Pro-active regional policy and the relocation of manufacturing firms: a case study of state-led industrial relocation in Guangdong, China

To contribute to the debate on the importance of state vis-avis inter-firm competition in regional development, this paper examines a representative dataset of the relocation of manufacturing firms in Guangdong province of China with multinomial logistic regression models. To improve the competitiveness of manufacturing in the Pearl River Delta, the Guangdong government implemented pro-active policies to encourage the relocation of existing manufacturing firms to their designated industrial parks during the 2000s. Although the initial results appear to support the usefulness of relocation policy, further examination reveals its effectiveness depends on the industrial sector and profiles of the relocated firms. In fact, the relocation of large-scale labor-intensive firms is not driven by local government initiatives. The physical proximity of high-technology parks to airports/ports has a bigger impact on the relocation of small-scale locally-funded high-technology firms into designated parks. In the case of locally-funded firms in polluting sectors, they are expanding rather than relocating to designated industrial parks. The empirical evidence indicates the non-binary nature of the industrial relocation policy. The nuances of relocation policy and its multi-scalar effects on relocated firms rejects any simplistic generalization.