How does the national new area impact the local economy? -- An empirical analysis from Zhoushan

TL;DR

This study empirically assesses how the Zhoushan New Area policy affected local GDP growth and economic efficiency, revealing short-term benefits in efficiency and varying impacts based on regional development levels.

Contribution

It provides the first empirical evaluation of the economic effects of the Zhoushan New Area policy using data envelopment analysis and counterfactual methods.

Findings

Initial four years saw increased economic efficiency in Zhoushan.

GDP growth rate was negatively affected initially but recovered after four years.

Policy impact was more significant in less developed regions.

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. By collecting input and output data from 20 prefectural-level cities in Jiangsu, Zhejiang, and Anhui provinces from 1995 to 2015, we estimate the economic efficiency of these cities using data envelopment analysis. Subsequently, we construct counterfactuals for Zhoushan by selecting comparable cities from the dataset, excluding Zhoushan, and applying a panel data approach. The difference between the actual and counterfactual values for GDP growth rate and economic efficiency in Zhoushan is analyzed to determine the treatment effect of the National New Area policy. The research reveals that in the initial four years, the New Area policy enhanced Zhoushan's economic efficiency but negatively affected its GDP growth rate. This influence gradually disappeared after four years. Further analysis suggests that the policy's effect on GDP growth rate varies with the level of economic development in different regions, having a more substantial impact in less developed areas. Therefore, we conclude that establishing a New Area in relatively undeveloped zones is more advantageous.