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Beyond the borders: Estimating the effect of China's Bonded Zones on innovation and its spillovers

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  • Fang, Guanfu
  • Gao, Tiantian
  • Xu, Peng

Abstract

This paper investigates the direct and spillover effects of place-based industrial policies on firm innovation activities, with a focus on the establishment of Bonded Zones (BZs) in China. By exploiting the temporal, spatial, and industrial variations in the policy, we demonstrate that the establishment of BZs promotes significantly patent applications and citations of firms in leading industries located within and outside of BZs. We also provide suggestive evidence that the innovation spillovers are mainly due to competition among firms within and outside of BZs, namely, the Marshallian externalities.

Suggested Citation

  • Fang, Guanfu & Gao, Tiantian & Xu, Peng, 2024. "Beyond the borders: Estimating the effect of China's Bonded Zones on innovation and its spillovers," China Economic Review, Elsevier, vol. 83(C).
    • Handle: RePEc:eee:chieco:v:83:y:2024:i:c:s1043951x2300189x
    DOI: 10.1016/j.chieco.2023.102104
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    Keywords

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    JEL classification:

    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods
    • O31 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Innovation and Invention: Processes and Incentives
    • P25 - Political Economy and Comparative Economic Systems - - Socialist and Transition Economies - - - Urban, Rural, and Regional Economics
    • R58 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Regional Development Planning and Policy

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