Marlon Seror (University of Bristol)

Industrial clusters in the long run: Evidence from Million-Rouble plants in China

Abstract

We identify the negative spillovers exerted by large, successful factories on other local production units in China. A short-lived cooperation program between the U.S.S.R. and China led to the construction of 156 "Million-Rouble plants" in the 1950s. The identification exploits the ephemeral geopolitical context and exogenous variation in location decisions due to the relative position of allied and enemy airbases. We \u000Cfind a rise-and-fall pattern in counties hosting a factory. The analysis of production and technological linkages shows a large cluster of non-innovative establishments along the production chain of the Million-Rouble plants, which limits technological spillovers across industries in the long-run and stifles entrepreneurial supply.

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