DP8696 Using Export Market Performance to Evaluate Regional Preferential Policies in China

Author(s): Annette Schminke , Johannes Van Biesebroeck

Publication Date: December 2011

Keyword(s): ETDZ , innovation policy , regional economics , spillover , STIP , treatment effects

JEL(s): F14 , L2 , R11

Programme Areas: Industrial Organization , International Trade and Regional Economics

Link to this Page: www.cepr.org/pubs/dps/DP8696.asp.asp

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.