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Artificial Administrative Boundaries: Evidence from China

Author

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  • Pei Li
  • Yi Lu
  • Tuan-Heww Sng

Abstract

What happens when subnational boundaries are badly drawn? We use China as a laboratory to investigate the rami cations. As Chinese provincial and long-standing socioeconomic boundaries are not fully aligned, counties of the same province may not share the same regional identity. Using Deng Xiaoping's eco-nomic liberalization campaign in 1991-92 to implement a difference-in-differences, we find that the annual growth differential between non-is located and dislocated counties increased by 3.1 percentage points after Deng's campaign galvanized the provinces to pursue economic expansion. We also uncover evidence of discrimination against the dislocated counties by the provincial authorities.

Suggested Citation

  • Pei Li & Yi Lu & Tuan-Heww Sng, 2017. "Artificial Administrative Boundaries: Evidence from China," CEH Discussion Papers 09, Centre for Economic History, Research School of Economics, Australian National University.
    • Handle: RePEc:auu:hpaper:060
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    File URL: https://cbe.anu.edu.au/researchpapers/CEH/WP201709.pdf
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    More about this item

    Keywords

    Artificial borders; Regional Favoritism; Decentralization; China;
    All these keywords.

    JEL classification:

    • D73 - Microeconomics - - Analysis of Collective Decision-Making - - - Bureaucracy; Administrative Processes in Public Organizations; Corruption
    • H11 - Public Economics - - Structure and Scope of Government - - - Structure and Scope of Government
    • H77 - Public Economics - - State and Local Government; Intergovernmental Relations - - - Intergovernmental Relations; Federalism
    • O43 - Economic Development, Innovation, Technological Change, and Growth - - Economic Growth and Aggregate Productivity - - - Institutions and Growth

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