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.
|Publication status||Published - 24 Jan 2020|
|Name||University of Bristol Working Paper Series|
|Publisher||University of Bristol|
- industrial clusters
- Agglomeration economies