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The Effect of Economic Reform and Industrial Policy in a Panel of Chinese Cities

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  • Lin Shao

    (Washington University of St. Louis)

  • Fabrizio Zilibotti

    (University of Zurich)

  • Simon Alder

    (University of Zurich)

Abstract

We use the establishment of Special Economic Zones in China to estimate the effect of economic reforms on GDP. A panel of 270 Chinese cities from 1988 to 2010 allows us to exploit the variation in the establishment of zones across time and space. The results from our baseline fixed effects specification suggest that the establishment of a major zone led to an increase in the level of GDP between 6% and 10%, depending on the type of zone. This result is similar in a sub-sample of inland provinces, where the selection of cities in which zones were established was more transparent. Decomposing GDP into physical capital, efficient labor, and TFP shows that the effect of the zones went mainly through the accumulation of physical capital. Using electricity consumption and light intensity as two alternative measures for economic activity partly confirms these results.

Suggested Citation

  • Lin Shao & Fabrizio Zilibotti & Simon Alder, 2013. "The Effect of Economic Reform and Industrial Policy in a Panel of Chinese Cities," 2013 Meeting Papers 1309, Society for Economic Dynamics.
  • Handle: RePEc:red:sed013:1309
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    Cited by:

    1. Neumark, David & Simpson, Helen, 2015. "Place-Based Policies," Handbook of Regional and Urban Economics, Elsevier.
    2. Samuel Cudré & Mathias Hoffmann, 2017. "A provincial view of global imbalances: regional capital flows in China," Review of World Economics (Weltwirtschaftliches Archiv), Springer;Institut für Weltwirtschaft (Kiel Institute for the World Economy), vol. 153(3), pages 573-599, August.
    3. Yao Amber Li & Joseph Kaboski & Wyatt Brooks, 2016. "Agglomeration and (the Lack of) Competition," 2016 Meeting Papers 1697, Society for Economic Dynamics.
    4. Defever, F. & Reyes, J-D., 2016. "Does the Elimination of Export Requirements in Special Economic Zones A ect Export Performance? Evidence from the Dominican Republic," Working Papers 16/04, Department of Economics, City University London.
    5. Nguyen, Huong, 2016. "Ease of Doing Business Reforms in Vietnam: Implications for Total Factor Productivity in Manufacturing Industries," Papers 999, World Trade Institute.
    6. Wyatt J. Brooks & Joseph P. Kaboski & Yao Amber Li, 2016. "Growth Policy, Agglomeration, and (the Lack of) Competition," NBER Working Papers 22947, National Bureau of Economic Research, Inc.
    7. Almås, Ingvild & Johnsen, Åshild Auglænd & Kotsadam, Andreaa, 2014. "Poverty in China Seen from Outer Space," Memorandum 11/2014, Oslo University, Department of Economics.
    8. David H. Autor & David Dorn & Gordon H. Hanson, 2016. "The China Shock: Learning from Labor-Market Adjustment to Large Changes in Trade," Annual Review of Economics, Annual Reviews, vol. 8(1), pages 205-240, October.
    9. Samuel Cudré, 2014. "Capital’s long march west: saving and investment frictions in Chinese regions," ECON - Working Papers 161, Department of Economics - University of Zurich.
    10. repec:eee:jcecon:v:45:y:2017:i:4:p:809-826 is not listed on IDEAS
    11. Douglas Zhihua Zeng, 2016. "Global Experiences of Special Economic Zones with Focus on China and Africa: Policy Insights," Journal of International Commerce, Economics and Policy (JICEP), World Scientific Publishing Co. Pte. Ltd., vol. 7(03), pages 1-27, October.
    12. Wei Tian & Liugang Sheng & Hongyan Zhao, 2016. "Special Section: China's Growing Trade and its Role to the World Economy," Pacific Economic Review, Wiley Blackwell, vol. 21(1), pages 84-101, February.
    13. Valerio Mendoza, Octasiano M., 2016. "Preferential policies and income inequality: Evidence from Special Economic Zones and Open Cities in China," China Economic Review, Elsevier, vol. 40(C), pages 228-240.
    14. World Bank Group, 2017. "Special Economic Zones," World Bank Other Operational Studies 29054, The World Bank.
    15. Zeng,Zhihua, 2015. "Global experiences with special economic zones : focus on China and Africa," Policy Research Working Paper Series 7240, The World Bank.
    16. 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.
    17. repec:eee:asieco:v:51:y:2017:i:c:p:33-42 is not listed on IDEAS
    18. repec:taf:rjapxx:v:20:y:2015:i:3:p:489-516 is not listed on IDEAS

    More about this item

    JEL classification:

    • E61 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Policy Objectives; Policy Designs and Consistency; Policy Coordination
    • O12 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Microeconomic Analyses of Economic Development
    • O25 - Economic Development, Innovation, Technological Change, and Growth - - Development Planning and Policy - - - Industrial Policy
    • P27 - Economic Systems - - Socialist Systems and Transition Economies - - - Performance and Prospects

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