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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

We study the impact of large, successful manufacturing plants on other local producers in China, focusing on "Million-Rouble Plants" built in the 1950s during a brief alliance with the U.S.S.R. The ephemeral geopolitical situation and the locations of allied and enemy airbases provide exogenous variation in plant siting. We find a boom-and-bust pattern: Counties hosting these plants were 80% more productive than control counties in 1982 but 20% less productive by 2010. This decline reflects the performance of local establishments, which exhibit low productivity, limited innovation, and high markup. Specialization hindered spillovers, preventing the emergence of new clusters and local entrepreneurship.

Suggested Citation

  • Stephan Heblich & Marlon Seror & Hao Xu & Yanos Zylberberg, 2026. "Industrial clusters in the long run: Evidence from Million-Rouble plants in China," RFBerlin Discussion Paper Series 26188, ROCKWOOL Foundation Berlin (RFBerlin).
    • Handle: RePEc:crm:wpaper:26188
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    Keywords

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    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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