Do city–county mergers in China promote local economic development?

Abstract

Municipal mergers have become a worldwide phenomenon in the past few decades, primarily advanced to exploit economies of scale. While most evaluations of municipal mergers have focused on the efficiency of local public goods provision, it is rare in the literature to explore how such mergers promote economic growth in a developing country context. This research investigates the economic consequences of a policy experiment of city-county mergers (che xian she qu) in China during the period 2000-2004. Using comprehensive datasets at city, county and firm levels, we present evidence that the merger significantly increases local economic development, and the magnitude of the effect depends on local endowments related to agglomeration forces. The results are robust to a number of different model specifications. We further verify that improved transport infrastructure and urban agglomeration economies after merger are potential contributors to the positive merger effects.JEL classifications: R1, R5, H11, O18.

Universities and the Formation of Edge Cities: Evidence from China's Government‐led University Town Construction

“…City planners may place UT far away from the core city given the cheap cost of land in the suburbs, or they may place it in the vicinity of city core to better exploit the agglomeration economies. In addition, urban districts and counties are different in levels of urbanization and industrial structure (Tang & Hewings, ). Finally, we choose the following variables as potential site selection variables: night‐time light value of year 1992, population of 2000, the distance between the district centroid and the prefecture CBD and a dummy variable denoting whether the district unit is an urban district or county (county‐level city).…”

The chosen fortunate in the urbanization process in China? Evidence from a geographic regression discontinuity study

“…Several researches discussed the benefits of “county‐to‐district” policy. First, Tang and Hewings () pointed out that “county‐to‐district” policy increases cities’ local returns to scale by removing jurisdiction barriers, stimulating the integration of governments from different jurisdictions and improving the construction of local infrastructure. Second, Tang and Hewings’ () empirical results suggest that “county‐to‐district” policy results in significant population agglomeration and economic growth in the upper‐level administrative division (prefecture‐level cities).…”

“…First, Tang and Hewings () pointed out that “county‐to‐district” policy increases cities’ local returns to scale by removing jurisdiction barriers, stimulating the integration of governments from different jurisdictions and improving the construction of local infrastructure. Second, Tang and Hewings’ () empirical results suggest that “county‐to‐district” policy results in significant population agglomeration and economic growth in the upper‐level administrative division (prefecture‐level cities). Third, in a qualitative study, Chung and Lam () argued that district areas may be granted higher political power since the party secretaries in these districts are more likely to join standing committees in prefectures.…”

“…The key to assessing the effect of the “county‐to‐district” policy is to control the potential variables that may influence regional economic growth, thus distinguishing the effect of the policy from regional growth effects. In addition, because of the limitation of the availability of county‐level data, previous studies (e.g., Fan et al., ; Tang & Hewings, ) analyzed the policy effect on the upper‐level administrative division (i.e., prefecture‐level city) rather than on the county itself, which is imprecise and will inevitably induce measurement error.…”

“…Second, It is well‐established that lights are exogenous to artificial manipulation, and that light intensity correlates with measures of economic activity such as national accounts GDP, in terms of light levels and growth rates (Henderson, Storeygard, & Weil, ). Compared with similar studies conducted by Tang and Hewings () and Li and Xu (), grid‐level nighttime light data are used to solve the problems caused by low‐quality or missing county‐level official statistical data in China. Owing to the limitation of the availability of county‐level data, Tang and Hewings () and Li and Xu () studied the effect of the “county‐to‐district” policy on prefecture‐level cities (upper‐level administrative division of the county).…”