization. The results confirm that NETDZs exerts a positive and significant impact on urban economic performance, and NETDZs also show indirect influence in urban growth through urbanization. Although significant and positive intermediation of industrialization remains invalid, foreign direct investment and investment in fixed assets are still crucial in Chinese industrialization. Both industrialization and urbanization play an important role in Chinese urban economic 1762

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

Cited by 4 publications

References 26 publications

Picking 'winners' in space: Impact of spatial targeting on firm performance in China

Picking 'winners' in space: Impact of spatial targeting on firm performance in China

The heterogeneity of agglomeration effect: Evidence from Chinese cities

Development zones and urban economic performance in China: Direct impact and channel effects

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