The special economic zones and innovation: Evidence from China

We examine the impact of Special Economic Zones (SEZs) on innovation using China's county-level data from 1985 to 2011. Results show that the establishment of SEZs promotes a county's innovation in terms of application, grant and citation numbers of patents by 15%–25%, 8%–22% and 15%–25%, respectively. The promoting effect of establishing high-tech SEZs is higher than that of establishing economic and technological SEZs. Compared with provincial SEZs, national SEZs have a greater effect on innovation. Counties with universities nearby apply for more patents. The SEZs not only promote innovation in existing technical fields, but also continuously expand new research fields. The SEZs promote innovation by providing tax credits, technological subsidies and attracting more enterprises.