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High-Technology Zones, Misallocation of Resources among Cities and Aggregate Productivity: Evidence from China

Author

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  • Laiqun Jin

    (School of Business, Ningbo University)

  • Xiuyan Liu

    (School of Economics and Management, Southeast University)

  • Sam Hak Kan Tang

    (Business School, The University of Western Australia)

Abstract

Recent literature has been debating the performance of high-technology zones (HTZs) in developing countries. This paper contributes to this debate by examining how national HTZs in China affect the allocative efficiency of resources among Chinese cities as well as China’s total factor productivity (TFP) growth. This paper has two key findings: Firstly, results show that resource misallocation among cities reduces China’s TFP growth by 4.5%. In the absence of national HTZs, China’s TFP loss would have been higher by about 1.5%. Secondly, we find that China’s national HTZs improve the allocative efficiency of capital among cities by channelling capital to where there is a shortage. Interestingly, we find little evidence of productivity growth driven by technical efficiency following the establishment of HTZs. The positive effect of national HTZs on allocative efficiency can be found in cities located in the Eastern and Central regions and cities without an administrative designation.

Suggested Citation

  • Laiqun Jin & Xiuyan Liu & Sam Hak Kan Tang, 2021. "High-Technology Zones, Misallocation of Resources among Cities and Aggregate Productivity: Evidence from China," Economics Discussion / Working Papers 21-11, The University of Western Australia, Department of Economics.
    • Handle: RePEc:uwa:wpaper:21-11
    Note: MD5 = a5c5beb355041a38019814b2ec793d5e
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    More about this item

    Keywords

    High-technology zones; Misallocation of resources; Total factor productivity; China;
    All these keywords.

    JEL classification:

    • O11 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Macroeconomic Analyses of Economic Development
    • O53 - Economic Development, Innovation, Technological Change, and Growth - - Economywide Country Studies - - - Asia including Middle East

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