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Place‐based policies, firm productivity, and displacement effects: Evidence from Shenzhen, China

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  • Hans R.A. Koster
  • Fang Fang Cheng
  • Michiel Gerritse
  • Frank G. van Oort

Abstract

Developing and transitional countries devote considerable funds to selected areas to stimulate local growth and firm productivity. We examine the impact of place‐based interventions due to the opening of science parks in Shenzhen, China, on firm productivity and factor use. Our identification strategy, exploiting spatial and temporal differencing in firm‐level data, addresses the issues that (a) the selection of science park locations is not random and (b) high‐productivity firms sort themselves into science parks. Firm productivity is approximately 15–25% higher due to the science park policy. The policy also increases local wages and leads to distortions due to job displacement.

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  • Hans R.A. Koster & Fang Fang Cheng & Michiel Gerritse & Frank G. van Oort, 2019. "Place‐based policies, firm productivity, and displacement effects: Evidence from Shenzhen, China," Journal of Regional Science, Wiley Blackwell, vol. 59(2), pages 187-213, March.
    • Handle: RePEc:bla:jregsc:v:59:y:2019:i:2:p:187-213
    DOI: 10.1111/jors.12415
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    Cited by:

    1. Wai-Ming To & Peter K. C. Lee & Antonio K. W. Lau, 2021. "Economic and Environmental Changes in Shenzhen—A Technology Hub in Southern China," Sustainability, MDPI, vol. 13(10), pages 1-17, May.
    2. Justin T Callais & Linan Peng, 2021. "The Impact of Place-Based Policy: Evidence from a Multiple Synthetic Control Analysis of the Northeastern Revitalization Program in China," Working Papers 2021-03, DePauw University, School of Business and Leadership and Department of Economics and Management.
    3. Wenwen Wang, 2021. "The heterogeneity of agglomeration effect: Evidence from Chinese cities," Growth and Change, Wiley Blackwell, vol. 52(1), pages 392-424, March.
    4. Alberto Albahari & Andrés Barge-Gil & Salvador Pérez-Canto & Paolo Landoni, 2023. "The effect of science and technology parks on tenant firms: a literature review," The Journal of Technology Transfer, Springer, vol. 48(4), pages 1489-1531, August.
    5. Anthony Howell & Chong Liu & Rudai Yang, 2020. "Explaining the urban premium in Chinese cities and the role of place-based policies," Environment and Planning A, , vol. 52(7), pages 1332-1356, October.
    6. Anthony Howell, 2020. "Picking 'winners' in space: Impact of spatial targeting on firm performance in China," Journal of Regional Science, Wiley Blackwell, vol. 60(5), pages 1025-1046, November.

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    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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