Please use this identifier to cite or link to this item: https://hdl.handle.net/10419/319898 
Year of Publication: 
2025
Series/Report no.: 
ZEW Discussion Papers No. 25-028
Publisher: 
ZEW - Leibniz-Zentrum für Europäische Wirtschaftsforschung, Mannheim
Abstract: 
China's special economic zones (SEZs) have been established to foster business growth and innovation by improving the institutional context of specific sub-regional areas. We examine the effect of SEZs on the contribution of research and development (R&D) to the market value of firms located in these areas. The market value reflects investors' expectations of future returns to R&D, providing crucial information for strategic investment decisions. Larger R&D contributions to the market value create stronger incentives for firms to invest in innovation. Empirical results suggest that the contribution of R&D to the market value increases through the SEZs program, particularly for R&D intensive firms. This suggests that regional policies, while increasing incentives to innovate, may widen the gap between less and more R&D intensive firms, potentially impacting competition and long-term growth.
Subjects: 
Special economic zones (SEZs)
China
Market value
R&D
Institutional development
Innovation incentives
JEL: 
O32
R58
O25
Document Type: 
Working Paper

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