Does development zone policy promote local firm’s export participation: based on the difference-in-differences method test

BIAN Zeyang1 QIANG Yongchang2 LI Zhiyuan2,3,4

(1.Business School, University of Shanghai for Science & Technology)
(2.School of Economics, Fudan University)
(3.Shanghai Institute of International Finance and Economics)
(4.Fudan-Pingan Macroeconomic Research Center)

【Abstract】This paper focuses on the promotion impact of the establishment of national-level development zone (economic and technological development zone and high-tech industrial development zone) on city-level firm’s export participation. In the theoretical part, we introduced endogenous thought of firm’s fixed export cost on the basis of Melitz (2003) model, deducing that agglomeration economies reduced fixed export cost and increased the probability of firm’s entering export market. Then, we used DID method to conduct the empirical test towards the above questions by referring to a balanced panel data of 204 prefecture-level cities in 2000–2014 after passing the quasi-experiment test and parallel trend test. The results show that the establishment of Nationallevel Development Zone significantly raises the city-level annual growth rate of the mass of exporters by 15.7%. Considering the timeliness of the policy, the National-level Development Zone has seized an inverted U-shape impact over time on prompting firm’s export participation which reaches the peak in the third year after the experiment, and this promotion effect can last for at least three to four years. The “Switching Treatment Group Test” based on PSM method proves that just the development zone policy has significantly prompted firm’s export participation, and the result of this causality “Placebo Test” is robust regardless of different estimation methods and procedures.

【Keywords】 development zone; agglomeration economy; export participation;

【DOI】

【Funds】 the National Natural Science Foundation of China (71773020) the Humanities and Social Sciences Planning Fund of the Ministry of Education (17YJA790053)

Download this article

(Translated by SU Chenfang)

    Footnote

    [1]. ① The difference between an economic development zone and a high-tech zone is the supervising department. The two has no fundamental difference in layout design, preferential policies and management systems. Therefore, there is no point in examining the two separately in terms of the effect on firms’ exports (Liu , 2018). [^Back]

    [2]. ① Specifically, Xianyang of Shaanxi Province established the Yangling Agricultural High-tech Industrial Demonstration Zone in 1997 and the Xianyang High-tech Industrial Development Zone in 2012, both of which are National National High-Tech Industrial Development Zone. However, the former is an agricultural high-tech zone and is not in manufacturing and export industries which are the subject of this paper. Therefore, Xianyang is deemed to obtain approval for a national high-tech zone in 2012. [^Back]

    [3]. ① During the selection of the control group cities, Sansha and Haidong, two prefecture-level cities established in 2012 and 2013, and Chaohu, a city removed from the prefecture-level divisions in 2011 are excluded, retaining the rest 89 prefecture-level cities with no national economic development zones or high-tech zones. [^Back]

    References

    [1] EATON J, KORTUM S, KRAMARZ F. Dissecting Trade: Firms, Industries, and Export Destinations. American Economic Review, 2004, 94(2): 150–154.

    [2] HUMMELSD, KLENOWPJ. The Variety and Quality of a Nation’s Exports. American Economic Review, 2005, 95(3): 704–723.

    [3] PHAMC, MARTINW. Extensive and Intensive Margin Growth and Developing Country Exports. World Bank, Washington, DC, 2007.

    [4] KANCSDA. Trade Growth in a Heterogeneous Firm Model: Evidence from South Eastern Europe. The World Economy, 2007, 30(7): 1139–1169.

    [5] BERNARD A B, JENSEN J B, REDDING S J, et al. The Margins of US Trade. American Economic Review, 2009, 99(2): 487–493.

    [6] MELITZ M J. The Impact of Trade on Intra-industry Reallocations and Aggregate Industry Productivity. Econometrica, 2003, 71(6): 1695–1725.

    [7] Chen, Z. & Xiong, R. Management World (管理世界), (8): 67–80 (2015).

    [8] Wu, M. & Huang, J. South China Journal of Economics (南方经济), (7): 87–102 (2012).

    [9] Zhang, G., Wang, Y. & Li, K. Journal of Finance and Economics (财经研究), (12): 49–60 (2016).

    [10] Wang, Y. & Zhang, G. Economic Research Journal (经济研究), (7): 58–71 (2016).

    [11] DURANTON G, PUGA D. Chapter48-Micro-Foundations of Urban Agglomeration Economies. Henderson J V, Thisse J. Handbook of Regional and Urban Economics. Elsevier, 2004: 2063–2117.

    [12] ANDERSSON M, LOOF H. Agglomeration and Productivity: Evidence from Firm-Level Data. Annals of Regional Science, 2011, 46(3): 601–620.

    [13] COMBES P, DURANTON G, GOBILLON L, et al. The Productivity Advantages of Large Cities: Distinguishing Agglomeration from Firm Selection. Econometrica, 2012, 80(6): 2543–2594.

    [14] Yu, Z. & Yang, Y. The Journal of World Economy (世界经济), (10): 31–51 (2014).

    [15] Fan, J., Feng, M. & Li, F. The Journal of World Economy (世界经济), (5): 51–73 (2014).

    [16] CAINELLI G, Di MARIA E, GANAU R. An Explanation of Firms’ Internationalisation Modes, Blending Firm Heterogeneity and Spatial Agglomeration: Microevidence from Italy. Environment and Planning A: Economy and Space, 2014, 46(4): 943–962.

    [17] Liu, J. Forum of World Economics & Politics (世界经济与政治论坛), (2): 45–67 (2018).

    [18] SHARMA S. Three Essays on the Economics of Agglomeration. Economics-Dissertations, 2001, 51.

    [19] CASSEY A J, SCHMEISER K N. The Agglomeration of Exporters by Destination. Annals of Regional Science, 2013, 51(2): 495–513.

    [20] KOENIG P. Agglomeration and the Export Decisions of French Firms. Journal of Urban Economics, 2009, 66(3): 186–195.

    [21] KOENIG P, MAYNERIS F, PONCET S. Local Export Spillovers in France. European Economic Review, 2010, 54(4): 622–641.

    [22] CHOQUETTE E, MEINEN P. Export Spillovers: Opening the Black Box. The World Economy, 2015, 38(12): 1912–1946.

    [23] Zheng, J., Gao, Y. & Hu, X. Economic Research Journal (经济研究), (5): 33–46 (2008).

    [24] Fan, Z. Financial Minds (财经智库), (3): 42–64 (2018).

    [25] Zheng, X., Wang, H. & Zhao, Y. Management World (管理世界), (8): 34–44 (2011).

    [26] AUTOR D H. Outsourcing at Will: The Contribution of Unjust Dismissal Doctrine to the Growth of Employment Outsourcing. Journal of Labor Economics, 2003, 21(1): 1–42.

    [27] Liu, R. & Zhao, R. Management World (管理世界), (8): 30–38 (2015).

    [28] Liu, J. & Fan, Z. The Journal of World Economy (世界经济), (11):117–135 (2013).

This Article

ISSN:1002-4670

CN: 11-1692/F

Vol , No. 11, Pages 116-132

November 2019

Downloads:2

Share
Article Outline

Abstract

  • Introduction
  • 1 Literature review
  • 2 Theoretical model and mechanism analysis
  • 3 Research design
  • 4 Empirical analysis
  • 5 Conclusions and policy implications
  • Footnote

    References