IDEAS home Printed from https://ideas.repec.org/a/gam/jscscx/v12y2023i9p493-d1231395.html
   My bibliography  Save this article

The Impact of Normalised Cross-Strait Relations on Regional Economics—An Empirical Study of Jiangsu Province

Author

Listed:
  • Yunyan Li

    (School for Policy Studies, Faculty of Social Sciences and Law, University of Bristol, Bristol BS8 1TZ, UK)

Abstract

How does the quality of international relations between countries affect regional economics? The question of how much economic change can be attributed to the trajectories of international politics is difficult to answer, because different factors over time can influence economic development. This research uses synthetic control and difference-in-differences methods to evaluate the impact of the normalisation of cross-strait relations in 2008 on regional economic growth in Jiangsu province. Based on data from the Regional and China Year Books from 1990 to 2015, Jiangsu province, a region with prominently close economic ties with Taiwan, witnessed a CNY 20,726.52 (around GBP 2328.35) increase in per capita GDP from 2008 to 2015, compared with the counterfactual in the absence of normalised cross-strait relations. There was an annual increase of approximately CNY 2961 Yuan (around GBP 333). This research has important implications for acknowledging the relationship between the quality of political relations and their economic impact on confrontational countries and regions.

Suggested Citation

  • Yunyan Li, 2023. "The Impact of Normalised Cross-Strait Relations on Regional Economics—An Empirical Study of Jiangsu Province," Social Sciences, MDPI, vol. 12(9), pages 1-50, September.
    • Handle: RePEc:gam:jscscx:v:12:y:2023:i:9:p:493-:d:1231395
    as

    Download full text from publisher

    File URL: https://www.mdpi.com/2076-0760/12/9/493/pdf
    Download Restriction: no
    File URL: https://www.mdpi.com/2076-0760/12/9/493/
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Kazunobu Hayakawa & Fukunari Kimura & Hyun-Hoon Lee, 2013. "How Does Country Risk Matter for Foreign Direct Investment?," The Developing Economies, Institute of Developing Economies, vol. 51(1), pages 60-78, March.
    2. Amir Najafi & Hossein Askari, 2012. "The Impact of Political Relations Between Countries on Economic Relations," PSL Quarterly Review, Economia civile, vol. 65(262), pages 247-273.
    3. Baier, Scott L. & Bergstrand, Jeffrey H. & Feng, Michael, 2014. "Economic integration agreements and the margins of international trade," Journal of International Economics, Elsevier, vol. 93(2), pages 339-350.
    4. Yang, Yung-Lieh & Cho, Tsui-Yueh & Huang, Ming-Hsiang, 2017. "Impacts Of The Economic Cooperation Framework Agreement On Banking Cost Efficiency In China And Taiwan : A Stochastic Metafrontier Approach," Hitotsubashi Journal of Economics, Hitotsubashi University, vol. 58(2), pages 121-141, December.
    5. Busse, Matthias & Hefeker, Carsten, 2007. "Political risk, institutions and foreign direct investment," European Journal of Political Economy, Elsevier, vol. 23(2), pages 397-415, June.
    6. Mamunur Rashid & Xuan Hui Looi & Shao Jye Wong, 2017. "Political stability and FDI in the most competitive Asia Pacific countries," Journal of Financial Economic Policy, Emerald Group Publishing Limited, vol. 9(02), pages 140-155, May.
    7. Mattoo, Aaditya & Rathindran, Randeep, 2006. "Measuring Services Trade Liberalization and Its Impact on Economic Growth: An Illustration," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 21, pages 64-98.
    8. Aisen, Ari & Veiga, Francisco José, 2013. "How does political instability affect economic growth?," European Journal of Political Economy, Elsevier, vol. 29(C), pages 151-167.
    9. Li, Yuhua & Jian, Ze & Tian, Wei & Zhao, Laixun, 2021. "How political conflicts distort bilateral trade: Firm-level evidence from China," Journal of Economic Behavior & Organization, Elsevier, vol. 183(C), pages 233-249.
    10. Lee, Kam Hing, 2012. "A Matter of Risk," University of Chicago Press Economics Books, University of Chicago Press, number 9789971694609, December.
    11. Federico Lupo Pasini, 2013. "Economic Stability and Economic Governance in the Euro Area: What the European Crisis can Teach on the Limits of Economic Integration," Journal of International Economic Law, Oxford University Press, vol. 16(1), pages 211-256, March.
    12. Daniel Berger & William Easterly & Nathan Nunn & Shanker Satyanath, 2013. "Commercial Imperialism? Political Influence and Trade during the Cold War," American Economic Review, American Economic Association, vol. 103(2), pages 863-896, April.
    13. Ekanayake, E. M. & Mukherjee, Amit, 2010. "Trade Blocks and the Gravity Model: A Study of Economic Integration among Asian Developing Countries," Journal of Economic Integration, Center for Economic Integration, Sejong University, vol. 25, pages 627-643.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Okafor, Luke Emeka & Hassan, M. Kabir & Rashid, Mamunur & Prabu, Darniya & Sabit, Ahmed, 2022. "Risk dimensions, risk clusters, and foreign direct investments in developing countries," International Review of Economics & Finance, Elsevier, vol. 82(C), pages 636-649.
    2. Eric Evans Osei Opoku & Alex O. Acheampong & Janet Dzator & Nana Kwabena Kufuor, 2022. "Does environmental sustainability attract foreign investment? Evidence from developing countries," Business Strategy and the Environment, Wiley Blackwell, vol. 31(7), pages 3542-3573, November.
    3. Sánchez-Martín, Miguel Eduardo & de Arce, Rafael & Escribano, Gonzalo, 2014. "Do changes in the rules of the game affect FDI flows in Latin America? A look at the macroeconomic, institutional and regional integration determinants of FDI," European Journal of Political Economy, Elsevier, vol. 34(C), pages 279-299.
    4. Barnard, Helena & Luiz, John M., 2018. "Escape FDI and the dynamics of a cumulative process of institutional misalignment and contestation: Stress, strain and failure," Journal of World Business, Elsevier, vol. 53(5), pages 605-619.
    5. Mirkina, Irina, 2018. "FDI and sanctions: An empirical analysis of short- and long-run effects," European Journal of Political Economy, Elsevier, vol. 54(C), pages 198-225.
    6. Nazeer, Abdul Malik & Masih, Mansur, 2017. "Impact of political instability on foreign direct investment and Economic Growth: Evidence from Malaysia," MPRA Paper 79418, University Library of Munich, Germany.
    7. Liu, Chang & Sun, Xiaolei & Chen, Jianming & Li, Jianping, 2016. "Statistical properties of country risk ratings under oil price volatility: Evidence from selected oil-exporting countries," Energy Policy, Elsevier, vol. 92(C), pages 234-245.
    8. Dirks, Maximilian & Schmidt, Torsten, 2023. "The relationship between political instability and economic growth in advanced economies: Empirical evidence from a panel VAR and a dynamic panel FE-IV analysis," Ruhr Economic Papers 1000, RWI - Leibniz-Institut für Wirtschaftsforschung, Ruhr-University Bochum, TU Dortmund University, University of Duisburg-Essen.
    9. Yoshifumi Fukunaga & Arata Kuno, 2012. "Toward a Consolidated Preferential Tariff Structure in East Asia: Going beyond ASEAN+1 FTAs," Working Papers PB-2012-03, Economic Research Institute for ASEAN and East Asia (ERIA).
    10. Muhammad Zahid Naeem, 2020. "Political Instability, Trade Openness And Economic Growth In Pakistan: An Empirical Analysis," Bulletin of Business and Economics (BBE), Research Foundation for Humanity (RFH), vol. 9(4), pages 183-190, December.
    11. Bleaney, Michael & Dimico, Arcangelo, 2016. "State history, historical legitimacy and modern ethnic diversity," European Journal of Political Economy, Elsevier, vol. 43(C), pages 159-170.
    12. Absher, Samuel & Grier, Robin & Grier, Kevin, 2023. "The consequences of CIA-sponsored regime change in Latin America," European Journal of Political Economy, Elsevier, vol. 80(C).
    13. Robertson,Raymond, 2021. "Deep Integration in Trade Agreements : Labor Clauses, Tariffs, and Trade Flows," Policy Research Working Paper Series 9599, The World Bank.
    14. Toke S. Aidt & Facundo Albornoz & Esther Hauk, 2021. "Foreign Influence and Domestic Policy," Journal of Economic Literature, American Economic Association, vol. 59(2), pages 426-487, June.
    15. Gamso, Jonas & Nelson, Roy C., 2019. "Does partnering with the World Bank shield investors from political risks in less developed countries?," Journal of World Business, Elsevier, vol. 54(5), pages 1-1.
    16. Meyer, Daniel Francois & Habanabakize, Thomas, 2018. "An analysis of the relationship between foreign direct investment (FDI), political risk and economic growth in South Africa," Business and Economic Horizons (BEH), Prague Development Center, vol. 14(4), pages 777-788, August.
    17. Tuğba Akın, 2019. "The Effects of Political Stability on Foreign Direct Investment in Fragile Five Countries," Central European Journal of Economic Modelling and Econometrics, Central European Journal of Economic Modelling and Econometrics, vol. 11(4), pages 237-255, December.
    18. Farzanegan, Mohammad Reza & Gholipour, Hassan F., 2023. "COVID-19 fatalities and internal conflict: Does government economic support matter?," European Journal of Political Economy, Elsevier, vol. 78(C).
    19. En‐Ze Wang & Chien‐Chiang Lee, 2023. "Foreign direct investment, income inequality and country risk," International Journal of Finance & Economics, John Wiley & Sons, Ltd., vol. 28(3), pages 2415-2435, July.
    20. Metaxas, Theodore & Kechagia, Polyxeni, 2017. "FDI and Terrorism in developing Asia: Approaches and Discussion," MPRA Paper 78165, University Library of Munich, Germany.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gam:jscscx:v:12:y:2023:i:9:p:493-:d:1231395. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: MDPI Indexing Manager (email available below). General contact details of provider: https://www.mdpi.com .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.