Marlon Seror (Paris School of Economics)

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

Abstract: This paper identifies 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 find a rise-and-fall pattern in counties hosting a factory and show that (over-) specialization explains their long-run decline. The analysis of production linkages shows that a very large cluster of non-innovative establishments enjoy technological rents along the production chain of Million-Rouble plants. This industrial concentration reduces the local supply of entrepreneurs.

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