The Net Effect Evaluation On Western Development Based On Difference-in-Differences Method

Since the reform and opening up,the eastern and central regions,especially the southeastern coastal regions in China,have maintained a good momentum of economic growth due to their geographical advantages,and have widened the economic disparity with the western regions.In order to narrow the income gap and realize the balanced development among these regions under the constraint of system resources,the policy of Western Development was formally implemented in 2000.The state has successively introduced a series of policy measures covering industrial adjustment,opening to the outside world,infrastructure construction,talent introduction,transfer payments and many other aspects.In 2015,the total GDP of the western region was 1149.6 billion yuan,which was nearly 7 times that of 2000.During the period from 2000 to 2015,the average economic growth rate in the western region was 11.23%.Its annual real GDP growth rate has gradually narrowed the gap with non-western regions since 2000,and it has been surpassing that from 2010 and maintaining its growth advantage.The implementation of the Western Development has enabled the western region to usher in some growth in macroeconomic indicators.However,due to the existence of latecomer advantages,even without the Western Development,the economy of the western regions will achieve a certain degree of growth.As a result,the debate over the net effect of Western Development has been stimulated: is it policy failure or policy promotion? In order to rule out the influence of endogenous factors on the policy outcomes,we will further explore the net effect of the Western Development policy,its specific impact mechanism,and its dynamic sustainability.Based on the panel data of 27 provinces or municipalities from 1994 to 2015,this paper sets a quasi-natural experiment using the difference-in-differences method(DID),which sets the province or municipality of the western region as a processing group,and set the non-Western provinces as a control group for horizontal comparisons and longitudinal comparisons over time to figure out the net effect of the Western Development.In addition,this paper makes a sensitivity analysis of the empirical results,and analyzes the influence mechanism of the western development policy and the dynamic effect of the policy.The research results show that the development of the western region has significantly improved the level of regional industrialization,investment in fixed assets,and foreign investment,which has led the economic growth rate of the western provinces increased by4.66 percent.The effect on the level of per capita consumption has been significantly less pronounced.The impact of the service industry level and the government scale is significantly negative;in addition,the policy effect is not dynamic.Therefore,there are four suggestions against the problems.First,in order to maintain and expand the positive net effect of the Western Development policy,the government should deepen the implementation of the policy.Second,the government ought to optimize the industrial structure rationally and achieve industrial upgrading.Third,as well as increasing the investment in physical capital,we need to appropriately raise the proportion of investment in pension insurance,poverty alleviation,and medical care.Fourth,it is necessary to further improve the level of education and other soft power so as to obtain the follow-up driving force for sustained economic growth.