IDEAS home Printed from https://ideas.repec.org/a/eee/reveco/v98y2025ics1059056025000668.html
   My bibliography  Save this article

Can upgrading development zones enhance regional entrepreneurial activity? Evidence from Chinese enterprise registration data

Author

Listed:
  • Liu, Xin
  • Xu, Zhao
  • Zhang, Kailai
  • Kang, Zhiyong
  • Xie, Xinyue

Abstract

As a crucial strategy for China's opening up and economic reform, development zones have undergone phases of initiation, boom and stable development since the establishment of Special Economic Zones (SEZs) in 1980, ultimately becoming engines for regional economic growth. In 2009, the Chinese government initiated the process of upgrading provincial-level development zones to national-level development zones, marking the beginning of a transformation in China's development zones from ‘quantitative change’ to ‘qualitative change’. What impact will the gradually implemented upgrading policy for development zones have on urban entrepreneurship? This study uses China's upgrading policy for development zones as a quasi-natural experiment and analyzes data from 2528 districts (or counties) from 2006 to 2019, employing the multi-period difference-in-differences (DID) method to examine the impact of upgrading development zones on entrepreneurial activity in both the local and surrounding areas. The study finds that the implementation of the upgrading policy for development zones significantly enhances the entrepreneurial activity in the local district (or county), but it has a certain suppressive effect on the entrepreneurial activity in the surrounding districts (or counties). After conducting various robustness tests, the conclusions remain valid. Further analysis reveals that the effects of the upgrading policy for development zones on entrepreneurial activity are notably influenced by the heterogeneity of urban characteristics and entrepreneurial enterprise characteristics. Mechanism tests indicate that business environment, preferential policies and agglomeration effects impact the entrepreneurial activity in the districts (or counties). The findings of this study expand the existing literature on the upgrading of development zones and entrepreneurship, providing relevant insights into how to further improve the development zone system and adjust its policy framework to promote innovative and entrepreneurial economic development.

Suggested Citation

  • Liu, Xin & Xu, Zhao & Zhang, Kailai & Kang, Zhiyong & Xie, Xinyue, 2025. "Can upgrading development zones enhance regional entrepreneurial activity? Evidence from Chinese enterprise registration data," International Review of Economics & Finance, Elsevier, vol. 98(C).
    • Handle: RePEc:eee:reveco:v:98:y:2025:i:c:s1059056025000668
    DOI: 10.1016/j.iref.2025.103903
    as

    Download full text from publisher

    File URL: http://www.sciencedirect.com/science/article/pii/S1059056025000668
    Download Restriction: Full text for ScienceDirect subscribers only
    File URL: https://libkey.io/10.1016/j.iref.2025.103903?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. Maryann P. Feldman & Cynthia R. Ronzio, 2001. "Closing the innovative loop: moving from the laboratory to the shop floor in biotechnology manufacturing," Entrepreneurship & Regional Development, Taylor & Francis Journals, vol. 13(1), pages 1-16, January.
    2. Kaish, Stanley & Gilad, Benjamin, 1991. "Characteristics of opportunities search of entrepreneurs versus executives: Sources, interests, general alertness," Journal of Business Venturing, Elsevier, vol. 6(1), pages 45-61, January.
    3. John B. Cullen & Jean L. Johnson & K. Praveen Parboteeah, 2014. "National Rates of Opportunity Entrepreneurship Activity: Insights from Institutional Anomie Theory," Entrepreneurship Theory and Practice, , vol. 38(4), pages 775-806, July.
    4. Erik Stam, 2015. "Entrepreneurial Ecosystems and Regional Policy: A Sympathetic Critique," European Planning Studies, Taylor & Francis Journals, vol. 23(9), pages 1759-1769, September.
    5. 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.
    6. Alan B. Krueger & David Card, 2000. "Minimum Wages and Employment: A Case Study of the Fast-Food Industry in New Jersey and Pennsylvania: Reply," American Economic Review, American Economic Association, vol. 90(5), pages 1397-1420, December.
    7. Demurger, Sylvie & Sachs, Jeffrey D. & Woo, Wing Thye & BAO, Shuming & Chang, Gene, 2002. "The relative contributions of location and preferential policies in China's regional development: being in the right place and having the right incentives," China Economic Review, Elsevier, vol. 13(4), pages 444-465, December.
    8. Susanne A. Frick & Andrés Rodríguez-Pose, 2023. "What draws investment to special economic zones? Lessons from developing countries," Regional Studies, Taylor & Francis Journals, vol. 57(11), pages 2136-2147, November.
    9. Annette Schminke & Johannes Van Biesebroeck, 2013. "Using export market performance to evaluate regional preferential policies in China," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 149(2), pages 343-367, June.
    10. Wang, Jin, 2013. "The economic impact of Special Economic Zones: Evidence from Chinese municipalities," Journal of Development Economics, Elsevier, vol. 101(C), pages 133-147.
    11. Branstetter, Lee G. & Li, Guangwei & Ren, Mengjia, 2023. "Picking winners? Government subsidies and firm productivity in China," Journal of Comparative Economics, Elsevier, vol. 51(4), pages 1186-1199.
    12. Dominic S.K. Lim & Eric A. Morse & Ronald K. Mitchell & Kristie K. Seawright, 2010. "Institutional Environment and Entrepreneurial Cognitions: A Comparative Business Systems Perspective," Entrepreneurship Theory and Practice, , vol. 34(3), pages 491-516, May.
    13. Andrés Rodríguez‐Pose & Federico Bartalucci & Susanne A. Frick & Amelia U. Santos‐Paulino & Richard Bolwijn, 2022. "The challenge of developing special economic zones in Africa: Evidence and lessons learnt," Regional Science Policy & Practice, Wiley Blackwell, vol. 14(2), pages 456-481, April.
    14. Bai, Xue-Jie & Yan, Wen-Kai & Chiu, Yung-Ho, 2015. "Performance evaluation of China's Hi-tech zones in the post financial crisis era — Analysis based on the dynamic network SBM model," China Economic Review, Elsevier, vol. 34(C), pages 122-134.
    15. Susanne Frick & Andrés Rodríguez-Pose, . "Are special economic zones in emerging countries a catalyst for the growth of surrounding areas?," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    16. Simon Alder & Lin Shao & Fabrizio Zilibotti, 2016. "Economic reforms and industrial policy in a panel of Chinese cities," Journal of Economic Growth, Springer, vol. 21(4), pages 305-349, December.
    17. Lee, Seung-Hyun & Yamakawa, Yasuhiro & Peng, Mike W. & Barney, Jay B., 2011. "How do bankruptcy laws affect entrepreneurship development around the world?," Journal of Business Venturing, Elsevier, vol. 26(5), pages 505-520, September.
    18. Paul Reynolds & Niels Bosma & Erkko Autio & Steve Hunt & Natalie De Bono & Isabel Servais & Paloma Lopez-Garcia & Nancy Chin, 2005. "Global Entrepreneurship Monitor: Data Collection Design and Implementation 1998–2003," Small Business Economics, Springer, vol. 24(3), pages 205-231, February.
    19. Susanne A. Frick & Andrés Rodríguez-Pose & Michael Wong, 2018. "Towards economically dynamic Special Economic Zones in emerging countries," Papers in Evolutionary Economic Geography (PEEG) 1816, Utrecht University, Department of Human Geography and Spatial Planning, Group Economic Geography, revised Apr 2018.
    20. Givord, Pauline & Rathelot, Roland & Sillard, Patrick, 2013. "Place-based tax exemptions and displacement effects: An evaluation of the Zones Franches Urbaines program," Regional Science and Urban Economics, Elsevier, vol. 43(1), pages 151-163.
    21. Cheng, Leonard K. & Kwan, Yum K., 2000. "What are the determinants of the location of foreign direct investment? The Chinese experience," Journal of International Economics, Elsevier, vol. 51(2), pages 379-400, August.
    22. Tatiana S. Manolova & Rangamohan V. Eunni & Bojidar S. Gyoshev, 2008. "Institutional Environments for Entrepreneurship: Evidence from Emerging Economies in Eastern Europe," Entrepreneurship Theory and Practice, , vol. 32(1), pages 203-218, January.
    23. Karl Wennberg & Göran Lindqvist, 2010. "The effect of clusters on the survival and performance of new firms," Small Business Economics, Springer, vol. 34(3), pages 221-241, April.
    24. Maria Minniti, 2008. "The Role of Government Policy on Entrepreneurial Activity: Productive, Unproductive, or Destructive?," Entrepreneurship Theory and Practice, , vol. 32(5), pages 779-790, September.
    25. Deming Luo & Yanjun Liu & Yiyun Wu & Xiwei Zhu & Xiangrong Jin, 2015. "Does development zone have spillover effect in China?," Journal of the Asia Pacific Economy, Taylor & Francis Journals, vol. 20(3), pages 489-516, July.
    26. 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.
    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. Lyu, Wenyi & Yang, Jian & Yu, Leng, 2025. "Place-based policies, pro-competitive effects, and allocative efficiency: Evidence from China’s economic zones," World Development, Elsevier, vol. 191(C).
    2. Cui, Yi, 2024. "Place-based policies and capital misallocation: Evidence from Chinese cities," Economic Systems, Elsevier, vol. 48(4).
    3. Yijia Song & Ruichen Deng & Ruoxi Liu & Qian Peng, 2020. "Effects of Special Economic Zones on FDI in Emerging Economies: Does Institutional Quality Matter?," Sustainability, MDPI, vol. 12(20), pages 1-21, October.
    4. Chen, Wei & Su, Zhi & Wang, Yanan & Wang, Qian & Zhao, Guoli, 2022. "Do the rank difference of industrial development zones affect land use efficiency? A regional analysis in China," Socio-Economic Planning Sciences, Elsevier, vol. 80(C).
    5. Lanzhuang Xu & Hu Xue & Qianrong Wu, 2022. "The Impact of Development Zones on Economic Growth in Less Developed Regions: Evidence from Guangxi, China," Land, MDPI, vol. 11(10), pages 1-20, September.
    6. Laiqun Jin & Xiuyan Liu & Sam Hak Kan Tang, 2021. "High-Technology Zones, Misallocation of Resources among Cities and Aggregate Productivity: Evidence from China," Economics Discussion / Working Papers 21-11, The University of Western Australia, Department of Economics.
    7. Zhang, Lihua & Chen, Xinyu & Xu, Zheng, 2024. "Can development zones reduce energy consumption and carbon emissions of enterprises? Evidence from China," Journal of Asian Economics, Elsevier, vol. 95(C).
    8. Simon Alder & Lin Shao & Fabrizio Zilibotti, 2016. "Economic reforms and industrial policy in a panel of Chinese cities," Journal of Economic Growth, Springer, vol. 21(4), pages 305-349, December.
    9. Susanne A. Frick & Andrés Rodríguez-Pose, 2022. "Special Economic Zones and Sourcing Linkages with the Local Economy: Reality or Pipedream?," The European Journal of Development Research, Palgrave Macmillan;European Association of Development Research and Training Institutes (EADI), vol. 34(2), pages 655-676, April.
    10. Susanne A. Frick & Imane Radouane, . "Special economic zones and entrepreneurship: A new path forward for SEZs in Africa?," UNCTAD Transnational Corporations Journal, United Nations Conference on Trade and Development.
    11. Gan, Tian & Zhang, Mingxin & Zhang, Zhiqiang, 2023. "The impact of digital government policy on entrepreneurial activity in China," Economic Analysis and Policy, Elsevier, vol. 79(C), pages 479-496.
    12. Nebojša Stojčić & Korneliusz Pylak & Dubravka Jurlina Alibegović, 2022. "The spatial impact of entrepreneurial zones: firm, city and inter-city evidence," Regional Studies, Taylor & Francis Journals, vol. 56(12), pages 2164-2176, December.
    13. Ashintya Damayati & Chaikal Nuryakin & Muhammad Halley Yudhistira & Teguh Dartanto, 2024. "Industrial location policy, exporting activity, and firms’ collusive behavior: scrutinizing the unintended effect of industrial location policy in Indonesia," Economia e Politica Industriale: Journal of Industrial and Business Economics, Springer;Associazione Amici di Economia e Politica Industriale, vol. 51(4), pages 815-858, December.
    14. Liang, Shuzhen & Ye, Yongwei & Yun, Feng, 2024. "Social credit system construction and entrepreneurial activity: A quasi-natural experiment from China," Journal of Asian Economics, Elsevier, vol. 95(C).
    15. Jieping Chen & Xianpeng Long & Shanlang Lin, 2022. "Special Economic Zone, Carbon Emissions and the Mechanism Role of Green Technology Vertical Spillover: Evidence from Chinese Cities," IJERPH, MDPI, vol. 19(18), pages 1-22, September.
    16. Abagna, Matthew Amalitinga & Hornok, Cecília & Mulyukova, Alina, 2025. "Place-based Policies and Household Wealth in Africa," Open Access Publications from Kiel Institute for the World Economy 318396, Kiel Institute for the World Economy (IfW Kiel).
    17. Guo, Di & Guo, Yan & Jiang, Kun, 2016. "Government-subsidized R&D and firm innovation: Evidence from China," Research Policy, Elsevier, vol. 45(6), pages 1129-1144.
    18. Jingyi Tian & Jun Nagayasu, 2023. "Financial Systemic Risk behind Artificial Intelligence:Evidence from China," TUPD Discussion Papers 44, Graduate School of Economics and Management, Tohoku University.
    19. Sun, Yifan & Ma, Anbing & Su, Haorui & Su, Shiliang & Chen, Fei & Wang, Wen & Weng, Min, 2020. "Does the establishment of development zones really improve industrial land use efficiency? Implications for China’s high-quality development policy," Land Use Policy, Elsevier, vol. 90(C).
    20. Binkai Chen & Ming Lu & Christopher Timmins & Kuanhu Xiang, 2019. "Spatial Misallocation: Evaluating Place-Based Policies Using a Natural Experiment in China," NBER Working Papers 26148, National Bureau of Economic Research, Inc.

    More about this item

    Keywords

    ;
    ;
    ;
    ;
    ;

    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:reveco:v:98:y:2025:i:c:s1059056025000668. 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/620165 .

    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.