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Industrial clusters in the long run: evidence from Million-Rouble plants in China

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  • Stephan Heblich
  • Marlon Seror
  • Hao Xu
  • Yanos Zylberberg

Abstract

This paper exploits a short-lived cooperation program between the U.S.S.R. and China, which led to the construction of 156 “Million-Rouble plants” in the 1950s. We isolate exogenous variation in location decisions due to the relative position of allied and enemy airbases and study the long-run impact of these factories on local economic activity. While the “156” program accelerated industrialization in treated counties until the end of the command-economy era, this significant productivity advantage fully eroded in the subsequent period. We explore the nature of local spillovers responsible for this pattern, and provide evidence that treated counties are overspecialized and far less innovative. There is a large concentration of establishments along the production chain of the Million-Rouble plants, which limits technological spillovers across industries.

Suggested Citation

  • Stephan Heblich & Marlon Seror & Hao Xu & Yanos Zylberberg, 2019. "Industrial clusters in the long run: evidence from Million-Rouble plants in China," CESifo Working Paper Series 7682, CESifo.
  • Handle: RePEc:ces:ceswps:_7682
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    More about this item

    Keywords

    industrial clusters; agglomeration economies; specialization;
    All these keywords.

    JEL classification:

    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R53 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - Public Facility Location Analysis; Public Investment and Capital Stock
    • J24 - Labor and Demographic Economics - - Demand and Supply of Labor - - - Human Capital; Skills; Occupational Choice; Labor Productivity
    • N95 - Economic History - - Regional and Urban History - - - Asia including Middle East

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