Development zones exacerbate regional resource mismatch, distorting market allocation in China.
The study looked at how setting up development zones in China affects the balance of resources in different regions. By comparing the productivity of companies in these zones, the researchers found that development zones can worsen resource imbalances by messing up how resources are distributed in the market. They also discovered that the impact of these zones varies depending on how market-oriented a city is and how efficient its institutions are. Overall, the study shows that the type of development zone and the policies they implement can have a big impact on how resources are distributed in a region.