“Withdrawing The County To Set District” And Regional Resources Misallocation

Administrative division has a great influence on resource allocation,so with the development of economy and society,the adjustment of local administrative division has become an important policy measure of regional economic development in China.In particular,“Withdrawing the County to set District” has become one of the main means of administrative division reform to promote urbanization in China.However,there are different views on the policy effect of “Withdrawing the County to set District”,especially whether“Withdrawing the County to set District” improves the efficiency of resource allocation,and few systematic empirical studies.In view of this,based on the 1998-2007 Chinese industrial enterprise database and county and city economic data,this paper adopts the multi-period DID model to empirically test the impact of “Withdrawing the County to set District” on the resource mismatch of municipal districts.The robustness was tested by inclination matching method.In the further study,regional heterogeneity test is carried out,and the influence of “Withdrawing the County to set District” on regional resource mismatch is studied from the perspectives of industry within the municipal district and other counties and cities within the prefecture-level city where the withdrawn counties are located.Finally,the paper empirically examines the influence mechanism of“Withdrawing the County to set District” on resource mismatch from the two aspects of the expansion of inefficient enterprises and the entry of inefficient enterprises.The results show that :（1）“Withdrawing the County to set District” intensifies the resource mismatch between the whole municipal district and the industry within the municipal district,and there is regional heterogeneity in this effect,which is significant in the eastern region,but not in the central and western regions.（2）“Withdrawing the County to set District” reduces the competition among counties in the prefecture-level cities of the counties to be removed,and thus reduces the degree of resource mismatch among other counties in the prefecture-level cities of the counties to be removed.（3）After the “Withdrawing the County to set District”,government policies protected inefficient enterprises in the original municipal districts,and a large number of inefficient enterprises were attracted by land investment,thus aggravating misallocation of regional resources.Therefore,this paper puts forward the following policy recommendations.（1）The government should do a good job in the transfer of the planning and management authority of the withdrawn counties,and promptly incorporate the withdrawn counties into the overall planning system of the city.In terms of infrastructure level and public service level,the gap between the withdrawn counties and the original municipal districts will be narrowed.（2）The government should attach importance to the development of the withdrawn counties,and should not develop the central urban areas at the expense of the interests of the withdrawn counties.（3）The government should reduce excessive intervention in the market.While playing the role of policy guidance and overall planning,the government should give full play to the role of the market mechanism.（4）The government should raise the entry threshold of enterprises and pay attention to the quality of introduced projects while attracting investment.Based on micro-data,this paper empirically examines the impact of “Withdrawing the County to set District”on resource misallocation,and further examines the possible mechanism of this influence,enriches the existing research literature,and deepens the mechanism of the impact of administrative division adjustment on resource allocation.