In this paper, we evaluate whether the efficiency of industrial policies depends on the consistency of their focus with the local productive structure. We use sector-level data from Chinese manufacturing surveys over the 1998–2007 period to show that the effi- ciency of the export-promoting policies implemented in export processing zones depends on whether they target activities for which the necessary capabilities and resources are available. We find export benefits from the EPZ policy which are greater for sectors with denser links with the local productive structure. Our results suggest that industrial-policy effectiveness is magnified by pre-existing productive knowledge.
