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The economic impact of Special Economic Zones: Evidence from Chinese municipalities

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  • Wang, Jin
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    Abstract

    The paper exploits a unique Chinese municipal dataset to assess the impact of Special Economic Zones on the local economy. Comparing the changes between the municipalities that created a SEZ in earlier rounds and those in later waves, I find that the SEZ program increases foreign direct investment not merely through firm relocation, and does not crowd out domestic investment. With dense investment in the targeted municipality the SEZ achieves agglomeration economies and generates wage increases for workers more than the increase in the local cost of living. The effects are heterogeneous: for zones created later the benefits are smaller while the distortions in firm location behavior are larger than those for the early zones. Municipalities with multiple SEZs experience larger effects than those with only one SEZ.

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    Bibliographic Info

    Article provided by Elsevier in its journal Journal of Development Economics.

    Volume (Year): 101 (2013)
    Issue (Month): C ()
    Pages: 133-147

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    Handle: RePEc:eee:deveco:v:101:y:2013:i:c:p:133-147

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    Web page: http://www.elsevier.com/locate/devec

    Related research

    Keywords: Special Economic Zone; Foreign direct investment; TFP growth; Factor price;

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    Cited by:
    1. Anthony Briant & Miren Lafourcade & Benoît Schmutz, 2012. "Can Tax Breaks Beat Geography? Lessons from the French Enterprise Zone Experience," PSE Working Papers halshs-00695225, HAL.
    2. Alex Bryson & John Forth & Minghai Zhou, 2013. "CEO Incentive Contracts in China: Why Does City Location Matter?," CEP Discussion Papers dp1192, Centre for Economic Performance, LSE.
    3. Davies, Ronald B., 2013. "The silver lining of red tape," Journal of Public Economics, Elsevier, vol. 101(C), pages 68-76.
    4. Patrick Kline & Enrico Moretti, 2014. "People, Places, and Public Policy: Some Simple Welfare Economics of Local Economic Development Programs," Annual Review of Economics, Annual Reviews, vol. 6(1), pages 629-662, 08.
    5. Yongzheng Liu & Jorge Martinez-Vazquez, 2014. "Inter-Jurisdictional Tax Competition In China," International Center for Public Policy Working Paper Series, at AYSPS, GSU paper1403, International Center for Public Policy, Andrew Young School of Policy Studies, Georgia State University.
    6. David Neumark & Helen Simpson, 2014. "Place-Based Policies," NBER Working Papers 20049, National Bureau of Economic Research, Inc.

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