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Energy endowments, barriers to trade and industry location in Chinese provinces


  • Irina Hotz


This study analyzes the determinants of manufacturing activity across Chinese provinces with emphasis on the important role of energy endowments on the location of industries. The data set consists of a panel of 28 Chinese provinces and 13 manufacturing industries for the years 1994, 1997 and 1999-2009. A model of production location is estimated, including comparative advantage and economic geography dynamics. The effects of trade impediments and changes in economic policies on the distribution of economic activity are also considered. Results validate energy as a driving force of industry location. They further show that provincial protectionism poses a problem to market mechanisms, but indicate an increase of concentration of economic activity through time.

Suggested Citation

  • Irina Hotz, 2012. "Energy endowments, barriers to trade and industry location in Chinese provinces," IRENE Working Papers 12-02, IRENE Institute of Economic Research.
  • Handle: RePEc:irn:wpaper:12-02

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    References listed on IDEAS

    1. Yanrui Wu, 2016. "China's Capital Stock Series by Region and Sector," Frontiers of Economics in China, Higher Education Press, vol. 11(1), pages 156-172, March.
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    7. Krugman, Paul, 1980. "Scale Economies, Product Differentiation, and the Pattern of Trade," American Economic Review, American Economic Association, vol. 70(5), pages 950-959, December.
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    9. Donald R. Davis & David E. Weinstein, 2002. "What Role for Empirics in International Trade?," Aussenwirtschaft, University of St. Gallen, School of Economics and Political Science, Swiss Institute for International Economics and Applied Economics Research, vol. 57(04), pages 441-468, December.
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    14. Michielsen, T.O., 2011. "The Distribution of Energy-Intensive Sectors in the US," Discussion Paper 2011-075, Tilburg University, Center for Economic Research.
    15. Bai, Chong-En & Du, Yingjuan & Tao, Zhigang & Tong, Sarah Y., 2004. "Local protectionism and regional specialization: evidence from China's industries," Journal of International Economics, Elsevier, vol. 63(2), pages 397-417, July.
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    More about this item


    China; factor endowments; industry location; energy; externalities; protectionism;

    JEL classification:

    • F18 - International Economics - - Trade - - - Trade and Environment
    • P2 - Economic Systems - - Socialist Systems and Transition Economies
    • R14 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Land Use Patterns

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