Title: Local Protectionism and Regional Specialization: Evidence from China's Industries
Reference Number: 1047
Publication Date: February 2002
JEL Classifcation: F1, R12, P2

Chong-En Bai
School of Economics and Finance, The University of Hong Kong

Yingjuan Du and Zhigang Tao
School of Business, The University of Hong Kong

Sarah Tong
HK Institute of Economics and Business Strategy

This paper uses a dynamic panel estimation method to investigate the determinants of regional specialization in China's industries, paying particular attention to local protectionism. Less geographic concentration is found in industries where the past tax-plus-profit margins and the shares of state ownership are high, reflecting stronger local government protection of these industries. The evidence also supports the scale-economies theory of regional specialization. Finally, the overall time trend of regional specialization of China's industries is found to have reversed an early drop in the mid 1980s, and registered a significant increase in the later years.

Published in Journal of International Economics 63, 2004, pp. 397-417.

Key words: local protectionism, regional specialization, scale economy, external economy

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Last modified: 01/23/2007