There is growing evidence that place-based industrial policies lead to positive economic effects. This column analyses the 'Million-Rouble Plants' programme of the 1950s when the Soviet Union helped China build state-of-the-art industrial facilities. By tracking the locations that benefitted, it finds positive economic spillovers in the short and medium run. Although the Million-Rouble Plants themselves continued to thrive, the performance of other local establishments eventually declined, as increasing specialisation weakened knowledge spillovers and constrained local entrepreneurship. Policymakers may achieve more durable gains by fostering diversified local production structures that encourage knowledge spillovers, labour market resilience, and adaptation to technological and market shocks.

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18 July 2026

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VoxEU

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https://cepr.org/voxeu/columns/place-based-industrial-policies-long-run

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