Working Paper: CEPR ID: DP8696
Authors: Annette Schminke; Johannes Van Biesebroeck
Abstract: We apply program evaluation methods to analyze the effectiveness of two types of preferential regional policy programs in China's manufacturing sector. Economic and Technological Development Zones (ETDZs) aim to facilitate firms' internationalization strategies. Science and Technology Industrial Parks (STIPs) aim to generate technology spillovers. We focus on various dimensions of export market performance as objective indicators for the upgrading of product quality and firm operations. We compare startups that locate into one of these zones with other startups, while controlling for self-selection. The findings suggest that firms locating in an ETDZ do much better on sheer quantity of trade, i.e. the total volume of exports and number of destinations are higher. Firms locating in a STIP perform best on 'quality' dimensions, in particular they fetch higher export prices, even by destination and especially for firms producing machinery.
Keywords: ETDZ; Innovation Policy; Regional Economics; Spillover; STIP; Treatment Effects
JEL Codes: F14; L2; R11
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Firms located in ETDZs (R30) | Total export volumes (F10) |
| Firms in STIPs (L10) | Higher prices for exports (F14) |
| Firms in STIPs (L10) | Lower export volumes (F14) |
| Firms in STIPs (L10) | Fewer high-income destinations (Z30) |
| Higher prices for exports (F14) | Strategic focus on quality (L15) |