Open doors: The impact of border reforming and opening policies on the regional border economies of China

Abstract

The openness and security of a country's borders is a matter of concern for countries worldwide. Since its reform and opening up in 1978, China has implemented reforming and opening policies in border regions, as represented by the “Xingbian Fumin Xingdong” (Revitalize Border Areas and Enrich Residents' Lives Policy [RBAERL Policy]) to achieve economic prosperity and stability. This study evaluated the impacts of the RBAERL policy in terms of outcomes related to county-level economic growth in China's border regions. Using China's county-level panel data from 1999 to 2016, we applied a spatial discontinuity design with the geographical boundary serving as the running variable. We found that the RBAERL policy contributed significantly to the economic growth of the border counties. These results were shown to be robust when measured against a series of test procedures. Through a by-segment analysis of the border regions, we found that the policy had the strongest effect in northeastern China. Further mechanism analysis showed that the effect of per capita GDP growth primarily resulted from the expansion of the industrial sector along with physical and human capital investment rather than the promotion of employment and the growth of total factor productivity. The findings of this study can provide references for the importance of open borders for economic development and national security.