Industry location in Chinese provinces: Does energy abundance matter?

We identify the driving factors of manufacturing activity across Chinese provinces with a particular focus on energy endowments. A model of production location is estimated, including both comparative advantage and economic geography determinants. The data set used consists of a panel of 28 Chinese...

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Bibliographic Details
Published in:Energy economics 2014-07, Vol.44, p.383-391
Main Authors: Grether, Jean-Marie, Hotz, Irina, Mathys, Nicole A.
Format: Article
Language:English
Subjects:
Applied sciences
Carriers
China
Comparative advantage
Comparative advantage (commerce)
Correlation analysis
Decision making models
Economic data
Economic geography
Economics
Endowment
Endowments
Energy
Energy economics
Energy endowments
Estimation
Exact sciences and technology
General aspects
General, economic and professional studies
Industry
Industry location
Location
Location of industry
Manufacturing
Methodology. Modelling
Production
Provinces
Studies
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Summary:We identify the driving factors of manufacturing activity across Chinese provinces with a particular focus on energy endowments. A model of production location is estimated, including both comparative advantage and economic geography determinants. The data set used consists of a panel of 28 Chinese provinces and 12 manufacturing industries over the period 1999–2009. Results confirm the relative importance of energy endowments. We find that larger energy endowments are significantly correlated with larger production of energy-intensive sectors. Disaggregation across energy carriers shows that coal exhibits the strongest impact. These results are robust across alternatives. •We estimate determinants of industry location in China for 1999–2009.•In addition to labor and capital, energy abundance matters for location.•Energy-intensive sectors are over-represented in energy abundant regions.•Coal displays the strongest effect when disaggregated by energy carrier.•New economic geography variables also display significant effects.
ISSN:0140-9883
1873-6181
DOI:10.1016/j.eneco.2014.05.005