Economic effects of conversion from county (or county-level city) to municipal district in China

Abstract

Administrative division is an important resource to promote the urbanization process and economic growth in China. As an important way of urban spatial expansion, the effect of the removal of counties (county-level cities) into municipal districts(RCD) on economic growth remains to be empirically tested. In this paper, the panel data at the county level from 1998 to 2016 and the differential method were selected to study this problem. The results show that, during the study period, the RCD significantly promoted the economic growth of Chinese cities. The effect of removing counties (county-level cities) from large cities and megacities to set up districts is obviously better than that of small and medium-sized cities. In small and medium-sized cities with small urban permanent population, the RCD has obvious negative impact on economic development. The effect of county (county-level city) reform in eastern and central regions is more significant, while the effect of policy in western and northeast regions is not significant. When the development intensity of the municipal district is between 15%-20%, the effect of the RCD is relatively good, and the administrative division adjustment of the municipal district has a certain optimal window period.