 How does people’s liberation army related business closure affect the local economy?Haozhe Han and Shuo Zhang China Economic Review, 2023, vol. 77, issue C Abstract: People’s Liberation Army (PLA) related business was rampant in China in the 1980s and 1990s, and they significantly disrupted the local economy. However, due to limited data about PLAs, this issue is rarely investigated and thus the negative impact is hardly measured. In this paper we introduce a new proxy for measuring the approximate level of PLA related business in a specific city, PLA hospital score, to identify cities that are more affected by PLA related business closure. We then employ a difference-in-differences (DID) framework and show that PLA related business closure does bring positive effects to China’s local economy, about a 2% increase in GDP growth per year. We also find that this effect is more significant in cities with median economic size and cities that rely more on secondary and tertiary sectors. We finally provide a possible channel of this effect, which mainly works through providing a more efficient and competitive market to local private firms as well as an investment-friendly environment that attracts foreign investments. Keywords: PLA related business; PLA hospitals; Difference in differences; China economy (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:chieco:v:77:y:2023:i:c:s1043951x22001481 DOI: 10.1016/j.chieco.2022.101890 Access Statistics for this article China Economic Review is currently edited by B.M. Fleisher, K. X. D. Huang, M.E. Lovely, Y. Wen, X. Zhang and X. Zhu More articles in China Economic Review from Elsevier |
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