Abstract
In this paper, we aim to study the relation between the marketization level in the western region of China and its economic development, and to provide policy guidance for the economic development of underdeveloped regions. Mixed methods data analysis was conducted using panel data from 82 prefecture-level cities in west China from 2003 to 2017. The overall regression results show that the level of marketization has a significant role in promoting economic growth. At the same time, regional heterogeneity analyses show that the sub-indicators of marketization have different degrees of influence on economic growth in the southwest and northwest of China, whereas the overall level indicator plays a significant role in both regions. In addition, the threshold panel model was used to test whether the influence of marketization on economic growth in the western region had interval characteristics. Through the self-sampling method, it was found that there are double thresholds. In terms of the gradual progress of the marketization level range, it shows a trend of first increasing, then decreasing and then increasing again. The results show that the level of marketization in west China has significantly promoted the economic development of the western region. Additionally, the impact of marketization on economic development in relatively backward regions is gradually increasing and surpassing that of relatively developed regions. Underdeveloped areas in west China can stimulate their advantages by continuously promoting the construction of marketization and improving the level of economic organization, so as to gradually narrow the development gap between regions.
Highlights
After the drastic changes in Eastern Europe in early 1990s, Eastern European countries experienced fundamental changes in social systems and implemented marketization reform
Is there a bottleneck for marketization? Can marketization become the main driver of the economy in this underdeveloped region? This study aims to answer these questions by exploring the relation between marketization level in the western region and its economic development
Based on the division of cities shown above, we examined the impact of marketization on economic growth for cities of different sizes
Summary
After the drastic changes in Eastern Europe in early 1990s, Eastern European countries experienced fundamental changes in social systems and implemented marketization reform. Some researchers suggest that marketization fails to drive economic growth based on their investigation on reforms in these countries [1,2]. China started implementing system reforms to transition from a planned economy to a market economy in 1978. Over the forty years, China realized phenomenal achievements in economic development. Marketization reform broke the shackles of traditional systems and mechanisms, improved efficiency in resource allocation and market exploration, and constantly unleashed economic vitality. China’s economy realized high-speed growth, with significant improvements in its comprehensive strengths and economic strengths. After healthcare reform, the input and output of medical research in China surpassed all other BRICS
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