Can regional development plans promote economic growth? City-level evidence from China

Abstract

To promote regional economic development, China introduced regional development plans (RDPs) in 2009. This is the first study to investigate the net effect of the RDPs on China's regional economic growth by employing the multi-stage difference-in-differences (DID) strategy and a city-level panel data set during the 2004–2015 period. We reduce the self-selection bias by employing the propensity score matching strategy and explore the mediating effects from two perspectives, i.e., investment scale and production efficiency. Finally, using nighttime satellite light data, we conduct a robustness test of the previous results. The results show that the RDPs have a significant negative impact on economic growth, with strong regional heterogeneity. The RDPs have no effect on economic growth in western cities when reducing self-selection bias, and the underlying reason is that their impacts on both the investment scale and production efficiency are unclear. However, the RDPs exert significantly negative impacts on economic growth in the eastern and central regions. The negative impacts are mainly because the RDPs decrease production efficiency to inhibit economic growth. Therefore, the central government needs to attach great importance to the improvement of the production efficiency when regulating regional development.