Place-based policies, firm productivity, and displacement effects: Evidence from Shenzhen, China

Hans R.A. Koster*, Fang Fang Cheng, Michiel Gerritse, Frank G. van Oort

*Corresponding author for this work

Research output: Contribution to JournalArticleAcademicpeer-review

Abstract

Developing and transitional countries devote considerable funds to selected areas to stimulate local growth and firm productivity. We examine the impact of place-based interventions due to the opening of science parks in Shenzhen, China, on firm productivity and factor use. Our identification strategy, exploiting spatial and temporal differencing in firm-level data, addresses the issues that (a) the selection of science park locations is not random and (b) high-productivity firms sort themselves into science parks. Firm productivity is approximately 15–25% higher due to the science park policy. The policy also increases local wages and leads to distortions due to job displacement.

Original languageEnglish
Pages (from-to)187-213
Number of pages27
JournalJournal of Regional Science
Volume59
Issue number2
DOIs
Publication statusPublished - 2019

Keywords

  • place-based policies
  • productivity
  • science parks
  • transitional economies

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