Impact on Local Economy from Zhoushan National New Area

Abstract

To empirically study the policy impact of a National New Area on the local economy, this paper evaluates the effect of the Zhoushan Archipelago New Area on local GDP growth rate and economic efficiency. Firstly, the economic efficiency of 20 prefectural-level cities in Jiangsu, Zhejiang and Anhui provinces is estimated by data envelopment analysis with input and output data from 1995 to 2015. In selecting some cities except Zhoushan as a control group, we construct some counterfactuals of Zhoushan by a panel data approach. The difference between the actual and counterfactual values for the GDP growth rate and economic efficiency of Zhoushan is calculated and compared to conclude the treatment effect of the National New Area. The research shows that in the first four years, the policy of the National New Area promoted Zhoushan's economic quality by raising its efficiency, but relatively reduced its economic quantity by negatively affecting the local GDP growth rate. Then the policy influence on Zhoushan’s GDP growth rate and economic efficiency gradually disappeared after four years. Combining some other research on our study, we find that the policy effect on the GDP growth rate is related to the level of economic growth in these areas. The policy of the National New Area has less influence on GDP growth if approved in the developed region rather than in the undeveloped region. We think that it is better to set up a National New Area in a relatively undeveloped area.