Location-Oriented Policies in China: Establishment of State-Level Development Zones and Enterprise Innovation Behaviors

Abstract

The impact of state-level development zones on company innovation behaviors—specifically, innovation input, output, and quality—is examined in this research. This study utilizes the establishment of state-level development zones as a quasi-natural experiment and employs a Staggered Difference-In-Difference model to systematically evaluate the actual effects. Furthermore, this research focuses on the heterogeneous effects of state-level development zones on enterprise innovation, taking into account different functional positionings, such as the Economic and Technological Development Zone (ETDZ), the High-Tech Industrial Development Zone (HIDZ), and the Special Customs Supervision Zone (SCSZ). The results of previous research indicate that the establishment of state-level development zones may effectively foster company innovation and have a noteworthy effect on the input, output, and quality of innovation. The establishment of ETDZs and HIDZs can significantly encourage enterprises to increase their investment in innovation. The innovation incentive effect of HIDZs is stronger than that of ETDZs. On the other hand, the establishment of SCSZs is more beneficial for improving the output and quality of innovation in enterprises. ETDZs can promote innovation output by adjusting industry agglomeration in the region. HIDZs can encourage enterprises to increase their innovation input by intensifying tax preferences and reducing the level of industry agglomeration. SCSZs can effectively promote the innovation input, innovation output, and innovation quality of enterprises by increasing government subsidies and the intensity of tax preferences.