Abstract
Economic development zones are a good example of how the interplay of economic and political decision-makers fosters regional development. Our analysis aims to shed light on dynamics and determinants of this process by studying two state-level economic development zones in central China. These are interesting examples since there is empirical evidence of the prosperity of these zones, although they do not benefit from proximity to the coast like earlier open zones in China. Empirical analysis shows that prosperity is created by the successful interaction of firms and political institutions on different levels. Possible theoretical starting-points for explaining the observed phenomena are discussed.
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