Prosper or beggar thy neighbour: Industrial policy effect of free trade zones

Du, Jane; King, Cheng; Shi, Xinxiang

Abstract

Firms that stand to gain from the institutional framework of a free trade zone (FTZ) usually opt for locations in the FTZ region where they could expect higher returns on investment. This concentration of industries in FTZs can result in a reallocation of productivity, potentially leading to the “hollowing out” effect in existing industries, which can have a beggar-thy-neighbour effect on regional growth. Over the long term, the outcome, whether it leads to prosperity or detriment, hinges on the delicate balance between the immediate static loss associated with resource reallocation and the dynamic gains based on traditional manufacturing sector’s growth along the evolving FTZ environment.

Citation

Du, J., King, C., & Shi, X. (2023). Prosper or beggar thy neighbour: Industrial policy effect of free trade zones. PLoS ONE, 18(10), Article e0293444. https://doi.org/10.1371/journal.pone.0293444

• Journal Article Type: Article
• Acceptance Date: Oct 12, 2023
• Online Publication Date: Oct 30, 2023
• Publication Date: Oct 30, 2023
• Deposit Date: Nov 5, 2023
• Publicly Available Date: Nov 5, 2023
• Journal: PLoS ONE
• Electronic ISSN: 1932-6203
• Publisher: Public Library of Science
• Peer Reviewed: Peer Reviewed
• Volume: 18
• Issue: 10
• Article Number: e0293444
• DOI: https://doi.org/10.1371/journal.pone.0293444
• Publisher URL: https://journals.plos.org/plosone/article?id=10.1371/journal.pone.0293444
• Additional Information: Data Access Statement : All data are available from the CSMAR (https://cn.gtadata.com/) and IOG databases.