Zooming in or zooming out: Energy strategy, developmental parity and regional entrepreneurial dynamism

In this paper, we analyze the economic impacts of the West-East Electricity Transmission Project (WEETP) project using the multi-period difference-in-difference (DID) method based on county-level data from 2000 to 2020. Our findings indicate that the WEETP project inhibits firm entry in electricity-exporting regions while encouraging firm entry in electricity-importing regions, thus hindering regional development equalization. Specifically, the initiation of WEETP discouraged firm activity in the southern and central corridors' exporting regions but boosted firm activity in the northern corridor. Additionally, WEETP exacerbated infrastructure overbuilding and environmental damage in energy-exporting regions, further weakening entrepreneurial dynamism (ED) and widening the development gap with energy-importing regions. Our study provides insights into the real impact of national energy strategies on regional development and highlights the institutional factors contributing to the resource curse. The findings demonstrate the limitations of non-market pricing approaches to resource allocation, thereby offering an empirical basis for narrowing the development gap and promoting developmental affirmative action.