Regional Economic Growth and Spillover Effects: An Analysis of China's Pan Pearl River Delta Area

Abstract

AbstractThe Pan Pearl River Delta (PPRD) Regional Co‐operation Framework Agreement was signed in 2004. It aims to bring prosperity through partnership among nine Chinese Mainland provinces and China's two special administrative regions. In this paper, we use a dynamic panel data model to examine the economic growth of the PPRD economies from 1985 to 2009. Our analysis confirms the existence of regional growth spillover effects in the PPRD area. Our results also show that economic growth spillover effects of non‐PPRD regions on the PPRD regions are greater than those among the PPRD members themselves. These findings imply that economic integration between Chinese provinces has generated considerable spillover effects on regional growth. However, the anticipated benefits of the implementation of the PPRD agreement have not been realized thus far. Therefore, greater effort should be made to promote further economic integration among these members so that their local economies can benefit from the positive spillover effects.