Working Paper: NBER ID: w21378
Authors: Siqi Zheng; Weizeng Sun; Jianfeng Wu; Matthew E. Kahn
Abstract: Several Chinese cities have invested billions of dollars to construct new industrial parks. These place based investments solve the land assembly problem which allows many productive firms to co-locate close to each other. The resulting local economic growth creates new opportunities for real estate developers and retailers that develop properties and stores close to the new park. The city mayor has the political clout and the personal promotion incentives to anticipate these effects as he chooses whether and where within the city to build the park. Using several geo-coded data sets, we measure the localized spillover effects of the new parks on local incumbent firm productivity, the growth of retail activity close to the park and local real estate pricing and construction. We document the heterogeneous effects of investment in parks. Those parks featuring a higher level of human capital, a greater level of co-agglomeration among firms within the park, and a smaller share of State Owned Enterprises offer greater spillover effects.
Keywords: industrial parks; spillover effects; China; urban economics; economic growth
JEL Codes: H42; H72
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| Industrial parks (R38) | Stimulate local retail activity and real estate development (R33) |
| Proximity of new jobs (J62) | Increases home prices and sales in nearby areas (R31) |
| Each additional job created in manufacturing (L60) | Significant multiplier effect on local employment and retail activity (R15) |
| Parks with higher human capital (R53) | Produce greater local economic benefits (F69) |
| Parks with lower shares of state-owned enterprises (L32) | Produce greater local economic benefits (F69) |
| Parks with better industry synergy (R53) | Produce greater local economic benefits (F69) |
| Establishment of industrial parks (O25) | Increased productivity among incumbent firms located nearby (R32) |