Fan, J., & Zou, B. (2021). Industrialization from scratch: The “Construction of Third Front” and local economic development in China's hinterland. Journal of Development Economics, 102698.

This paper investigates whether temporary subsidies to the manufacturing sector at an early stage of structural transformation stimulate economic development. We study the “Construction of Third Front” (TF), a massive yet short-lived industrialization campaign in China’s under-developed hinterland. Motivated by defense considerations, location choices of TF projects followed a peculiar set of criteria, which generates plausibly exogenous variation in manufacturing capacity before market reforms started in the mid-1980s. We find initial advantages in manufacturing have long-run positive effects on the structural transformation of the local economy. The effects are driven by new entrants in the private sector, consistent with the existence of local agglomeration economics. However, there is no evidence that agglomeration forces are stronger in initially less-developed regions. While the TF reduced regional inequality, it likely hurt the aggregate efficiency

Files

  • tf_final.pdf

    size: 7.3 MB | mime_type: application/pdf | date: 2021-11-15

Metadata

Work Title Fan, J., & Zou, B. (2021). Industrialization from scratch: The “Construction of Third Front” and local economic development in China's hinterland. Journal of Development Economics, 102698.
Access
Open Access
Creators
  1. Jingting Fan
  2. Ben Zou
License In Copyright (Rights Reserved)
Work Type Article
Publication Date September 2021
Deposited November 15, 2021

Versions

Analytics

Collections

This resource is currently not in any collection.

Work History

Version 1
published

  • Created
  • Added Creator Jingting Fan
  • Added Creator Ben Zou
  • Added tf_final.pdf
  • Updated Work Title, Description, Publication Date, and 1 more Show Changes
    Work Title
    • Industrialization from Scratch: The "Construction of Third Front" and Local Economic Development in China’s Hinterland
    • Fan, J., & Zou, B. (2021). Industrialization from scratch: The Construction of Third Front and local economic development in China's hinterland. Journal of Development Economics, 102698.
    Description
    • This paper investigates whether temporary subsidies to the manufacturing sector at an early stage of structural transformation stimulate economic development. We study the “Construction of Third Front” (TF), a massive yet short-lived industrialization campaign in China’s under-developed hinterland. Motivated by defense considerations, location choices of TF projects followed a peculiar set of criteria, which generates plausibly exogenous variation in manufacturing capacity before market reforms started in the mid-1980s. We find initial advantages in manufacturing have long-run positive effects on the structural transformation of the local economy. The effects are driven by new entrants in the private sector, consistent with the existence of local agglomeration economics. However, there is no evidence that agglomeration forces are stronger in initially less-developed regions. While the TF reduced regional inequality, it likely hurt the aggregate efficiency
    Publication Date
    • September 2021
    • 2021-09
    License
    • https://rightsstatements.org/page/InC/1.0/
  • Published
  • Updated