Zheng, Jianghuai and Gao, Yanyan (2009): The nature of economic development zones in China:an empirical study based on data from the Yangtze River Delta.
Download (222kB) | Preview
Development zones, born in the course of China’s economic transition, are the carriers of both the favorable institutions and the foreign advanced technology. They are now at the stage of transferring from the concentration of firms to being industrial clusters. Based on data of firms in development zones along the Yangtze River obtained through micro-level investigation, this paper studies the effects of local factors special to development zones as well as the influence of technology promotion on the economic performance of those firms “locating” in development zones, and thus discloses the nature of firms concentrating into development zones and their trend of transferring into industrial clusters. The empirical study suggests that firms locating on development zones mainly aim at obtaining “policy rents”, which results in that firms concentrating in development zones do not possess the industrial cluster effect in the general sense: the benefits of closing to the supply or demand market. However, although firms in a develop zone do not necessarily concentrate with related firms in space, their technology and market activities are inevitably to produce relations with factors such as local governments and related industrial elements and thus affect the economic performance of firms and nurture the clustering effects of development zones. Therefore, as “policy rents” fade away due to industry transfer and adjustment of favorable economic policies, the key to keep development zones sustainable is to enhance their clustering effects.
|Item Type:||MPRA Paper|
|Original Title:||The nature of economic development zones in China:an empirical study based on data from the Yangtze River Delta|
|Keywords:||development zones along the Yangtze River, spatial concentration of firms, industrial clustering effect, technology promotion, policy rents|
|Subjects:||R - Urban, Rural, Regional, Real Estate, and Transportation Economics > R3 - Real Estate Markets, Production Analysis, and Firm Location > R30 - General
F - International Economics > F2 - International Factor Movements and International Business > F23 - Multinational Firms; International Business
O - Economic Development, Technological Change, and Growth > O5 - Economywide Country Studies > O53 - Asia including Middle East
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L23 - Organization of Production
L - Industrial Organization > L2 - Firm Objectives, Organization, and Behavior > L22 - Firm Organization and Market Structure
|Depositing User:||Jianghuai Zheng|
|Date Deposited:||03. Sep 2011 05:17|
|Last Modified:||13. Feb 2013 00:48|
Amiti, M. and Beata S. Javorcik, 2008, “Trade costs and location of foreign firms in China”, Journal of Development Economics, 85, 129-149.
Amiti, M., 2005, “Location of vertically linked industries: agglomeration versus comparative advantage”, European Economic Review, 49, 809-832.
Dixit, A. and J. Stiglitz, 1977, “Monopolistic competition and optimum product diversity”, American Economic Review, 67, 297-308.
DU, Julan, Yi LU and Zhigang TAO, 2007, “FDI Location Choice: Agglomeration vs Institutions”, International Journal of Financial Economics, forthcoming.
Hongbin Cai, Yasuyuki Todo, and Li-An Zhou, 2007, “Do Multinationals' R&D Activities Stimulate Indigenous Entrepreneurship? Evidence from China's ‘Silicon Valley’”, NBER working paper, No. 13618.
Javorcik, B. S. and M. Spatareanu, 2008, “Share or not to share: Does local participation matter for spillovers from foreign direction investment?”, Journal of Development Economics, 85, 194-217.
Jiang Dianchun, Zhang Yu, 2006, “Industrial Characteristics and Technology Spillover of FDI: The Empirical Evidence of Chinese High-tech Industries,” The Journal of World Economy, issue 10, in Chinese.
Johansson, H. and L. Nilsson, 1997, “Export processing zones as catalysts”, World Development, 25, 2115-28.
Krugman, P., 1991, “History and industry location: the case of the manufacturing belt”, American Economic Review, 81, 80-83.
Krugman, P., 1991, “Increasing Returns and Economic Geography”, The Journal of Political Economy, Vol. 99, No. 3. 483-499.
Krugman, P., 1998, “Space: the final frontier”, Journal of Economic Perspectives, 12, 161-174.
Lai Mingyong, Bao Qun, Peng Shuijun, Zhang Xin, 2005, “Foreign Direct Investment and Technology Spillover: A Theoretical Explanation of Absorptive Capability,” Economic Research Journal, issue 8, in Chinese.
Lall，Somik V., 2004, “Location, concentration, and performance of economic activity in Brazil”, World Bank Policy Research Working Paper 3268.
Marshall, Alfred, 1890, Principles of Economics, London: Macmillan and Co., Ltd.
Martin P. and C. Rogers, 1995, “Industrial location and public infrastructure”, Journal of International Economics, 39, 335-351.
Meyer-Stamer, J., 1999, “From industrial policy to regional and local location policy: experience from Stanta Catarina/Brazil”, Bull. Latin Am. Res.,18, 451-468.
Oman C., 2000, “Policy competition for foreign direct investment: A study of competition among governments to attract FDI”, Development Centre Studies, OECD.
Porter, M. E., 1990, The Competitive Advantage of Nations. New York: Free Press.
Porter, Michael E., Hirotaka Takeuchi, and M. Sakakibara., 2000, Can Japan Compete? Basingstoke: MacMillan.
Sargent，J. and L. Matthews, 2004, “What happens when relative costs increase in export processing zones? Technoloy, regional production networks, and Mexico’s Maquiladoras”, World Development, 32, 2015-2030.
Web, Alfred, 1909, Theory of Location of Industries, Chicago: University of Chicago Press.
Yuan Cheng & Lu Ting, 2005, “Foreign Direct Investment and Managerial Knowledge Spillover —— Evidence from Entrepreneurs in China s Private Sector,” Economic Research Journal, Issue 3, in Chinese.
Zhong Changbiao, 2006, “Horizontal and Vertical Spillover of FDI in China s Electronic Industry,” The Journal of World Economy, Issue 11, in Chinese