Exit Spillovers of Foreign-invested Enterprises in Shenzhen's Electronics Manufacturing Industry

TL;DR

This paper investigates how the exit of foreign-invested electronics firms in Shenzhen affects nearby firms, revealing significant spillover effects at the industry group level but not at the industry class level.

Contribution

It introduces a novel dataset and provides empirical evidence on neighborhood spillover effects of firm exit in a specific industry and region.

Findings

Significant spillover effects at the industry group level.

No significant spillover effects at the industry class level.

Highlights the importance of industry group context in exit spillovers.

Abstract

Neighborhood characteristics have been broadly studied with different firm behaviors, e.g. birth, entry, expansion, and survival, except for firm exit. Using a novel dataset of foreign-invested enterprises operating in Shenzhen's electronics manufacturing industry from 2017 to 2021, I investigate the spillover effects of firm exits on other firms in the vicinity, from both the industry group and the industry class level. Significant neighborhood effects are identified for the industry group level, but not the industry class level.