The Impact of Place-Based Policies on Firm Performance: Evidence from China

This study investigates the causal effect of first round China’s Great Western Development Strategy (GWDS) on total factor productivity (TFP) Chinese manufacturing firms employing geographic regression discontinuity design. It uses firm-level data from Annual Survey Industrial Firms (ASIF) database 1998 to 2007. To follow principle design and ensure validity our identification strategies, only within a 10 km radius either side GWDS boundary were retained in baseline regression. The main results include some following: (1) increased TFP western range 11.2% 13.7%. (2) mechanisms this improvement identified as reduction firm’s actual income tax rate firm investment high-quality human capital. (3) has greater impact private firms, small labor-intensive firms. provides reliable evidence that place-based policies can promote sustainable development affected regions, could serve policy inspiration alleviate regional disparities other developing countries.