Research on the Impact of Market Integration on Regional Productivity: A Spatial Econometric Approach for Chinese Regions

Abstract

The process of market integration has a profound impact on regional output activities. This paper discusses the impact mechanism of market integration on regional productivity. Using China’s province-level panel data from 2006 to 2019, a spatial econometric model is constructed to empirically analyse the actual impact of China’s market integration process on regional productivity at this stage. The empirical study found that the spatial distribution of China’s regional productivity at the current stage exhibits the agglomeration characteristics of “high in the east and low in the west”. The process of market integration can not only significantly promote the productivity of the region, but also have a significant positive impact on the productivity of geographical and economic neighbouring regions. The subregional empirical results show that the marginal impact of the market integration process on productivity in different regions is heterogeneous, showing that the marginal impact on the eastern and coastal regions is stronger than that in the central and western regions. Altogether, this study provides empirical evidence of the positive impact of market integration on regional productivity in the spatial dimension, having significant implications for regional coordinated and sustainable development.