IDEAS home Printed from https://ideas.repec.org/a/eee/jrpoli/v75y2022ics0301420721004475.html
   My bibliography  Save this article

Place-based policies, government intervention, and regional innovation: Evidence from China's Resource-Exhausted City program

Author

Listed:
  • Lu, Hongyou
  • Liu, Min
  • Song, Wenjing

Abstract

We assess the impact of a prominent place-based policy, namely the Resource-Exhausted City (REC) program, on regional innovation in China from 2003 to 2016. Exploiting the cross-city, cross-time variation in the timing of cities starting the REC program, we perform a difference-in-differences (DID) analysis and find that the program has a negative impact on regional innovation. This finding remains robust with various tests. One mechanism that may generate such impact is that the REC program increases the government intervention and thus affects regional innovation. Three channels support this mechanism, including the increase of zombie firms, the changes of government subsidy preference, and the land market distortion. Interestingly, the increase of the zombie state-owned enterprises (SOEs) and the government subsidy are more obvious in the non-resource-based SOEs than other firms, indicating the program increases the government's preference for the non-resource-based SOEs. Overall, the results provide evidence that government intervention is critical to regional innovation from the perspective of place-based policy. Our study provides a feasibility idea for further improving regional innovation and promoting high-quality development of resource-based cities in China.

Suggested Citation

  • Lu, Hongyou & Liu, Min & Song, Wenjing, 2022. "Place-based policies, government intervention, and regional innovation: Evidence from China's Resource-Exhausted City program," Resources Policy, Elsevier, vol. 75(C).
    • Handle: RePEc:eee:jrpoli:v:75:y:2022:i:c:s0301420721004475
    DOI: 10.1016/j.resourpol.2021.102438
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S0301420721004475
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.resourpol.2021.102438?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    As the access to this document is restricted, you may want to search for a different version of it.

    References listed on IDEAS

    as
    1. Brachert, Matthias & Dettmann, Eva & Titze, Mirko, 2019. "The regional effects of a place-based policy – Causal evidence from Germany," Regional Science and Urban Economics, Elsevier, vol. 79(C).
    2. Nicholas Bloom & John Van Reenen & Heidi Williams, 2019. "A toolkit of policies to promote innovation," Voprosy Ekonomiki, NP Voprosy Ekonomiki, issue 10.
    3. Zuo, Na & Zhong, Hua, 2020. "Can resource policy reverse the resource curse? Evidence from China," Resources Policy, Elsevier, vol. 68(C).
    4. Sun, Yajie & Liao, Wen-Chi, 2021. "Resource-Exhausted City Transition to continue industrial development," China Economic Review, Elsevier, vol. 67(C).
    5. Li, Bo & Dewan, Hasnat, 2017. "Efficiency differences among China's resource-based cities and their determinants," Resources Policy, Elsevier, vol. 51(C), pages 31-38.
    6. Jeffrey D. Sachs & Andrew M. Warner, 1995. "Natural Resource Abundance and Economic Growth," NBER Working Papers 5398, National Bureau of Economic Research, Inc.
    7. Fabrizio Barca & Philip McCann & Andrés Rodríguez‐Pose, 2012. "The Case For Regional Development Intervention: Place‐Based Versus Place‐Neutral Approaches," Journal of Regional Science, Wiley Blackwell, vol. 52(1), pages 134-152, February.
    8. An, Zhiyong, 2012. "Taxation and capital structure: Empirical evidence from a quasi-experiment in China," Journal of Corporate Finance, Elsevier, vol. 18(4), pages 683-689.
    9. Venables, Anthony & Duranton, Gilles, 2018. "Place-Based Policies for Development," CEPR Discussion Papers 12889, C.E.P.R. Discussion Papers.
    10. Thorsten Beck & Ross Levine & Alexey Levkov, 2010. "Big Bad Banks? The Winners and Losers from Bank Deregulation in the United States," Journal of Finance, American Finance Association, vol. 65(5), pages 1637-1667, October.
    11. Tang, Tingfeng & Li, Zhigang & Ni, Jinlan & Yuan, Jia, 2020. "Land costs, government intervention, and migration of firms: The case of China," China Economic Review, Elsevier, vol. 64(C).
    12. Sachs, Jeffrey D. & Warner, Andrew M., 1999. "The big push, natural resource booms and growth," Journal of Development Economics, Elsevier, vol. 59(1), pages 43-76, June.
    13. Ying Hao & Jing Lu, 2018. "The Impact of Government Intervention on Corporate Investment Allocations and Efficiency: Evidence from China," Financial Management, Financial Management Association International, vol. 47(2), pages 383-419, June.
    14. Filippo Belloc, 2014. "Innovation in State-Owned Enterprises: Reconsidering the Conventional Wisdom," Journal of Economic Issues, Taylor & Francis Journals, vol. 48(3), pages 821-848.
    15. Zhang, Zengkai & Guo, Ju'e & Qian, Dong & Xue, Yong & Cai, Luping, 2013. "Effects and mechanism of influence of China's resource tax reform: A regional perspective," Energy Economics, Elsevier, vol. 36(C), pages 676-685.
    16. Jia, Junxue & Ma, Guangrong & Qin, Cong & Wang, Liyan, 2020. "Place-based policies, state-led industrialisation, and regional development: Evidence from China's Great Western Development Programme," European Economic Review, Elsevier, vol. 123(C).
    17. Li, Huijuan & Long, Ruyin & Chen, Hong, 2013. "Economic transition policies in Chinese resource-based cities: An overview of government efforts," Energy Policy, Elsevier, vol. 55(C), pages 251-260.
    18. Falck, Oliver & Koenen, Johannes & Lohse, Tobias, 2019. "Evaluating a place-based innovation policy: Evidence from the innovative Regional Growth Cores Program in East Germany," Regional Science and Urban Economics, Elsevier, vol. 79(C).
    19. Chen, Shimin & Sun, Zheng & Tang, Song & Wu, Donghui, 2011. "Government intervention and investment efficiency: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 17(2), pages 259-271, April.
    20. Eliana La Ferrara & Alberto Chong & Suzanne Duryea, 2012. "Soap Operas and Fertility: Evidence from Brazil," American Economic Journal: Applied Economics, American Economic Association, vol. 4(4), pages 1-31, October.
    21. Chen, Yvonne Jie & Li, Pei & Lu, Yi, 2018. "Career concerns and multitasking local bureaucrats: Evidence of a target-based performance evaluation system in China," Journal of Development Economics, Elsevier, vol. 133(C), pages 84-101.
    22. Sabrina T. Howell, 2017. "Financing Innovation: Evidence from R&D Grants," American Economic Review, American Economic Association, vol. 107(4), pages 1136-1164, April.
    23. Müge Adalet McGowan & Dan Andrews & Valentine Millot & Thorsten BeckManaging Editor, 2018. "The walking dead? Zombie firms and productivity performance in OECD countries," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 33(96), pages 685-736.
    24. Brandt, Loren & Van Biesebroeck, Johannes & Zhang, Yifan, 2012. "Creative accounting or creative destruction? Firm-level productivity growth in Chinese manufacturing," Journal of Development Economics, Elsevier, vol. 97(2), pages 339-351.
    25. Dan Yang & Guojun Wang & Mokai Lu, 2020. "Marketization level, government intervention and firm M&As: evidence from the local SOEs in China," Applied Economics Letters, Taylor & Francis Journals, vol. 27(5), pages 378-382, March.
    26. Andrei Shleifer & Robert W. Vishny, 1994. "Politicians and Firms," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 109(4), pages 995-1025.
    27. Ge, Jianping & Lei, Yalin, 2013. "Mining development, income growth and poverty alleviation: A multiplier decomposition technique applied to China," Resources Policy, Elsevier, vol. 38(3), pages 278-287.
    28. Ricardo J. Caballero & Takeo Hoshi & Anil K. Kashyap, 2008. "Zombie Lending and Depressed Restructuring in Japan," American Economic Review, American Economic Association, vol. 98(5), pages 1943-1977, December.
    29. Loren Brandt & Johannes Van Biesebroeck & Luhang Wang & Yifan Zhang, 2017. "WTO Accession and Performance of Chinese Manufacturing Firms," American Economic Review, American Economic Association, vol. 107(9), pages 2784-2820, September.
    30. Hongbin Cai & Qiao Liu, 2009. "Competition and Corporate Tax Avoidance: Evidence from Chinese Industrial Firms," Economic Journal, Royal Economic Society, vol. 119(537), pages 764-795, April.
    31. Ariel Pakes & Mark Schankerman, 1984. "The Rate of Obsolescence of Patents, Research Gestation Lags, and the Private Rate of Return to Research Resources," NBER Chapters, in: R&D, Patents, and Productivity, pages 73-88, National Bureau of Economic Research, Inc.
    32. Fu, Xiaolan & Gong, Yundan, 2011. "Indigenous and Foreign Innovation Efforts and Drivers of Technological Upgrading: Evidence from China," World Development, Elsevier, vol. 39(7), pages 1213-1225, July.
    33. Li, Hao-Chung & Lee, Wen-Chieh & Ko, Bo-Ting, 2017. "What determines misallocation in innovation? A study of regional innovation in China," Journal of Macroeconomics, Elsevier, vol. 52(C), pages 221-237.
    34. Wang, Jue, 2018. "Innovation and government intervention: A comparison of Singapore and Hong Kong," Research Policy, Elsevier, vol. 47(2), pages 399-412.
    35. Ufuk Akcigit & John Grigsby & Tom Nicholas & Stefanie Stantcheva, 2018. "Taxation and Innovation in the 20th Century," NBER Working Papers 24982, National Bureau of Economic Research, Inc.
    36. Chenyan Zhang & Yongqiao Chen & Huiyu Zhou, 2020. "Zombie Firms and Soft Budget Constraints in the Chinese Stock Market," Asian Economic Journal, East Asian Economic Association, vol. 34(1), pages 51-77, March.
    37. Hongbin Cai & J. Vernon Henderson & Qinghua Zhang, 2013. "China's land market auctions: evidence of corruption?," RAND Journal of Economics, RAND Corporation, vol. 44(3), pages 488-521, September.
    38. Li, Jianqiang & Shan, Yaowen & Tian, Gary & Hao, Xiangchao, 2020. "Labor cost, government intervention, and corporate innovation: Evidence from China," Journal of Corporate Finance, Elsevier, vol. 64(C).
    39. Namazi, Mehdi & Mohammadi, Emran, 2018. "Natural resource dependence and economic growth: A TOPSIS/DEA analysis of innovation efficiency," Resources Policy, Elsevier, vol. 59(C), pages 544-552.
    40. Chang, Qingqing & Zhou, Yisihong & Liu, Guangqiang & Wang, Di & Zhang, Xiaojie, 2021. "How does government intervention affect the formation of zombie firms?," Economic Modelling, Elsevier, vol. 94(C), pages 768-779.
    41. Chang Liu & Guangrong Ma, 2019. "Are Place-Based Policies Always a Blessing? Evidence from China’s National Poor County Programme," Journal of Development Studies, Taylor & Francis Journals, vol. 55(7), pages 1603-1615, July.
    42. Wang, Han & Chen, Zhoupeng & Wu, Xingyi & Nie, Xin, 2019. "Can a carbon trading system promote the transformation of a low-carbon economy under the framework of the porter hypothesis? —Empirical analysis based on the PSM-DID method," Energy Policy, Elsevier, vol. 129(C), pages 930-938.
    43. Lin, Justin Yifu & Cai, Fang & Li, Zhou, 1998. "Competition, Policy Burdens, and State-Owned Enterprise Reform," American Economic Review, American Economic Association, vol. 88(2), pages 422-427, May.
    44. Lim, Chu Yeong & Wang, Jiwei & Zeng, Cheng (Colin), 2018. "China's “Mercantilist” Government Subsidies, the Cost of Debt and Firm Performance," Journal of Banking & Finance, Elsevier, vol. 86(C), pages 37-52.
    45. Hunt Allcott & Daniel Keniston, 2018. "Dutch Disease or Agglomeration? The Local Economic Effects of Natural Resource Booms in Modern America," The Review of Economic Studies, Review of Economic Studies Ltd, vol. 85(2), pages 695-731.
    46. Gary Jefferson & Bai Huamao & Guan Xiaojing & Yu Xiaoyun, 2006. "R&D Performance in Chinese industry," Economics of Innovation and New Technology, Taylor & Francis Journals, vol. 15(4-5), pages 345-366.
    47. Lily Fang & Josh Lerner & Chaopeng Wu & Qi Zhang, 2018. "Corruption, Government Subsidies, and Innovation: Evidence from China," NBER Working Papers 25098, National Bureau of Economic Research, Inc.
    48. Veugelers, Reinhilde, 2012. "Which policy instruments to induce clean innovating?," Research Policy, Elsevier, vol. 41(10), pages 1770-1778.
    49. Yi Lu & Jin Wang & Lianming Zhu, 2019. "Place-Based Policies, Creation, and Agglomeration Economies: Evidence from China's Economic Zone Program," American Economic Journal: Economic Policy, American Economic Association, vol. 11(3), pages 325-360, August.
    50. Li, Xing & Guo, Yue & Hou, Jiani & Liu, Jun, 2021. "Human Capital Allocation and Enterprise Innovation Performance: An Example of China's Knowledge-Intensive Service Industry," Research in International Business and Finance, Elsevier, vol. 58(C).
    51. Li, Pei & Lu, Yi & Wang, Jin, 2016. "Does flattening government improve economic performance? Evidence from China," Journal of Development Economics, Elsevier, vol. 123(C), pages 18-37.
    52. Huiming Zhang & Lifang Xiong & Yueming Qiu & Dequn Zhou, 2017. "How Have Political Incentives for Local Officials Reduced Environmental Pollution in Resource-Depleted Cities?," Sustainability, MDPI, vol. 9(11), pages 1-14, October.
    53. Zhiyong An, 2012. "Taxation and foreign direct investment (FDI): empirical evidence from a quasi-experiment in China," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 19(5), pages 660-676, October.
    54. Sachs, Jeffrey D. & Warner, Andrew M., 2001. "The curse of natural resources," European Economic Review, Elsevier, vol. 45(4-6), pages 827-838, May.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Huwei Wen & Yutong Liu & Yulin Huang, 2023. "Place-Based Policies and Carbon Emission Efficiency: Quasi-Experiment in China’s Old Revolutionary Base Areas," IJERPH, MDPI, vol. 20(3), pages 1-19, February.
    2. Jiaxin Wang, 2022. "Did China’s “National Sustainable Development Plan of Resource-Based Cities” Promote Economic Growth?," Sustainability, MDPI, vol. 14(13), pages 1-17, July.
    3. Lee, Chien-Chiang & Zhong, Qiming & Wen, Huwei & Song, Qinghua, 2023. "Blessing or curse: How does sustainable development policy affect total factor productivity of energy-intensive enterprises?," Socio-Economic Planning Sciences, Elsevier, vol. 89(C).
    4. Wu, Guoyong & Gao, Yue & Feng, Yanchao, 2023. "Assessing the environmental effects of the supporting policies for mineral resource-exhausted cities in China," Resources Policy, Elsevier, vol. 85(PB).
    5. Gao, Kang & Yuan, Yijun, 2022. "Government intervention, spillover effect and urban innovation performance: Empirical evidence from national innovative city pilot policy in China," Technology in Society, Elsevier, vol. 70(C).
    6. Zheng, Heyun & Ge, Liming, 2022. "Carbon emissions reduction effects of sustainable development policy in resource-based cities from the perspective of resource dependence: Theory and Chinese experience," Resources Policy, Elsevier, vol. 78(C).
    7. Lee, Chien-Chiang & Wang, Chang-song, 2022. "Does natural resources matter for sustainable energy development in China: The role of technological progress," Resources Policy, Elsevier, vol. 79(C).
    8. Jiahui Xu & Chee-Pung Ng & Toong Hai Sam & Asokan Vasudevan & Poh Kiong Tee & Alex Hou Hong Ng & Wong Chee Hoo, 2023. "Fiscal and Tax Policies, Access to External Financing and Green Innovation Efficiency: An Evaluation of Chinese Listed Firms," Sustainability, MDPI, vol. 15(15), pages 1-19, July.
    9. Luo, Lianfa & Liu, Peiyao & Zhu, Fangjing & Sun, Yongping & Liu, Lingna, 2022. "Policy objective bias and institutional quality improvement: Sustainable development of resource-based cities," Resources Policy, Elsevier, vol. 78(C).
    10. Xinyu Zhuang & Xin Li & Yisong Xu, 2022. "How Can Resource-Exhausted Cities Get Out of “The Valley of Death”? An Evaluation Index System and Obstacle Degree Analysis of Green Sustainable Development," IJERPH, MDPI, vol. 19(24), pages 1-29, December.
    11. Quan Sun & Lexin Zhao, 2023. "The Impact of Rural Enterprise Park Policy on the Income of Rural Residents: Evidence from China," Sustainability, MDPI, vol. 15(11), pages 1-15, June.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Tian, Yanping & Song, Wenjing & Liu, Min, 2021. "Assessment of how environmental policy affects urban innovation: Evidence from China’s low-carbon pilot cities program," Economic Analysis and Policy, Elsevier, vol. 71(C), pages 41-56.
    2. Ren, Meixu & Zhao, Jinxuan & Zhao, Jingmei, 2023. "Why is it difficult for Chinese companies to operate across regions in China?—Evidence from zombie companies," International Review of Financial Analysis, Elsevier, vol. 87(C).
    3. Sun, Yajie & Liao, Wen-Chi, 2021. "Resource-Exhausted City Transition to continue industrial development," China Economic Review, Elsevier, vol. 67(C).
    4. Li, Qiangyi & Zeng, Fu'e & Liu, Shaohui & Yang, Mian & Xu, Fei, 2021. "The effects of China's sustainable development policy for resource-based cities on local industrial transformation," Resources Policy, Elsevier, vol. 71(C).
    5. Ren, Meixu & Zhao, Jinxuan & Zhao, Jingmei, 2023. "The crowding-out effect of zombie companies on fixed asset investment: Evidence from China," Research in International Business and Finance, Elsevier, vol. 65(C).
    6. Ping Guo & Jin Li & Jinsong Kuang & Yifei Zhu & Renrui Xiao & Donghao Duan & Baocong Huang, 2022. "Low-Carbon Governance, Fiscal Decentralization and Sulfur Dioxide Emissions: Evidence from a Quasi-Experiment with Chinese Heavy Pollution Enterprises," Sustainability, MDPI, vol. 14(6), pages 1-24, March.
    7. Weng, Qian & Söderbom, Måns, 2018. "Is R&D cash flow sensitive? Evidence from Chinese industrial firms," China Economic Review, Elsevier, vol. 47(C), pages 77-95.
    8. Shuo Lu & Yong Zhou & Wei Song, 2021. "Uncoordinated urbanization and economic growth—The moderating role of natural resources," Growth and Change, Wiley Blackwell, vol. 52(4), pages 2071-2098, December.
    9. Huiying Zhang & Xiaohui Yang, 2016. "Intellectual Property Rights and Export Sophistication," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 7(03), pages 1-19, October.
    10. Gao, Ming & Gu, Qiankun & He, Shijun, 2022. "Place-based policies, administrative hierarchy, and city growth: Evidence from China," Economic Modelling, Elsevier, vol. 115(C).
    11. Grant D. Jacobsen, 2019. "Who Wins In An Energy Boom? Evidence From Wage Rates And Housing," Economic Inquiry, Western Economic Association International, vol. 57(1), pages 9-32, January.
    12. Jiang, Wei & Li, Xitao & Liu, Ruoxi & Song, Yijia, 2022. "Local fiscal pressure, policy distortion and energy efficiency: Micro-evidence from a quasi-natural experiment in China," Energy, Elsevier, vol. 254(PB).
    13. Yi Li & Lili Ding & Yongliang Yang, 2020. "Can the Introduction of an Environmental Target Assessment Policy Improve the TFP of Textile Enterprises? A Quasi-Natural Experiment Based on the Huai River Basin in China," Sustainability, MDPI, vol. 12(4), pages 1-19, February.
    14. Dongmin Kong & Mengxu Xiong & Ni Qin, 2023. "Tax incentives and firm pollution," International Tax and Public Finance, Springer;International Institute of Public Finance, vol. 30(3), pages 784-813, June.
    15. Xiang, Yitian & Cui, Haotian & Bi, Yunxiao, 2023. "The impact and channel effects of banking competition and government intervention on carbon emissions: Evidence from China," Energy Policy, Elsevier, vol. 175(C).
    16. Qiao, Lu & Fei, Junjun, 2022. "Government subsidies, enterprise operating efficiency, and “stiff but deathless” zombie firms," Economic Modelling, Elsevier, vol. 107(C).
    17. Zhou, Mengling & Wang, Bing & Chen, Zhongfei, 2020. "Has the anti-corruption campaign decreased air pollution in China?," Energy Economics, Elsevier, vol. 91(C).
    18. Chen, Yongmin & Jiang, Haiwei & Liang, Yousha & Pan, Shiyuan, 2022. "The impact of foreign direct investment on innovation: Evidence from patent filings and citations in China," Journal of Comparative Economics, Elsevier, vol. 50(4), pages 917-945.
    19. Zuo, Na & Zhong, Hua, 2020. "Can resource policy reverse the resource curse? Evidence from China," Resources Policy, Elsevier, vol. 68(C).
    20. Nicoletta Corrocher & Camilla Lenzi & Marie-Louise Deshaires, 2020. "The curse of natural resources: an empirical analysis of European regions," Regional Studies, Taylor & Francis Journals, vol. 54(12), pages 1694-1708, December.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:eee:jrpoli:v:75:y:2022:i:c:s0301420721004475. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Catherine Liu (email available below). General contact details of provider: http://www.elsevier.com/locate/inca/30467 .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.