The impact of economic policy on industrial specialization and regional concentration of China’s high-tech industries

Abstract

This paper uses a dynamic panel approach to investigate the impact of economic policy on industrial specialization and regional concentration of China’s high-tech industries for the period 1996–2005. It is found that the degrees of specialization and concentration show increasing trends throughout the sample period, while high-tech industry sector has increasingly concentrated in costal regions. It is also found that the implementation of high-technology-oriented export policy and subsidy for science and high-technology activities encourage specialization and concentration, whereas local governments’ protection for local high-tech enterprises results in convergence in regional industrial structure and obstructs regional concentration of high-tech industries. The estimation result is robust not only to the use of various estimation techniques, but also to the control for other factors proposed by theories such as transport costs and knowledge resources. Our findings support the idea that economic policies might play an important role in determining the geographic distribution of high-tech industries in China.