Artificial Administrative Boundaries: Evidence from China

Pei Li, Yi Lu and Tuan-Heww Sng

No 9, CEH Discussion Papers from Centre for Economic History, Research School of Economics, Australian National University

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.

Keywords: Artificial borders; Regional Favoritism; Decentralization; China (search for similar items in EconPapers)
JEL-codes: D73 H11 H77 O43 (search for similar items in EconPapers)
Date: 2017-09
New Economics Papers: this item is included in nep-cna and nep-tra
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Persistent link: https://EconPapers.repec.org/RePEc:auu:hpaper:060

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