IDEAS home Printed from https://ideas.repec.org/a/eee/chieco/v94y2025ipbs1043951x25002299.html

The border effect of industrial development in China

Author

Listed:
  • Chen, Siru
  • Shen, Guangjun
  • Zhang, Li

Abstract

Administrative divisions significantly influence China's economic integration and industrial layout. This study documents a stylized fact of land allocation in China: the less-developed cities are inclined to lease industrial land near their border with more-developed cities. We call it the “border effect.” Using detailed information on over a million transactions of land plots, we construct a city-level panel dataset spanning from 2007 to 2019 to explore the border effect. The empirical analysis shows that a city leases 1.49 percentage points more industrial land near its border with a more-developed city on average, as compared with its border with a less-developed city. The border effect is robust to alternative measures and various specifications, and more profound for cities left behind their adjacent cities by a wide margin. Mechanism analysis reveals that the land constraint of more-developed cities and their strategic land-use expansion to less-developed neighbors are the main causes of the border effect.

Suggested Citation

  • Chen, Siru & Shen, Guangjun & Zhang, Li, 2025. "The border effect of industrial development in China," China Economic Review, Elsevier, vol. 94(PB).
    • Handle: RePEc:eee:chieco:v:94:y:2025:i:pb:s1043951x25002299
    DOI: 10.1016/j.chieco.2025.102571
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1043951X25002299
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.chieco.2025.102571?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

    for a different version of it.

    References listed on IDEAS

    as
    1. Helsley, Robert W. & Strange, William C., 1990. "Matching and agglomeration economies in a system of cities," Regional Science and Urban Economics, Elsevier, vol. 20(2), pages 189-212, September.
    2. Zheng, Yilin & Lu, Ming & Li, Jiewei, 2022. "Internal circulation in China: Analyzing market segmentation and integration using big data for truck traffic flow," Economic Modelling, Elsevier, vol. 115(C).
    3. Helsley, Robert W. & Strange, William C., 2007. "Agglomeration, opportunism, and the organization of production," Journal of Urban Economics, Elsevier, vol. 62(1), pages 55-75, July.
    4. Dominik Bertram & Tobias Chilla & Stefan Hippe, 2024. "Cross-border mobility: Rail or road? Space-time-lines as an evidence base for policy debates," Journal of Borderlands Studies, Taylor & Francis Journals, vol. 39(5), pages 913-930, September.
    5. Lawrence A. Herzog, 1991. "Cross-national Urban Structure in the Era of Global Cities: The US-Mexico Transfrontier Metropolis," Urban Studies, Urban Studies Journal Limited, vol. 28(4), pages 519-533, August.
    6. Henderson, J. Vernon, 2003. "Marshall's scale economies," Journal of Urban Economics, Elsevier, vol. 53(1), pages 1-28, January.
    7. Michael Storper & Anthony J. Venables, 2004. "Buzz: face-to-face contact and the urban economy," Journal of Economic Geography, Oxford University Press, vol. 4(4), pages 351-370, August.
    8. Li, Hongbin & Zhou, Li-An, 2005. "Political turnover and economic performance: the incentive role of personnel control in China," Journal of Public Economics, Elsevier, vol. 89(9-10), pages 1743-1762, September.
    9. Xinhui Jiang & Sarah Eaton & Genia Kostka, 2023. "No county is an island: the rise of interjurisdictional cooperation among counties in China," Regional Studies, Taylor & Francis Journals, vol. 57(10), pages 2021-2036, October.
    10. Rosenthal, Stuart S. & Strange, William C., 2004. "Evidence on the nature and sources of agglomeration economies," Handbook of Regional and Urban Economics, in: J. V. Henderson & J. F. Thisse (ed.), Handbook of Regional and Urban Economics, edition 1, volume 4, chapter 49, pages 2119-2171, Elsevier.
    11. Combes, Pierre-Philippe & Duranton, Gilles, 2006. "Labour pooling, labour poaching, and spatial clustering," Regional Science and Urban Economics, Elsevier, vol. 36(1), pages 1-28, January.
    12. Chen, Natalie, 2006. "Erratum to "Intra-national versus international trade in the European Union: Why do national borders matter?" [J. Int. Econ. 63 (2004) 93-118]," Journal of International Economics, Elsevier, vol. 70(1), pages 334-335, September.
    13. Engel, Charles & Rogers, John H, 1996. "How Wide Is the Border?," American Economic Review, American Economic Association, vol. 86(5), pages 1112-1125, December.
    14. Yang Yao & Muyang Zhang, 2015. "Subnational leaders and economic growth: evidence from Chinese cities," Journal of Economic Growth, Springer, vol. 20(4), pages 405-436, December.
    15. Steijn, Mathieu P.A. & Koster, Hans R.A. & Van Oort, Frank G., 2022. "The dynamics of industry agglomeration: Evidence from 44 years of coagglomeration patterns," Journal of Urban Economics, Elsevier, vol. 130(C).
    16. Guo, Hao & Minier, Jenny, 2021. "Borders, geography, and economic activity: The case of China," Regional Science and Urban Economics, Elsevier, vol. 90(C).
    Full references (including those not matched with items on IDEAS)

    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. William C. Strange, 2009. "Viewpoint: Agglomeration research in the age of disaggregation," Canadian Journal of Economics, Canadian Economics Association, vol. 42(1), pages 1-27, February.
    2. William Grieser & James LeSage & Morad Zekhnini, 2022. "Industry Networks and the Geography of Firm Behavior," Management Science, INFORMS, vol. 68(8), pages 6163-6183, August.
    3. Pierre M. Picard & David E. Wildasin, 2009. "Labor Market Pooling, Outsourcing and Labor Contracts," DEM Discussion Paper Series 09-05, Department of Economics at the University of Luxembourg.
    4. Picard, Pierre M. & Wildasin, David E., 2011. "Outsourcing, labor market pooling, and labor contracts," Journal of Urban Economics, Elsevier, vol. 70(1), pages 47-60, July.
    5. Andini, Monica & de Blasio, Guido & Duranton, Gilles & Strange, William C., 2013. "Marshallian labour market pooling: Evidence from Italy," Regional Science and Urban Economics, Elsevier, vol. 43(6), pages 1008-1022.
    6. Carlino, Gerald & Kerr, William R., 2015. "Agglomeration and Innovation," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 349-404, Elsevier.
    7. Duranton, Gilles & Puga, Diego, 2014. "The Growth of Cities," Handbook of Economic Growth, in: Philippe Aghion & Steven Durlauf (ed.), Handbook of Economic Growth, edition 1, volume 2, chapter 5, pages 781-853, Elsevier.
    8. He, Ruofan & Wan, Panbing, 2024. "Electricity market integration in China: The role of government officials’ hometown ties," Energy, Elsevier, vol. 303(C).
    9. Feldman, Maryann P. & Kogler, Dieter F., 2010. "Stylized Facts in the Geography of Innovation," Handbook of the Economics of Innovation, in: Bronwyn H. Hall & Nathan Rosenberg (ed.), Handbook of the Economics of Innovation, edition 1, volume 1, chapter 0, pages 381-410, Elsevier.
    10. Gilles Duranton & William R. Kerr, 2015. "The Logic of Agglomeration," Harvard Business School Working Papers 16-037, Harvard Business School.
    11. Martijn J. Burger & Frank G. Oort & Otto Raspe, 2011. "Agglomeration and New Establishment Survival: A Mixed Hierarchical and Cross-Classified Model," Advances in Spatial Science, in: Karima Kourtit & Peter Nijkamp & Roger R. Stough (ed.), Drivers of Innovation, Entrepreneurship and Regional Dynamics, pages 45-63, Springer.
    12. Rodger Barros Antunes Campos & Carlos Roberto Azzoni, 2019. "Estimating the Intra-Urban Wage Premium," TD NEREUS 4-2019, Núcleo de Economia Regional e Urbana da Universidade de São Paulo (NEREUS).
    13. Edward L. Glaeser & William R. Kerr, 2009. "Local Industrial Conditions and Entrepreneurship: How Much of the Spatial Distribution Can We Explain?," Journal of Economics & Management Strategy, Wiley Blackwell, vol. 18(3), pages 623-663, September.
    14. Combes, Pierre-Philippe & Gobillon, Laurent, 2015. "The Empirics of Agglomeration Economies," Handbook of Regional and Urban Economics, in: Gilles Duranton & J. V. Henderson & William C. Strange (ed.), Handbook of Regional and Urban Economics, edition 1, volume 5, chapter 0, pages 247-348, Elsevier.
    15. William R. Kerr & Frederic Robert-Nicoud, 2020. "Tech Clusters," Journal of Economic Perspectives, American Economic Association, vol. 34(3), pages 50-76, Summer.
    16. Combes, Pierre-Philippe & Duranton, Gilles & Gobillon, Laurent, 2008. "Spatial wage disparities: Sorting matters!," Journal of Urban Economics, Elsevier, vol. 63(2), pages 723-742, March.
    17. Sabrina Di Addario & Eleonora Patacchini, 2006. "Is there an urban wage premium in Italy?," Temi di discussione (Economic working papers) 570, Bank of Italy, Economic Research and International Relations Area.
    18. Henderson, J. Vernon & Thisse, Jacques-François, 2024. "Urban and spatial economics after 50 years," Journal of Urban Economics, Elsevier, vol. 144(C).
    19. Javier Changoluisa, 2021. "The early development of new establishments: An evaluation of the role of spatial selection and agglomeration," Jena Economics Research Papers 2021-009, Friedrich-Schiller-University Jena.
    20. Mano, Yukichi & 真野, 裕吉 & Suzuki, Aya & 鈴木, 綾, 2013. "Measuring Agglomeration Economies: The Case of the Ethiopian Cut Flower Industry," Discussion Papers 2013-04, Graduate School of Economics, Hitotsubashi University.

    More about this item

    Keywords

    ;
    ;
    ;
    ;

    JEL classification:

    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns
    • Q24 - Agricultural and Natural Resource Economics; Environmental and Ecological Economics - - Renewable Resources and Conservation - - - Land
    • O14 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Industrialization; Manufacturing and Service Industries; Choice of Technology
    • O18 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Urban, Rural, Regional, and Transportation Analysis; Housing; Infrastructure

    Statistics

    Access and download statistics

    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:chieco:v:94:y:2025:i:pb:s1043951x25002299. 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/chieco .

    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.