Papers in Evolutionary Economic Geography

July 15, 2015

# 15.22 Does Creative Destruction Work for Chinese Regions? An Empirical Study on the Articulation between Firm Exit and Entry

Filed under: 2015 — Tags: , , , , — mattehartog @ 3:08 pm

Yi Zhou, Canfei He & Shengjun Zhu

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Creative destruction is a key driving force behind industrial development. The continuing process of creative destruction provides an impetus to regional industrial renewal. Our analytical framework that emphasizes the ways in which firm exit creates a stimulus for firm entry, resulting in incremental innovation and productivity increase is complementary to the process of technological change and industrial renewal articulated by Schumpeter who pays attention to how new entrants bring in radical innovation and new products, making incumbents’ products and technologies obsolete and force them to exit or catch up. Using firm-level data of China’s industries during 1998-2008, this paper seeks to argue that the articulation between firm exit and entry has been constantly shaped by an assemblage of various factors, including firm characteristics, industrial linkages, regional institutions and geographical proximity.

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