Industrial clusters in the long run: evidence from Million-Rouble plants in China

Stephan Heblich; Marlon Seror; Hao Xu; Yanos Zylberberg

Industrial clusters in the long run: evidence from Million-Rouble plants in China

Stephan Heblich, Marlon Seror, Hao Xu, Yanos Zylberberg

Research output: Working paper › Working paper and Preprints

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Abstract

We identify the negative spillovers exerted by large, successful factories on other local production units in China. A short-lived cooperation program between the U.S.S.R. and China led to the construction of 156 \Million-Rouble plants" in the 1950s. The identication exploits the ephemeral geopolitical context and exogenous variation in location decisions due to the relative position of allied and enemy airbases. We nd a rise-and-fall pattern in counties hosting a factory and show that (over-) specialization explains their long-run decline. The analysis of production linkages shows that a very large cluster of non-innovative establishments enjoy technological rents along the production chain of Million-Rouble plants. This industrial concentration reduces the local supply of entrepreneurs.

Original language	English
Publication status	Published - 24 Jan 2020

Publication series

Name	University of Bristol Working Paper Series
Publisher	University of Bristol

Keywords

industrial clusters
Agglomeration economies
specialization

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Full-text PDF (submitted manuscript) Final published version, 10.9 MB

http://www.bristol.ac.uk/efm/media/workingpapers/working_papers/pdffiles/dp19712.pdf

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AB - We identify the negative spillovers exerted by large, successful factories on other local production units in China. A short-lived cooperation program between the U.S.S.R. and China led to the construction of 156 \Million-Rouble plants" in the 1950s. The identication exploits the ephemeral geopolitical context and exogenous variation in location decisions due to the relative position of allied and enemy airbases. We nd a rise-and-fall pattern in counties hosting a factory and show that (over-) specialization explains their long-run decline. The analysis of production linkages shows that a very large cluster of non-innovative establishments enjoy technological rents along the production chain of Million-Rouble plants. This industrial concentration reduces the local supply of entrepreneurs.

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