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| Administrative Boundaries, the Provision of Public Goods, and Economic Development |
| MA Guangrong, ZHAO Yaohong
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| School of Finance, Renmin University of China\China Financial Policy Research Center |
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Abstract China's economy has achieved rapid growth since the reform and opening up, but the problem of unbalanced and uncoordinated economic development among regions remains. Administrative barriers can hinder the balanced and coordinated development of regions, particularly divisional border areas, as they negatively affect efficiency and fairness. We identify two main effects of these barriers on the economic development of border areas. First, they prevent the free flow of commodities and services between regions and thus produce a “boundary jumping effect,” which suggests that the differences in economic development between divisions will remain. Second, barriers between administrative divisions mean that border areas cannot fully benefit from the inflow of capital from the province, and their economic development lags behind that of the core provincial areas, resulting in a “boundary depression effect” that widens the development gap between internal border and non-border areas. However, these two effects do not necessarily occur at the same time. If the effects of border depression are severe on both sides of the border and economic development is low because of neglect of the border, then we may not observe the jumping effect.
We identify the boundary-jumping and boundary-depression effects using the high-precision global DMSP/OLS night-light raster data released by the U.S. National Oceanic and Atmospheric Administration (NOAA) and public goods data extracted from Gaode maps. We use the spatial breakpoint regression method to test the inter-provincial administrative boundary zone. First, we find no significant boundary jumping effect in the inter-provincial border zone in terms of economic development and the provision of public goods. Second, we find an obvious boundary depression effect in the inter-provincial border zone. The closer the region is to the provincial border, the more it lags behind the general level of economic development and public goods provision. The effect is particularly pronounced within 20 kilometers of the provincial border. This boundary depression effect prevents the economic development of the province's core from effectively radiating out to the boundary area, which may further explain why no boundary jump effect is observed.
Our study has the following research significance. First, we use refined grid-level nighttime light brightness data and public goods provision data to re-examine the economic development of administrative boundaries and assess the extent of the depression effect of public goods provision. Our empirical findings can offer geographically targeted policy recommendations that strengthen regional coordination and promote the economic development of provincial border areas. Second, we examine the boundary-jumping effect of economic development and public goods and discuss the relationship between this effect and the boundary depression effect, thus comprehensively revealing the impact of administrative division boundaries on economic development. Third, unlike studies focusing on the economic disparity in China in terms of physical capital, human capital, financial market development, geographical factors, social characteristics, infrastructure, policy systems, etc., we reveal the impact of administrative division barriers on the economic gaps between regions. Fourth, at the practical level, removing the barriers between administrative areas can promote sharing, coordinated development, and domestic market integration.
Removing the restrictions on the flow of resources caused by these barriers, ensuring that the supply of public goods is sufficient, and encouraging economic development in interprovincial border areas can lead to mutual benefits. To achieve this, the government can implement effective inter-regional coordination mechanisms that promote the orderly flow of capital, labor, and other factors across regions. Increased investment in public goods in the border areas of provinces can address long-standing shortcomings and further promote the equalization of basic public services in the province. The integrated development of urban agglomerations can also be promoted by focusing on removing the barriers between administrative division. Finally, the central government should establish an effective incentive mechanism for regional coordinated development, urge provincial governments to increase their public goods investment in inter-provincial border areas, and encourage local governments to establish cooperation and coordination mechanisms.
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Received: 01 June 2021
Published: 01 September 2022
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