1、 very preliminaryComparative Advantage and the Effects of Place-Based Policies:Evidence from Chinas Export Processing ZonesZhao Chen#,Sandra Poncet*,Ruixiang Xiong#China Center of Economic Studies,Fudan University*Paris School of Economics(University of Paris 1)and CEPII2023-1-6I.Introduction Indust
2、ry policies,place-based policies and Economic Zones in China No conclusive conclusions about the effectiveness of place-based policies(Moretti,2010,Busso et al.,2013)Difficulties in evaluation of industry policies(Krugman,1983)How to measure industry policy How to identify the causality2023-1-6I.Int
3、roduction In this paper The effects of export-processing zones(EPZs)Clear policy purpose The role of comparative advantage DID estimation using a quasi-experiment of EPZs in China.2023-1-6II.Brief literature review The effect of industry policies(Cai,Harrison and Lin,2011)Tariff policy has positive
4、impact on TFP of industries with comparative advantage Comments:Tariff policy&TFP Comparative advantage:exporting firms Policy of protection vs.policy of promotionII.Brief literature review Policy evaluation of Economic Zones City-level data(Wei,1995;Wang,2013;Alder et al.,2013)Firm-level data(Head
5、and Ries,1996;Schminke and Van Biesebroeck,2013)Comments:policy at city-level,no within city difference Few concern about the heterogeneous impact This paper:Policy difference at city-industry level Comparative advantageIII.Background of Chinas EPZs Aim:promote exports by preferential policies Estab
6、lishment:2023-1-6Establishment yearNumber of EPZs2000152001320028200313200518total57III.Background of Chinas EPZs Only some industries chosen as key industries could enjoy preferential policies Preferential policies in EPZs：free VAT,free trade for imported components;facilitate firms exporting outsi
7、de：tax reimbursement when providing firms in EPZs with intermediate goods 2023-1-6IV.Data Data source China annual survey of manufacturing firms from 1998 to 2007 Sample To make the cities more comparable,we only include the cities having EPZs by 20052023-1-63.Data Data cleaningBasic cleaning(Brandt
8、 et al.,2012,Nie et al.,2012)Industry classification adjustment(Yang et al.,2013)Administrative division adjustment(Bao et al.,2013)Price deflatorExporting firms(1998-2007)Matching key industries 2023-1-64.Empirical Results2023-1-64.Empirical Results How to define comparative advantagecomparative ad
9、vantage(CA):Qci=1,if location entropy for industry i in city c 1 before EPZ establishment,otherwise 0 Regression Full sample Subsample with CA Subsample without CA Triple-interaction term with Qci2023-1-64.1 Basic model(1)(2)(3)(4)(5)(6)Full-sampleWithout CAWith CAFull-sampleWithoutCAWith CAOLSOLSOL
10、SFEFEFET-0.0477-0.0106-0.0547-0.0594*-0.0317-0.0640*(0.0326)(0.0344)(0.0360)(0.0191)(0.0291)(0.0217)K-0.03320.00541-0.0414(0.0337)(0.0364)(0.0394)T*K0.0663*0.009030.0830*0.104*0.03670.123*(0.0255)(0.0299)(0.0283)(0.0157)(0.0303)(0.0169)Constant-0.909*-1.388*-0.404-0.247-0.328*-0.229(0.232)(0.143)(0.
11、283)(0.243)(0.169)(0.313)Cluster-CityYESYESYESYESYESYESObs338,21197,966240,245338,21197,966240,245R-squared0.9120.9120.9130.9190.9160.921Number of panelid75,19722,46452,7332023-1-64.2 long-run effectsReference group:n=-5 -7,-6,-5(n=-4)*Kci(n=-3)*Kci(n=4)*Kci(n=5)*Kci 4.2 long-run effects:full sample
12、2023-1-6-.20.2.4Regression coefficients:%change in export value-4-3-2-1012345years since(to)EPZs establishmentEstimates95%upper bound95%lower bound4.2 long-run effects:sub-sample w/o CA2023-1-6-.10.1.2.3Regression coefficients:%change in export value-4-3-2-1012345years since(to)EPZs establishmentEst
13、imates95%upper bound95%lower bound4.2 long-run effects:sub-sample with CA2023-1-6-.20.2.4Regression coefficients:%change in export value-4-3-2-1012345years since(to)EPZs establishmentEstimates95%upper bound95%lower bound5.Robustness checks2023-1-65.1 Using interaction terms（FE）T-0.0185(0.0325)T*K0.0
14、451(0.0319)T*Q-0.0549*(0.0330)T*K*Q0.0811*(0.0333)Constant-0.241(0.240)Cluster-cityYESObservations338,211R-squared0.919Number of panelid75,1972023-1-65.2 Considering firms relocation 2023-1-6(1)(2)(3)full-sampleWithout CAWith CAT-0.0481*-0.0192-0.0539*(0.0194)(0.0282)(0.0225)T*K0.108*0.03760.128*(0.
15、0159)(0.0287)(0.0172)Constant-0.265-0.356*-0.253(0.217)(0.162)(0.276)Cluster-CityYESYESYESObservations277,61079,517198,093R-squared0.9190.9160.921Number of panelid56,09016,55539,5355.3 Omitted governance abilities（FE）(1)(2)(3)Full-sampleWithout CAWith CAT-0.0169-0.0115-0.0149(0.0347)(0.0441)(0.0378)
16、T*K0.0873*0.003930.108*(0.0281)(0.0434)(0.0311)Constant-0.0469-0.144-0.0499(0.269)(0.147)(0.364)Cluster-CityYESYESYESObservations158,34045,687112,653R-squared0.9200.9180.921Number of panelid34,56910,23324,3362023-1-65.4 Higher export intensity firms（FE）Prologis（2008）(1)(2)(3)Full-sampleWithout CAWit
17、h CAT-0.0524*-0.00726-0.0652*(0.0256)(0.0354)(0.0266)T*K0.110*0.03460.130*(0.0215)(0.0457)(0.0231)Constant-0.539-0.570*-0.546(0.436)(0.225)(0.554)Cluster-CityYESYESYESObservations166,80947,361119,448R-squared0.9300.9320.930Number of panelid38,76611,51227,2542023-1-66.Conclusions and implications Conclusions Average effectsOverall:10.4%Industries with CA：12.3%;otherwise no effectsLong-run effectsIndustries with CA：from 9.8%to 24.4%Otherwise no effects Policy implication：local initial conditions are important when making place-based policies2023-1-6Thank You！2023-1-6
