Inter-regional barriers and economic growth: Evidence from China

• 成果类型: Article
• 署名作者: Han, Yi; Wu, Mingqin
• 署名单位: Renmin University of China; Wuhan University
• 刊物名称: JOURNAL OF DEVELOPMENT ECONOMICS
• ISSN/ISSBN: 0304-3878
• DOI: 10.1016/j.jdeveco.2023.103197
• 发表日期: 2024
• 关键词: market integration; Inter-regional barriers; Economic growth; CHINA

摘要

This paper examines the impact of a policy reform in China that removed inter -regional market barriers by incorporating counties into larger prefecture-level divisions. Employing a difference-in-differences approach, we compare the economic performance of incorporated counties before and after the reform to two control groups: counties that applied for incorporation but were unsuccessful, and counties that were incorporated at a later time. Our findings suggest that the reform had an immediate and sustained positive effect on the economic growth of incorporated counties. Using firm-level data, we provide evidence that the reform reduced policy-induced frictions, leading to increased regional specialization in industries with comparative advantage, more entries of new firms, and more exits of low-profit-margin firms. Overall, the research highlights the importance of reducing inter -regional market barriers in promoting economic growth in developing countries.