Saturday, November 09, 2013

The Evolving Geography of China's Industrial Production

In joint research, I have just released a new NBER Working Paper that examines the causes and consequences of shifts in the economic geography of China's industrial production.   Led Zeppelin recorded a famous song called; "The Song Remains the Same".  This applies to this piece of my research.  Back in 1999, I published a JUE paper using U.S data examining the air quality benefits of Rust Belt decline. Cities such as Pittsburgh experienced sharp improvements in quality of life.  

My new paper argues that a similar dynamic is now playing out within China.  Coastal rich cities feature high land prices, high labor prices and increasingly stringent environmental regulation.  These factors encourage land intensive manufacturing to leave these cities and to move to Western China and to leave China.  The powerful central government and local Western Mayors are offering incentives for such factories to move West.  This migration brings about some income convergence across regions but also impacts the spatial distribution of pollution and quality of life.  We survey the emerging literature on China's industrialization and present a lot of new empirical evidence in this paper.

The Evolving Geography of China's Industrial Production: Implications for Pollution Dynamics and Urban Quality of Life

Siqi ZhengCong SunYe QiMatthew E. Kahn

NBER Working Paper No. 19624
Issued in November 2013
NBER Program(s):   EEE   IO   ITI   POL 
China’s rapid economic growth has been fueled by industrialization and urbanization. Given its export focus, this industrialization was spatially concentrated in the coastal eastern cities. Over the last decade, a spatial transformation has taken place leading to a deindustrialization of the rich coastal cities and sharp industrial growth in the inland cities. This survey examines recent work that studies the economic geography of industrial production, per-capita income, pollution and quality of life in China’s cities. We focus on the interaction between firms, local governments and the central government that together determine the new economic geography of industry and pollution within China.