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Industrial Clusters in the Long Run: Evidence from Million-Rouble Plants in China

Author

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

Abstract

We identify negative spillovers exerted by large, successful manufacturing plants on other local production facilities in China. A short-lived alliance between the U.S.S.R. and China led to the construction of 150 "Million-Rouble plants" in the 1950s. Our identification strategy exploits the ephemeral geopolitical context and the relative position of allied and enemy airbases to isolate exogenous variation in plant location decisions. We find a boom-and-bust pattern in hosting counties: treated counties are twice as productive as control counties in 1982, but 30% less productive in 2010. The average other establishment in treated counties is unproductive, does not innovate, and charges high markups. We find that (over)specialization limits technological spillovers. This prevents the emergence of new industrial clusters and leads to a flight of entrepreneurs.

Suggested Citation

  • Stephan Heblich & Marlon Seror & Hao Xu & Yanos Zylberberg, 2022. "Industrial Clusters in the Long Run: Evidence from Million-Rouble Plants in China," NBER Working Papers 30744, National Bureau of Economic Research, Inc.
    • Handle: RePEc:nbr:nberwo:30744
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    Cited by:

    1. Stephan Heblich & Dávid Nagy & Alex Trew & ​Yanos Zylberberg, 2023. "The Death and Life of Great British Cities," Working Papers 1398, Barcelona School of Economics.
    2. Hu, Zhi-An & Li, Jinghong & Nie, Zhuo, 2023. "Long Live friendship? The long-term impact of Soviet aid on Sino-Russian trade," Journal of Development Economics, Elsevier, vol. 164(C).
    3. Liu, Renliang & Xie, Jian, 2025. "Heritage of Hostility: How Anti-Missionary Violence and Industrial Capacity Shaped China’s Quid Pro Quo for Foreign Technology," CAGE Online Working Paper Series 777, Competitive Advantage in the Global Economy (CAGE).
    4. Fei Wang & Hao Wang & Qiliang Mao, 2025. "State-owned enterprises fail to drive regional technological diversification: evidence from China," Empirical Economics, Springer, vol. 69(2), pages 915-949, August.

    More about this item

    JEL classification:

    • 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
    • R11 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - General Regional Economics - - - Regional Economic Activity: Growth, Development, Environmental Issues, and Changes
    • R50 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis - - - General

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