posted on 2025-03-03, 11:40authored byPengyu Zhu, Yulin Wang, Yatang Lin
This paper studies China's Great Western Development Program, which was designed to promote growth in the backward western provinces. In addition to evaluating its original policy goal, we further investigate its unintended consequences and potential mechanisms. Employing a regression discontinuity design and night-light series data, we find that the Program led to a 1.3–1.7% faster annual output growth in China's western region. Though the financial investment is homogenous, the positive growth effects are limited to localities with better initial endowments. We suggest that the Program has widened inequality within the treatment group due to lack of targeting.
Funding
This work was supported by the Hong Kong Research Grants Council (RGC) Research Fellow Scheme (RFS) [grant number HKUST RFS2425-6H03]; the Public Policy Research (PPR) Funding Scheme [grant number 2024.A7.032.24B]; the HKUST IPO Support Fund for Interdisciplinary Research Collaboration [grant number 008]; the Inaugural CLP Research Fellowship Programme Award [grant number RFP2022HKUST]; and the RGC Strategic Topics Grant (STG) [grant number STG2/E-605/23-N].