Industrial Clusters in the Long Run: Evidence from Million-Rouble Plants in China

77 Pages Posted: 25 Jul 2019

See all articles by Stephan Heblich

Stephan Heblich

Munk School of Global Affairs & Public Policy and Dept. of Economics,

Marlon Seror

University of Bristol

Hao Xu

Peking University

Yanos Zylberberg

University of Bristol

Date Written: 2019

Abstract

This paper exploits a short-lived cooperation program between the U.S.S.R. and China, which led to the construction of 156 "Million-Rouble plants" in the 1950s. We isolate exogenous variation in location decisions due to the relative position of allied and enemy airbases and study the long-run impact of these factories on local economic activity. While the "156" program accelerated industrialization in treated counties until the end of the command-economy era, this significant productivity advantage fully eroded in the subsequent period. We explore the nature of local spillovers responsible for this pattern, and provide evidence that treated counties are overspecialized and far less innovative. There is a large concentration of establishments along the production chain of the Million-Rouble plants, which limits technological spillovers across industries.

Keywords: industrial clusters, agglomeration economies, specialization

JEL Classification: R110, R530, J240, N950

Suggested Citation

Heblich, Stephan and Seror, Marlon and Xu, Hao and Zylberberg, Yanos, Industrial Clusters in the Long Run: Evidence from Million-Rouble Plants in China (2019). CESifo Working Paper No. 7682, Available at SSRN: https://ssrn.com/abstract=3422265

Stephan Heblich (Contact Author)

Munk School of Global Affairs & Public Policy and Dept. of Economics, ( email )

Toronto, Ontario M5S 3G8
Canada

Marlon Seror

University of Bristol ( email )

University of Bristol,
Senate House, Tyndall Avenue
Bristol, BS8 ITH
United Kingdom

Hao Xu

Peking University ( email )

No. 38 Xueyuan Road
Haidian District
Beijing, Beijing 100871
China

Yanos Zylberberg

University of Bristol ( email )

University of Bristol,
Senate House, Tyndall Avenue
Bristol, BS8 ITH
United Kingdom

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