Developing and transitional countries devote considerable funds to selected areas to stimulate local growth and firm productivity. We examine the impact of place-based interventions due to the opening of science parks in Shenzhen, China, on firm productivity and factor use. Our identification strategy, exploiting spatial and temporal differencing in firm-level data, addresses the issues that (a) the selection of science park locations is not random and (b) high-productivity firms sort themselves into science parks. Firm productivity is approximately 15–25% higher due to the science park policy. The policy also increases local wages and leads to distortions due to job displacement.

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Journal of Regional Science
Erasmus School of Economics

Koster, H.R.A. (Hans R.A.), Cheng, F.F. (Fang Fang), Gerritse, M. (Michiel), & van Oort, F. (2018). Place-based policies, firm productivity, and displacement effects: Evidence from Shenzhen, China. Journal of Regional Science. doi:10.1111/jors.12415