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Place-based Policies, Firm Productivity and Displacement Effects: Evidence from Shenzhen, China

Author

Listed:
  • Hans Koster

    (VU University Amsterdam, the Netherlands, and London School of Economics, United Kingdom)

  • Fang Fang Cheng

    (Utrecht University, the Netherlands)

  • Michiel Gerritse

    (University of Groningen, the Netherlands)

  • Frank van Oort

    (Erasmus University Rotterdam, and Utrecht University, the Netherlands)

Abstract

We analyse the economic impacts of place-based policies that aim to enhance economic development by stimulating growth and productivity of firms in designated areas. We use unique panel data from China with information on manufacturing firms’ production factors, productivity and location, and we exploit temporal and spatial variation in place-based interventions due to the opening of science parks in the metropolitan area of Shenzhen. The identification strategy enables us to address the issues that (i) science parks are located in favourable locations and that (ii) high-productivity firms sort themselves in science parks. We find that productivity is approximately 15-25 per cent higher due to the policies. The results also show that local wages have increased in science parks. Weaker evidence suggests that displacement effects are sizeable.

Suggested Citation

  • Hans Koster & Fang Fang Cheng & Michiel Gerritse & Frank van Oort, 2016. "Place-based Policies, Firm Productivity and Displacement Effects: Evidence from Shenzhen, China," Tinbergen Institute Discussion Papers 16-021/VIII, Tinbergen Institute.
  • Handle: RePEc:tin:wpaper:20160021
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    Cited by:

    1. Anthony Howell & Chong Liu & Rudai Yang, 2020. "Explaining the urban premium in Chinese cities and the role of place-based policies," Environment and Planning A, , vol. 52(7), pages 1332-1356, October.
    2. Wai-Ming To & Peter K. C. Lee & Antonio K. W. Lau, 2021. "Economic and Environmental Changes in Shenzhen—A Technology Hub in Southern China," Sustainability, MDPI, Open Access Journal, vol. 13(10), pages 1-17, May.

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    More about this item

    Keywords

    place-based policies; transitional economies; science parks; productivity;
    All these keywords.

    JEL classification:

    • H2 - Public Economics - - Taxation, Subsidies, and Revenue
    • R3 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Real Estate Markets, Spatial Production Analysis, and Firm Location
    • R5 - Urban, Rural, Regional, Real Estate, and Transportation Economics - - Regional Government Analysis

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