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The Legacies of the Soviet Influence in the 1950s: China’s 156 Major Industrial Projects

11.01.2022 14:00 Uhr Seminarreihe des AB Ökonomie

Ein Vortrag von Zhangfeng Jin (Zhejiang University) im Rahmen der Seminarreihe des AB Ökonomie am IOS.

This paper investigates whether and how China’s adoption of Soviet-aided industrialization programs in the 1950s has affected its long-run innovation. Focusing on 156 major industrial projects aided by the Soviet Union, combined with an instrumental variable approach, I find that the adoption of these programs substantially discourages local firms to innovate in the long run. A causal mediation analysis of instrumental variable settings shows that the negative effect is entirely driven by local firms’ lower intensity of incentive pay. This evidence suggests disadvantages of Soviet-aided industrialization programs for long-run innovation due to firms adopting incentive-incompatible management technology.