Bo Li (PBC School of Finance, Tsinghua University) - Technology Transfer and Early Industrial Development: Evidence from the Sino-Soviet Alliance

Co-author: Michela Giorcelli (University of California) 

Abstract
This paper studies the causal effect of technology transfer on early industrial development. Between 1950 and 1957, the Soviet Union supported the “156 Projects” in China for the construction of technologically advanced, large-scale, capital-intensive industrial facilities. We exploit idiosyncratic delays in project completion and the unexpected end of the Sino[1]Soviet Alliance, due to which some projects received Soviet technology embedded in capital goods and know-how, while some others were eventually realized by China alone using domestic technology. We find that jointly receiving Soviet technology and know-how had large and persistent effects on plant performance, and while the effects of receiving only Soviet capital goods were short-lived. The intervention generated horizontal and vertical spillovers, and production reallocation from state-owned to privately-owned companies since the late 1990s.

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