Place-based policies, state-led industrialisation, and regional development: Evidence from China's Great Western Development Programme

This study evaluates the effects of a prominent place-based policy in China-the Great Western Development Programme. In 2000, China's central government targeted inland provinces in Western China for considerable investment and preferential treatment to accelerate their industrialisation. Using a spatially discontinuous design, we find that the programme has succeeded in accelerating industrialisation, raising the annual GDP growth rate by 1.6 percentage points in the targeted regions. However, no such effects are observed on nonfarm employment or wages. Moreover, the GDP growth effects primarily result from massive physical investment rather than the growth of total factor productivity. (C) 2020 Elsevier B.V. All rights reserved.