Xi Jinping’s report to the 19th CPC National Congress expounded the implementation of the regional coordinated development strategy for the first time, which is a significant improvement in China’s regional development strategy since the reform and opening up policy. The imbalance of China’s regional development reflects the conflicts between people’s growing needs for a better life and the imbalanced regional development in terms of the spatial distribution of economic activities, and has always been one of the major difficulties in China’s economic and social development. As a typical " place-based” policy, the significance of the development zone has gone beyond the development zone itself and become an important carrier to serve the national economic development strategy. Based on the panel data of prefecture-level cities from 2000—2015, this paper takes the cleaning up and rectifying policy of development zones in 2003 as a quasi-natural experiment and adopts the difference-in-differences propensity score matching method to estimate the impact of the " place-based” policy on regional economic development. It comes to the results as follows: the cleaning up and rectifying policy of development zones has significantly reduced regional disparity, but not significantly affected regional disparities at the per capita level. Meanwhile, the cleaning up and rectifying policy of development zones has significantly reduced regional economic growth, which in another way means the setting up of development zones has indeed promoted regional economic growth. Also it has not significantly affected regional disparities at the per capita level. On these grounds, it can be concluded that, under the circumstance of insufficient mobility of production factors, the balance of regional development at the aggregate level has been achieved through the transfer of resources and the regional preferential policies, but the regional balance at the per capita level has not been achieved. The sub-region test shows that the impact is more significant for the central and western areas but not significant for the eastern areas when it comes to the aggregate economic growth, implying that the development of the central and western may be balanced at the expense of losing efficiency in the eastern. Furthermore, cities with development zones which are within 300 km from the urban agglomeration are more advantageous than those beyond 300 km from the urban agglomeration. The heterogeneity test of metropolitan areas shows that the cleaning up and rectifying policy of the Yangtze River Delta and Beijing-Tianjin-Hebei region has greater effects on economic growth, while that of the Pearl River Delta has less effects. Therefore, the urban agglomeration and metropolitan area should be strengthened as a key to implement the " place-based” policy. By optimizing the rational layout of development zones, it will help to boost economic growth in less developed areas and narrow the gap of economic development between developed areas and less developed areas. Besides, by improving the basic public service level in the central and western areas, the loss of balance and efficiency can be avoided to some extent, thus realizing regional prosperity.
Are Place-Based Policies Effective? Evidence from China’s Development Zones
Journal of Finance and Economics Vol. 45, Issue 01, pp. 4 - 18 (2019) DOI:10.16538/j.cnki.jfe.2019.01.001
 Chen Z, Lu M. Toward Balanced Growth with Economic Agglomeration: Empirical Studies of China’s Urban-Rural and Interregional Development[M]. Beijing: Peking University Press, 2009.
 Deng H H. Trade Accessibility, Factor Distribution and Agglomeration: A Case of China[J]. Economic Research Journal, 2009, (11):118-129.
 Deng H H, Zhao J L. Peer Effects in Economic Decision-making of China’s Local Governments[J]. China Industrial Economics, 2018, (4):59-78.
 Deng M J, Gong Q L. Spatial Choice Logic of China’s Regional Policy[J]. Economist, 2017, (12):58-65.
 Ding S, Sun B D. Regional Policy Reshapes Economic Geography? A Perspective from Spatially-Neutral and Spatially-Targeted Approaches [J]. Comparative Economic and Social System, 2015, (6):56-67.
 Fan J Y, Zhang Y. Economic Geography and Inequality of Regional Wages[J]. Economic Research Journal, 2009, (8):73-84.
 Li L X, Shen G J. Special Economic Zones, Comparative Advantage, and Industrial Structural Transformation[J]. China Economic Quarterly, 2015, (2):885-910.
 Liu R M, Zhao R J. Does the National High-tech Zone Promote Regional Economic Development? Based on Difference in Differences Estimation[J]. Management World, 2015, (8):30-38.
 Liu X Y. Spatial Efficiency and Regional Balance: A Test of Agglomeration Effect at Provincial Level in China[J]. The Journal of World Economy, 2014, (1):55-80.
 Lu M. Great State Needs Bigger City[J]. Shanghai: Shanghai People’s Publishing House, 2016.
 Lu M. Urban, Regional and National Development-The Present and Future of Spatial Political Economics[J]. China Economic Quarterly, 2017a, (4):1499-1532.
 Lu M. The Power of Space: Geography, Politics and Urban Development (2nd Edition) [M]. Shanghai: Truth and Wisdom Press, 2017b.
 Lu M, Xiang K H. Solving the Dilemma between Efficiency and Balance: On China's Regional Development Strategy[J]. Comparative Economic and Social System, 2014, (4):1-16.
 Lu M, Zhong H Y. Development of Big Countries: A Political Economics Analysis of Geography[J]. The Review of New Political Economy, 2015, (28):1-19.
 Wei H K. Adjustment and Prospect of China’s Regional Policy[J]. Journal of Southwest Minzu University (Humanities and Social Science), 2008, (10):62-64.
 Wu M, Huang J L. Provincial Development Zones, Leading Industries and the Counties’ Industrial Performance[J]. Economic Perspectives, 2017, (1):52-61.
 Xiang K H. Geography versus Policy[D]. Fudan University, 2014.
 Xiang K H, Lu M. Speed versus Quality: Why Regional Dispersion Tendency of Development Zone Policy is not Sustainable?[J]. Journal of Finance and Economics, 2015, (4):4-17.
 Xu X X, Chen X F. Special Economic Zones: the Starting Point of China’s Gradual Reform and Opening-up[J]. World Economic Papers, 2008, (1):14-26.
 Xu X X, Wang X B. Promotion Incentive and Economic Growth: Evidence from Chinese Provincial Officials[J]. The Journal of World Economy, 2010, (2):15-36.
 Xu X X, Wang X B, Gao Y Y. Political Economics of Regional Development in China[J]. World Economic Papers, 2011, (3):26-58.
 Zhao Y, Wei H K. Government Intervention, Spatial Functional Division of Urban Agglomeration and Regional Disparity: On the Effectiveness of China's Regional Policy[J]. Management World, 2015, (8):14-29.
 Zhou M, Lu Y, Du Y, et al. Special Economic Zones and Region Manufacturing Upgrading [J]. China Industrial Economics, 2018, (3):62-79.
 Zhou S J, Wang Y Q, Yin C Y. Regional Collaborative Development in China: Functional Definition and Mechanism Analysis[J]. Journal of Tsinghua University (Philosophy and Social Sciences), 2010, (2):141-148.
 Zhou Y L, Sun J W. On the Spatial Dimension of Regional Development Policy[J]. China Soft Science, 2016, (2):67-80.
 Zhu X W, Tao Y L. Economic Agglomeration and Regional Coordination[J]. World Economic Papers, 2011, (3):1-25.
Cite this article
Deng Huihui, Yu Yihua, Zhao Jialing. Are Place-Based Policies Effective? Evidence from China’s Development Zones[J]. Journal of Finance and Economics, 2019, 45(1): 4-18.
Previous: Will the Change in Labor Supply Affect the Productivity and Profitability of Chinese Industrial Enterprises?