We study the effect of China’s inland-favoring land policy on firm-level productivity by employing a research design combining difference-in-differences and regression discontinuity at the policy border. We find that the inland-favoring land policy decreased the firm productivity gap between developed (eastern) regions and underdeveloped (inland) regions. The relative changes are mainly due to slower eastern firm productivity growth rather than faster inland firm productivity growth. Eastern firms reduced their R&D expenditure and capital usage as a response to the policy.

Exploiting staggered COVID-19 lockdowns and reopening across different regions in China, we study how lockdowns affect the investment decisions of venture capital (VC) investors and whether such changes are temporary or enduring in the post-pandemic era. Contrary to the conventional wisdom that lockdowns exacerbate the “tyranny of distance” (i.e., VCs avoid investing in remote ventures), our findings suggest the “death of distance”: VCs invest in remoter ventures during a lockdown and such effects persist even after the economy reopens. Such lockdown effects are more pronounced when there is better internet infrastructure, when the level of information asymmetry between VCs and entrepreneurs is lower, and when VCs are more experienced. The lockdown effects can be explained by the advancement and adoption of remote communication technology as a response to the social distancing requirements. As geographic boundaries of VC investment are shattered by remote communication technology, local competition among VCs has been intensified, the monopoly power of VCs has been curtailed, and the regional inequality of entrepreneurial access to VC financing has been mitigated.